#OutToLunch Amazon and the culture of succession planning

By Denis Jjuuko

Jeff Bezos, founder of the global unicorn that is Amazon, stepped down from the role of Chief Executive Officer to become executive chairman. Bezos founded Amazon in 1994 and built it into one of the biggest and most profitable companies in the world. After 27 years at the helm and USD200 billion letter in personal wealth, he decided to call it quits.

He says he doesn’t have the time he needs to run this giant as he wants to concentrate on other interests, including charity. In doing so, Bezos is walking in the shoes of fellow billionaires such as Bill Gates who left the companies they founded in their prime to do something else. Bezos is just 57 years old. He could have stayed on for another 30 years but that is what we need to learn from these entrepreneurs. Like Bill Gates before him, Bezos will soon leave the role of executive chairman. He just took it up to ensure the Amazon stock doesn’t take a considerable beating, if he had decided to leave the company at once. It is part of transition planning.

The main reasons these billionaires leave their legacy companies is not because they don’t have time or the drive to carry on. That is usually for public relations. The founders go because they want to create a culture of succession from one chief executive to another and see their businesses live on forever.

The Americans and Europeans usually hand over the businesses to leaders who aren’t necessarily their relatives while the Asians mainly hand over to their offspring. For us in Uganda, we rarely want to hand over the business to anyone. Although we prefer the Asian model of handing over the company to the offspring, many do so without proper succession planning. A parent dies and a child who was not involved in the business at all and who has no experience running anything finds himself in the swivel chair as CEO and Chairman.

That perhaps explains why companies that were household names just 25 years ago are now as quiet as a cemetery. The children who inherited them run them down as fast as they got them. Not because they necessarily wanted to but because they were not prepared to run the businesses in the first place. Instead of paying creditors, they buy a fancy SUV and install blue and red grill flashing lights to announce their arrival as the next big thing. The creditors take them to court and the next time you hear about them is when company assets are being sold on the cheap through auctions.

Of course, not all Ugandan businesses have ended up that way. The Mulwana Group still stands successful many years after its founder’s death and the children and their mother seem to be doing a great job. The Madhavanis have been fine though last year there were some squabbles in the press over some assets.

Succession planning shouldn’t be only for big companies. How do we ensure that small and medium enterprises can survive beyond their founders? The founders need to let go of many things including decision making to people they can groom and trust well in time. The guy who is replacing Bezos at Amazon had been at the firm since 1997, which makes him understand the business. He wasn’t simply parachuted into the CEO role. He had been running Amazon Web Services, the company’s cloud computing arm, which is one of Amazon’s most profitable divisions.

Amazon as successful as it is, its founder could easily have claimed that he is the only one who understands its problems and challenges and therefore should be its CEO for eternity but he didn’t. He understood that his legacy, his company’s success will be determined long after he has stepped down. Given Amazon’s success, nobody was itching for him to leave but he decided that after almost three decades, the business needed new leadership. That is leadership.

If we want our businesses to become as successful or even a quarter as successful as the Amazons and Microsofts of this world, the leaders must adequately plan for the day they won’t be there to run them. This should be done by identifying and grooming leaders and then stepping away when they can still offer advice to the new leaders.

 

The writer is a communication and visibility consultant. djjuuko@gmail.com 

 

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Out to Lunch

#OutToLunch: Make cylinders of 1kg, 2kg if gas is to replace charcoal

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Out to Lunch

#OutToLunch: Medical apprenticeship programs critical in improving diagnosis and treatment

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Out to Lunch

#OutToLunch: Uber’s abrupt exit calls for regulation of international brands to protect users

By Denis Jjuuko Ten years ago, Kampala was all the rage. Uber, the global taxi hailing app launched in Kampala with fanfare. The razzmatazz that comes with a global brand that promises to change the world. All our transport problems, at least in Kampala, would be sorted. It was cool to order a Uber or arrive at a fancy party in one. If you hadn’t installed the app, you were being left behind. There was no need to buy a car. Uber would sort that at the fraction of the cost. If you had a car, it was so cool to use it as a Uber on your way to or from work. And if you didn’t like your boss, you could quit your job and become your own boss as a Uber driver. It wouldn’t get any fancy than that. Some people cashed out their savings, bought a few corollas, got their cousins who had previously graduated from university and made them Uber drivers. Side hustle had never been so simple. Special hire drivers cried. Calls placed to their previous customers went unanswered. The suitor had a new lover. You were exploitative. Uber transported someone to wherever they wanted at the cost of a chapati! Some young people decided to create Uber for all sorts of things. Looking for somebody to wash your clothes over the weekend, a “uber” was created for that. Need a truck to transport something? There was a “uber” for it. Need a boda? Well, another “uber” was created before Uber itself introduced bodas. Innovation hubs were full of ideas with young people dressed in hoodies spending all their time trying to create the next Uber. To be fair, it wasn’t just in Uganda. Every new innovation has somebody trying to replicate it for another industry. With apps like Uber and AirBnB and their early global success, other platforms for gig work or sharing were created everywhere. UpWork, Fiverr, DoorDash… the list is endless. We were told the sharing economy was the new thing. That we didn’t need to own stuff. We could easily share. The problem though with international brands like Uber is that they can wake up and make a decision that affects many people. Like they did when they announced that they will no longer be available in Uganda. And within a few minutes, they were gone. They didn’t even have the courtesy to inform the drivers signed up on their app for at least a week. I believe some were even still processing the news and maybe even parked at malls waiting for clients only to realize that the application had gone mute. I believe those who hadn’t checked their communications platforms restarted their phones several times. Developing economies like Uganda shouldn’t just allow these brands to come in, do and go as they wish. They can’t just be making abrupt decisions from Silicon Valley. Why couldn’t Uber give time before exiting the country? They could have given a 90-day notice so that their drivers and customers have enough time to prepare. To operate here, the government should force them to follow some rules and regulations. Usually when they start offering service in smaller economies like ours, there is something they want which isn’t direct revenue. It is global presence that enables them to have an explosive initial public offering on the New York Stock Exchange or attract some funding. Once they achieve those goals, their mission is over and can do whatever they want especially where there is no regulation. In markets where they are regulated, they can’t just wake up and announce that they have closed. Also, the actions of brands like Uber mean that there is a need to identify our challenges and find applicable solutions. For many years, I wonder whether Uber drivers made any money. The rates were so low prompting many of them to try to negotiate out of the app. What had made Uber appealing to drivers was the near guarantee of a return trip. Unlike a special hire (cab), the driver would be able to find a customer after dropping off somebody. That increasingly became difficult yet the rates remained low. When fuel prices went up, Uber didn’t respond appropriately. Apparently, increments had to follow some policy created based on the American or western European economy. Bad roads and traffic jams were never factored in. Ugandans largely drive old cars which means that they consume a lot of fuel and susceptible to breakdowns. If the roads are potholed, maintenance and repair become costly. An unregulated global brand wouldn’t care much about that while setting rates especially when they don’t own the asset that guarantees their return (25% of each trip in the case of Uber). Regulation of global brands is critical in protecting the interests of users. The writer is a communication and visibility consultant. djjuuko@gmail.com

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