New Zealand has a healthy business birth rate. In 2016, enterprise population growth swelled by nearly 5,000 businesses, the fourth year running in which more businesses were born than died.
The survival rate is not so good. Of the crop of 2006, only 26 per cent were still alive and kicking in 2016.*
A lot is written about these start-ups and a lot less about the 500,000-odd enterprises that make up a more or less fixed part of the business firmament. These businesses have seen many generations of management come and go and have long experience of what works, and what doesn't.
One such is Guardian Trust, which traces its roots back to 1882. CEO Grant Kemble, says a recent change of general managers in the company provides a template for how leadership change can ideally be managed.
Outgoing GM, Bryan Connor, gave plenty of notice he would be stepping down, so Guardian Trust was able to capture his long experience of corporate trust services in New Zealand.
Corporate trustees supervise the relationship between wealth managers and the individuals whose money wealth managers invest - so relationships built on familiarity and trust are critical.
Connor worked alongside the incoming GM, Mark Jephson, for six months and took on a role as Jephson's external mentor after the official changeover.
"It is important Mark also forges his own path and brings his own ideas to the table."
Kemble says. "In fact, the whole of our senior leadership team has external mentors."
Succession also brings the risk, particularly for businesses for whom familiarity and trust are fundamental, that a new leader will feel under pressure to "fix what ain't broke". Against that must be balanced the risk of complacency and an "it's always been done that way" attitude.
"Don't tinker with things for the sake of it," advises Kemble. "A robust business with a sound model and good revenue streams is in a good position, and the succession plan should involve turning the wheel of continuous improvement."
Companies that are future-proofed don't get there by chance. Resilient businesses have built-in ability to adapt to change, so there is always a plan if the rug is pulled out from under them.
"Recruiting for the future, and training people within the business for a time before promoting them, builds that resilience," says Kemble.
Then there's the always-vexed question of internal promotion versus external appointment.
The advantage of having a great internal candidate, says Kemble, is that you already know the good and the bad. But there's a danger of damning the internal candidate for his or her flaws, while discounting those of an external candidate - which you might not even know about.
By the same token, the external may have strengths you can't see.
"There's no easy answer," says Kemble, "but it helps to know the blind spots."
Externals can also bring from the outside valuable know-how from another industry - for example, in how systems and operations can be advanced using technological innovation. In Guardian Trust's case, it was determined Jephson's understanding of the nuances and key drivers of the business couldn't be imported from another industry and outweighed the merits of bringing in new talent.
Another risk of internal promotion is the assumption new leaders already know the business and will be left to sink or swim. Guardian Trust's Kemble says that, in reality, stepping up to the next level and shouldering new responsibilities should involve a substantial amount of training.
If possible, that should involve both the outgoing and incoming leaders attending key client and other stakeholder meetings during the transition period.
Finding the right balance between experience and youthful energy is also critical. In New Zealand financial services, says Kemble, there has been a trend towards younger people holding the most senior positions.
"Youth and institutional knowledge are a killer combination. Succession planning shouldn't prize any one characteristic, and diversity should be a core component," says Kemble.
"Talent really can come from anywhere, and we believe following an open process leads to the best result."
While start-ups are inevitably focused on building revenue and profitability, says Kemble, all businesses need to give thought to how generations of potential leaders should be identified, cultivated and promoted to the top.
*Statistics New Zealand, New Zealand Business Demography Statistics, February 2016:
• Enterprises 515,046
• Births (since Feb 2015) 58,563
• Deaths 53,736
• Of enterprises born in the February 2015 year, 84 per cent were still running in February 2016. But of those born in 2006, only 26 per cent remained.