Being willing to lead is a question of enthusiasm. Being able to lead is a question of ability.
Hawk Filtration Technology (Shanghai) Co., Ltd., located in the Shanghai Qingpu Industrial Zone, is a specialized filter manufacturer. Established in 2002, the company currently makes more than 1,000 types of specialized filters for vacuum cleaners, air purifiers, automotive air conditioning, power tools and respirators. The company’s vision embodies the protection of the environment, clean air, pollution prevention and safeguarding human health. Among its customers are many of the most well-known brands in North America, Europe and mainland China.
Within the next 3 years, Hawk Filtration Technology will be led by the family’s second-generation successor, ZHU Naifeng, who is expected to continue to evolve the company’s industry specialization and overseas expansion strategies. The company was founded by his father, ZHU Xuehao, who is exiting the company gradually and plans to retire fully when be believes his son is ready to inherit the business.
For family business leaders such as ZHU Xuehao, China’s one-child policy has presented unique challenges, with only one daughter or one son to choose from as a potential successor – assuming that the second generation is interested and willing to take over at all.
Most of the enterprises founded by the first generation of entrepreneurs in China are concentrated in traditional industries, many of which are being transformed and expanding internationally in a global economy. The overseas education of many second-generation family members is generating innovative strategies and operating models that are transforming many family businesses through the succession process.
ZHU Naifeng is a typical representative of this second generation. He possesses an overseas education and work experience and had many options to consider before his decision to return to China and the family business.
Critical factors for successful succession
ZHU Xuehao announced his 5-year retirement plan at the company’s 2017 annual meeting, along with several senior employees who have been with him from the start of the business. Despite ZHU Xuehao’s retirement intentions, Hawk Filtration Technology does not have a written succession plan. However, as with many first-generation leaders, he has his own criteria for how a successor will be chosen.
"My dad has a couple of preconditions to evaluate whether I can take over the family business,” says son ZHU Naifeng. “The first is the willingness. Enthusiasm is a prerequisite and everything else is based on that. The second is to train a successor to see if they are capable of succeeding. There can be a wide span between those two conditions. You may have the will to do it but do you actually have the ability you need in order to succeed?”
Cultivating a successor
For any second-generation family member who meets the first condition and is willing to take over the family business, the process does not happen overnight. After completing his studies and being employed in North America for several years, ZHU Naifeng returned to China to begin working at the ground level of the family business, rotating among different departments, from driving delivery trucks to sales and then as the sales manager.
In late 2006, problems arose in the foreign trade business sector of Hawk Filtration Technology. With the language proficiency he fostered when studying abroad, ZHU Naifeng began to work as a foreign trade salesman in the division. Under his direction, the company’s foreign trade business improved dramatically. He was ultimately given the opportunity to lead the independent foreign trade segment and he gradually formed his own management team.
ZHU Naifeng recognizes that cultivating a successor requires visionary thinking and preparation and he was fortunate to have the opportunity to develop a segment of the business independently. He suggests that providing potential successors with an opportunity to lead and develop a division or special portion of the business, such as the opportunity that he was given, is of benefit to everyone.
For the potential successor, it is an opportunity to decide if taking over the family business is right for them and what they really want, if they have the will to lead and whether they have the skill set and knowledge to be successful.
For the current business leader, it provides a first-hand and practical way to assess a potential successor’s leadership skills, alignment with the company’s values and vision and their ability to get results.
Both ZHU Xuehao and ZHU Naifeng have gained important insights from ZHU Naifeng’s leadership of the foreign trade division, especially as it relates to several generational differences in each other’s vision for the future of the business, strategic opportunities and management approach.
Managing intergenerational differences
A different generational perspective for the future of Shanghai Hawk Filtration Technology began to emerge in the third year following ZHU Naifeng’s return to China, when he worked as the foreign trade project manager in the family business. As a second-generation successor, he was looking for more freedom to manage the business in his own way, applying the experience and knowledge he had gained from his time in North America. This led to challenging discussions with ZHU Xuehao regarding the company’s strategies and customer philosophies.
It was during this time that ZHU Naifeng made a decision to return to business school for an Executive MBA. "I met great mentors and classmates who gave me a lot of guidance and help, which led me to identify my own shortcomings and helped improve the discussions with my father about the future direction of our business,” he says.
It also helped him to understand that within any company there can only be one person making the final decisions. “When I realized this, I adjusted my position,” he says, “I would then talk to my dad about a lot of things and give him many opinions and ideas, and he made the final decisions."
The experience of ZHU Xuehao and ZHU Naifeng provides important insights regarding the value of leveraging the diverse experiences and perspectives of different generations, including:
- the importance of open discussions to consider new ideas from all generations within the business – even when the timing may not yet be right for implementing them,
- the need to thoroughly assess the company’s culture, structure and employees’ capabilities when considering visionary new strategies, and
- the amount of patience, time, careful thought and planning required to fully develop a new strategy and implement it successfully.
Broadening the view of succession
As a key component of the strategy development process at Hawk Filtration Technology, both generations have now broadened their views of succession as well, with an increased appreciation for the need to have a thoughtful succession process at all levels of the business. As ZHU Naifeng explains, the succession of the company’s core values is one important factor. Equally important, however, is being able to transfer the knowledge and experience of everyone in the company to the people who will come behind them.
ZHU Naifeng believes that the factors his father uses as his guide to succession – willingness and ability – are ‘intertwined twigs’. Making a mistake with any of them could lead the business in a negative direction. Consequently, with more than a decade of training at the company's grassroots level, he is now guiding the family business alongside a team of mid-level core leaders who he is developing and promoting as they continue to build their own capabilities.
The cultivation of successors is a systematic project, as is the exit of the first-generation founders, and ZHU Xuehao has taken a training program divided into several steps for his own retirement planning. While the team established by ZHU Naifeng and his core of managers continues to take the business forward, ZHU Xuehao remains as its Chairman and stays closely connected with Hawk Filtration Technology while also organizing his retirement life.
"I now arrange my life according to three 'ones'," he says. "One-third of my time for traveling and reading, one third for company management and one third for helping and promoting my son's work."