From the moment the Yung Kee restaurant sold its first goose in Wellington Street, Central, in the 1960s, its founder Kam Shui-fai groomed two of his sons for management roles. However he never had the time to develop a structured approach to succession planning. Following his death, the younger son Ronald Kam Kwan-lai underhandedly stripped the eldest son Kinsen Kam Kwan-sing of his management role at the restaurant. If this were not bad enough, the latter died in unexplained circumstances a few years afterwards, having been pushed out of the only business he ever knew. Family succession should never end this way—and probably wouldn’t – if more founders of successful enterprises followed some basic rules in long-term planning. Before discussing my approach, I would like to share three of my favorite proverbs that illustrate why having a structure in place is so important for family leaders. Proverb Number One: The comb to groom a successor has brittle teeth. Each high-potential family member is unique and so will be his or her need to have a formal plan to guide actions. The comb used to groom one family member should not be used a second time. Proverb Number Two: Size should not matter in family planning. No matter how large a business is, the founder or current family leader should develop formal business planning and written policies 20 years in advance of a changeover. Needless to say, many family owners resist putting plans into place because they do not want to devote the time to ensure it is done. In reality, a family owner should take great care to complete the formalisation or professionalism process before the business actually needs it. Proverb Number Three: Feelings need planning. Some business owners think that formal plans are the surest way to take the spirit out of the family business feeling. Nothing could be further from the truth. Embedding the family business feeling into every aspect of the family business requires formal planning and written rules. In so doing, owners can create their own organisational culture, which should reflect the entrepreneurial spirit of the founder and the socialisation process that has developed within the organisation. Structure needs to evolve as the business grows, so that the firm can maintain a family based culture. It is unlikely than any of these proverbs resounded at the Yung Kee palace during the many decades that Kam Shui-fai was building his empire. Nevertheless family leaders can avoid such dramatic outcomes by following a structured approach to long-term planning. Having advised many family businesses around the world, I have developed a three-step model that can help families make their businesses sustainable: •Identify: Evaluate current and prospective family assets and roadblocks; •Plan: Determine the appropriate ownership structure and management choices; •Cultivate: Align the ownership design to both family and corporate governance. Tough decisions may need to be taken, especially in cases where external managers are brought in to replace family members Let’s look at these steps in more detail. In order to identify assets and roadblocks, a family leader should identify the strengths and weaknesses of the business. To do this, he or she can examine the depth of the family network, the values of the firm, brand awareness, traditions and reputation. On the roadblocks, most of these arise within the family, at the market level or from regulative and cultural based institutions. Having put all the cards on the table, the family leader then needs to create a strategic plan that accurately captures these strengths and weaknesses. In so doing, the family business owner can ensure that the direction and pace of growth stay in line with expectations. Tough decisions may need to be taken, especially in cases where external managers are brought in to replace family members or even in situations where an owner-manager considers exiting the business. Finally, the firm founder or current leader needs to cultivate the business over a 20-year period from when the three-step planning started. This is the longest step but the most rewarding. Many actions that would be appropriate for one type of planning path would of course not be appropriate for other planning paths. Cultivating the next generation, for example, would not be valuable for the business if the owner has decided to sell the firm or rely entirely on external management and professional boards in the future. Hence, the core of the cultivation process is to identify the day to day governance and leadership issues that the owner manager has to address and that will lead the firm to achieve the 20 year plan that was set up before. Often in my discussions with entrepreneurs, I use the analogy of a gardener who wants to plant a stand of trees that may take as long as 20 years to grow before they can be harvested for their nuts, fruits or timber. First, the gardener identifies the properties of the soil including humidity levels. Second, he or she decides which type of trees to plant. Third, he or she cultivates the stand over the next 20 years before the harvesting can begin. Morten Bennedsen is the André and Rosalie Hoffmann Chaired Professor of Family Enterprise and Academic Director of the Wendel International Centre for Family Enterprise at INSEAD. He is also the author of the new book “The Family Business Map: Assets and Roadblocks in Long Term Planning”, in English and Chinese.