What an established company should carry forward, what it should question, and what it must learn to do without the founder
Some years ago, we took a closer look at our receivables at Dutum and the numbers were worrying. We had payments sitting at 180 days, 360 days and, in some cases, 720 days, which meant we could complete the work and still wait up to two years for the cash. The projects were there. People were working, salaries had to be paid, suppliers were expecting payment and the company still had overheads every month. I remember looking at those numbers and asking myself: if this continues, what kind of construction business are we building?
That question eventually changed the direction of the company. We started looking more seriously at the private sector, studying other construction companies and thinking about how much of our business should continue to depend on clients whose payment timing we could hardly predict. Today, when I think about succession, I find myself coming back to experiences like that.
Succession is usually discussed in terms of who will lead the company after the founder. In my own experience, another question comes first: which parts of the way the company currently works should the next generation actually inherit? When a company has been around for thirty years, some things have lasted because they are genuinely valuable. Other things have lasted because that is simply how the company has always done them. The responsibility of leadership is to know the difference.
Thirty years leaves a lot behind
When I spoke at the LSDPC Strategy Retreat earlier this month, I described what an established organisation accumulates over time as two different inheritances. One is institutional capital. You have the reputation built from completed projects, the relationships, technical knowledge, experienced people, knowledge of the market and all the lessons that came from getting some things right and getting some things badly wrong.
The other inheritance is the way the company has become used to operating. Where it looks for work, which clients it understands, how decisions are made, who gets involved when something goes wrong, what management pays attention to and which important things are still dependent on particular people. Both come from the company's history.
I entered Dutum after my father had already spent many years building the business. There was a reputation to protect, there were people in the organisation who had been there for years, and there were ways of working that had helped the company survive long before I arrived. I had to respect that. At the same time, I also started asking questions about some of the boundaries we had accepted.
One of the first was geography. Dutum had mainly worked within a limited part of the country, and I could not understand why an indigenous Nigerian contractor should automatically limit itself to a few states when foreign companies could come into Nigeria and pursue projects almost anywhere. So we started looking outside the areas where the company had traditionally operated. That eventually took us into many more parts of Nigeria and exposed the business to clients, operating conditions and challenges that we would never have encountered if we had continued working exactly as before.
What I understand better today is that the earlier approach was not necessarily wrong. It suited a particular size of company and a particular point in its development. The company changed, and that meant some of the assumptions had to change with it.
This happens in many established businesses. Something starts as a sensible decision, works for many years and eventually becomes “the way we do things here”, even after the original reason for doing it has disappeared. That is where history can become difficult to manage.
Sometimes the business is working and the model is still wrong
The receivables experience is a good example. At the time, government work had been very important to Dutum. It had given the company projects, experience, relationships and a track record across the country. But when we looked closely at how long it was taking to convert some of that work into cash, we had to confront the effect on the business itself.
You can have a profitable project and still struggle because the money is not coming when you need it. Staff salaries do not wait for certification, suppliers do not stop asking for their money, and another project can come along while cash from the previous one is still tied up somewhere. That experience changed how I looked at clients.
A client is not valuable to a contractor only because they can award a large project. Payment behaviour, the structure of the contract and the amount of working capital required to carry the job also determine the quality of the opportunity. Once we understood that properly, changing our client mix became a business decision, not an emotional decision about whether government or private-sector work was somehow better. We were asking what kind of work allowed us to build a more predictable and financially healthier company.
That is one lesson I believe the next generation of management should inherit. The specific answer may change again. What should remain is the habit of looking at the evidence and being willing to ask whether an operating model that worked yesterday is still serving the company today.
Good work does not solve every business problem
I learnt something similar when we started moving more seriously into Lagos. We got a substantial private-sector project after several years of building the relationship, and my thinking at the time was very simple: let us execute this project extremely well and the next work will come. So I focused heavily on the project.
I was on site early. I stayed late. My attention was on making sure the work was delivered properly because I believed the quality of the work itself would create the next opportunity. Then the project ran into problems and was suspended for a long period. The weakness in my thinking became very clear.
I had done almost no marketing. I had not developed enough new relationships, and there was no strong pipeline sitting behind the project because I had assumed that successful delivery would take care of the future. When we eventually came back into Lagos properly, one of the first people I employed was a business-development person.
That experience taught me something about construction companies that I still believe strongly today. You can be very good technically and still have a weak business. Somebody has to deliver the project well. Somebody also has to bring in the next opportunity, somebody has to understand the commercial terms, somebody has to know what the project will do to cash and somebody has to make sure the company does not grow itself into trouble. As the company becomes larger, all of those things have to exist together.
That is also why I think experience only becomes useful to an institution when it changes something inside the organisation. If I learnt from that Lagos experience and kept the lesson to myself, then the company did not really learn. The lesson became useful when it changed how we approached business development and how we thought about where the next project would come from.
The same should apply to every major experience in a company. A difficult project should change something. A poor contract should change something. A payment problem should change something. A procurement mistake should change something. If five years later the company can make exactly the same mistake under exactly the same conditions, then experience has accumulated without becoming institutional knowledge.
One person can quietly become part of the company's system
This is where the founder becomes very important. A founder who has been operating for many years usually carries almost too much information that nobody has written down. He knows certain clients, remembers old projects, has seen different cycles in the market and can sometimes look at a situation for five minutes and notice something that another manager has missed.
That can be extremely useful. It can also hide a problem. If every difficult tender comes back to the founder, every sensitive client issue comes back to him, every major procurement decision needs his intervention and every unusual project problem requires him to step in, the company may be depending on him for much more than his job title suggests.
On paper, there may already be departments, directors and managers. In practice, the hardest decisions may still be ending on one table. That arrangement can work for a long time, especially when the founder is very good at what he does.
Growth is usually what exposes it. More projects mean more decisions. New locations mean you cannot physically see everything, more clients mean more relationships to manage, and larger contracts mean that mistakes become more expensive. At some point, the founder simply cannot be involved in everything.
This is where I think companies need to become more honest about their real capacity. We normally think about financial capacity, technical capacity, equipment and manpower before taking on a project. Management capacity should also be part of that discussion.
A company may have enough engineers and enough equipment to carry five major projects. But if every serious commercial problem from those five projects eventually has to come to the same one or two people, then the company does not have as much capacity as it thinks it has. The bottleneck may be sitting in management.
Winning work can expose what the company has not yet built
One of the experiences that taught me this most clearly came from three bridge projects we pursued earlier in my career. We had previously struggled with some tenders and eventually learnt that part of our problem was how our technical capability was being presented. We got better advice, improved our submissions and reached a point where I felt we finally understood what it would take to break into that category of work.
When another bridge opportunity came, I made a very aggressive decision. My team brought the tender to me with a profit margin included and I told them to remove it. I wanted the experience and the reference, and I was prepared at the time to take the commercial pain that came with getting into that kind of work.
We ended up winning all three bridges. Everybody was happy. Then we had to deliver them.
We did not have all the equipment we needed. The price at which we had won the work made some conventional options too expensive, and we had to find people, solve production problems and build capability while the projects were already moving. At one point, we created a makeshift batching plant so that we could produce the concrete ourselves. The arrangement worked well enough that people who saw the concrete started approaching us for other work.
One prospective customer wanted us to supply concrete for a substantial building project. Everything had progressed quite far until he asked to visit the facility. When he saw what we were using, he pulled back.
From my point of view, the evidence was right in front of him. He had seen the concrete and he could see the bridges. From his point of view, he was about to put serious money into a supplier whose production capability did not yet look sufficiently permanent.
That experience taught me something I did not understand as clearly at the time. Doing something successfully once and building a company that can repeat it comfortably are two different things.
We delivered the bridges. We also made a loss. Years later, those same bridges began opening doors in ways we could not have calculated properly when we priced them. One executive involved in another infrastructure procurement remembered watching our work years earlier, and the reputation from those projects helped our credibility long after the original contracts had ended.
That does not mean losing money on projects is a good strategy. If anything, the lesson is more demanding. There may be moments when a company knowingly accepts weak immediate economics because it is trying to acquire a reference, capability or position that it believes will create value later. Management has to be very clear about what it is buying with that sacrifice and how much the company can afford to lose while waiting for that future value.
Otherwise every bad contract can be explained afterwards as “strategic”. A company will not survive many strategic explanations like that.
The next generation inherits yesterday's financial decisions
This is one reason capital discipline belongs inside a discussion about succession. When leadership changes, the next person does not receive only the brand, staff and company history. They receive the receivables, debt, equipment, guarantees, contracts, claims and every other commitment that management has built up over the years. Some of those decisions may still be producing consequences long after the person who approved them has left the role.
Take equipment. Buying equipment can make complete sense because it gives the contractor control over availability, programme and quality. It also ties capital into an asset that still needs to work after the particular project that created the need has finished. The next management team inherits that utilisation problem.
Contracts are the same. A large order book may look impressive, but if too much of the work requires heavy working capital, carries poor payment conditions or stretches management beyond what it can supervise properly, the company can enter a leadership transition already constrained by decisions made several years earlier.
This is why I believe boards discussing continuity should also look at the quality of the company being handed over. A business can survive the founder legally and still be in a weak commercial position. The real question is how much room the next leadership team has to make decisions of its own.
Delegation has to include the difficult decisions
It is easy to say that a founder needs to delegate. Every growing company eventually creates more roles, approval levels and reporting lines. The harder part is giving other people responsibility for decisions where the answer is not obvious.
Should we take this contract? Should we buy this equipment? Should we keep financing this project while certification is delayed? Should we move into this market? Should we accept a lower return because the project gives us a capability we need?
These decisions cannot all be solved by policy. People develop the ability to make them by seeing the information, understanding what the company is trying to protect, taking decisions and living with the consequences. That development takes time.
For me, this is where management depth becomes real. A senior manager should eventually be able to reach a decision that I may personally have approached differently and still explain clearly why the decision makes sense for the company.
If everybody is simply trying to guess what the MD would have said, then the company has not really transferred judgement. It has only moved the approval box.
The organisation must be able to challenge its own experience
There is another side to this. Experience is valuable, but the more successful somebody has been, the easier it becomes for people around them to assume that their judgement must always be right. That can become dangerous.
I saw it even in my own experience because some of the decisions I felt very strongly about earlier in my career later taught me difficult lessons. I believed good delivery would automatically bring the next project. I learnt otherwise. I believed very aggressive pricing could buy us a valuable reference. It did, but I also learnt how long the financial consequences of that decision could remain with the company. I believed certain markets were worth pursuing. Later, the cash data forced me to think differently about the type of clients we needed.
A company that wants to survive several generations has to be able to question even the assumptions created by successful leaders. That is part of what governance should do.
Finance should be able to tell management that an attractive project creates too much cash exposure. Operations should be able to say that the programme being promised cannot be delivered comfortably, and commercial teams should be able to question a client or contract that looks impressive from the outside. The founder's experience should remain important in that discussion. It should never become the end of the discussion simply because it belongs to the founder.
What exactly should survive?
This is the question I keep coming back to.
The company's reputation should survive. The seriousness around quality should survive. The habit of keeping commitments should survive. The ability to look at a difficult problem and find a way through should survive. The technical knowledge built across many projects should survive. The company should also preserve the lessons hidden inside its mistakes.
Some other things should always remain open for review. The geography that made sense twenty years ago may become too narrow. The client base that built the company may become too concentrated. A decision process that worked when there were five major projects may become too slow when there are twenty. An informal reporting system may stop working once projects are spread across different locations. A commercial strategy used to win an early reference may become irresponsible once the company has more capital and reputation to protect.
None of these things comes with an expiry date. Management has to notice when the conditions have changed.
That is why I believe one of the strongest signs of an institution is its ability to learn from what has already happened to it. When a contract creates a serious problem, something in the next tender should change. When delayed payment puts pressure on the business, the way clients and payment terms are assessed should change. When a project succeeds only because a few people worked extraordinary hours and kept solving emergencies, management should resist describing that project as evidence that the system works perfectly.
Sometimes success is hiding the work the system failed to do.
You can test succession while the founder is still there
There is a practical way to look at this without waiting for anybody to retire. Take the important decisions the company made during the last twelve months and look at the major tenders, equipment purchases, financing decisions, difficult client issues, project interventions, appointments and large commercial disputes.
For each one, follow the decision. Who noticed the problem first? Who understood what was happening? Who had the information? Who recommended what should be done? Who finally made the decision? And where did the founder or chief executive have to step in?
Then ask what that intervention added. Maybe the founder knew something about the client that nobody else knew. Maybe he remembered an old project with a similar problem. Maybe the manager already had authority but was afraid to use it. Maybe the reporting system had not surfaced something that became obvious once somebody made a phone call. Each answer tells you something the company still has to build.
The same test can be used for client relationships. If one person leaves, how many important clients still have enough relationships inside the organisation to remain comfortable?
It can be used for project information. If the MD stops calling individual project managers for a month, will the normal reporting system show the problems he would usually discover himself?
It can also be used for commercial judgement. If the founder is unavailable, can another senior executive explain why a contract should be refused even when the revenue is attractive?
These are succession questions already. Nobody has to announce retirement before they become relevant.
The company after the founder is already being built
When I was younger in business, I looked at many experiences mainly through the immediate result. Did we win the project? Did we finish it? Did we make money? Did the client come back?
After enough years, I have become more interested in another question: what changed inside the company because of what happened?
Did the loss change how we price? Did the delayed payment change how we select clients? Did the project suspension change how we build pipeline? Did a difficult mobilisation change what we require before accepting similar work? Did an old decision remain in place long after the conditions that produced it disappeared?
Those are the things that tell me whether experience has actually entered the institution.
This is also why I do not believe succession starts when a founder is ready to retire. It is happening every time somebody else is trusted to carry a serious decision, every time a lesson becomes part of how the company works, every time a client learns to trust more than one person in the business and every time management becomes strong enough to question an assumption that once came from the founder himself.
The founder leaves behind the company he built. He also leaves behind whatever ability that company has developed to keep thinking when he is no longer the person doing most of the thinking.
For a founder, board or senior management team, that may be the more useful test:
If the people who built today's way of working were no longer available tomorrow, would the company understand why it works the way it does, which parts still make sense, and what it should be prepared to change?
That answer tells you a lot about the company that will remain.