Global Implications of a Failed Succession

By Prof. Enrique Soriano

In this final part of our series, we explore the broader lessons that can be drawn from the Japanese model of family business succession. The practices of Mukoyoshi and strategic adoption offer valuable insights for family businesses worldwide. While Mukoyoshi is uniquely Japanese, its core principles—meritocracy, long-term vision, and flexibility in succession planning—are universally applicable.

These lessons are particularly relevant in regions where high-profile family conflicts have disrupted business transitions. Below are notable cases that demonstrate the importance of strategic succession planning, which could have mitigated the chaos and division these families faced.

Lotte Group (South Korea)

The Lotte Group’s succession conflict illustrates the critical need for clear and merit-based succession planning. After the death of founder Shin Kyuk-ho in 2020, a bitter battle for control ensued between his sons, Shin Dong-bin and Shin Dong-joo. This feud, triggered when their father’s health declined in 2013, revolved around control of the company’s Korean and Japanese operations. Despite Shin Dong-bin ultimately assuming control, the conflict led to severe legal and financial repercussions, including bribery charges against Dong-bin. A Mukoyoshi-like approach—focused on merit rather than birth order—could have minimized this turmoil and helped avoid years of family infighting (Korea Joongang Daily)

Mayfull Foods (Taiwan)

Mayfull Foods, one of Taiwan’s largest food importers with ties to the famed Miramar Group, became the center of a tragic family feud. Following the death of founder Huang Jung-tu, a succession dispute between his six sons escalated into violence. During a heated meeting about inheritance, Huang Ming-Te fatally shot two of his brothers and subsequently ended his own life. The bloody scene was the culmination of a bitter family dispute and a succession gone horribly wrong.

This case underscores how neglecting succession planning can lead to catastrophic consequences. For family business leaders, especially in Asia, the message is clear: succession planning should not be an afterthought. It must begin as soon as the business is established, with governance structures in place to prevent such tragedies.

Key Takeaways for Family Businesses

The Japanese model of family business succession offers several valuable lessons for family enterprises worldwide:

1. Merit-Based Selection: Businesses should prioritize selecting leaders based on skills, experience, and alignment with company values, rather than following traditional family hierarchy. This approach can minimize internal conflicts and ensure capable leadership.
2. Long-Term Incentives: Succession plans should align the interests of successors with those of the family and the business. This alignment fosters a long-term commitment to growth and success.
3. Flexibility in Succession Planning: Families must remain open to non-traditional strategies, such as Mukoyoshi, to ensure business continuity. Flexibility in leadership choices allows businesses to adapt and thrive, even when a biological heir may not be suitable.

Conclusion: A Model for Enduring Success

The Mukoyoshi model provides a powerful framework for achieving long-term success in family businesses. By focusing on merit, aligning incentives, and embracing flexibility in succession planning, family enterprises can safeguard their legacy across generations.

As the global business landscape continues to evolve, the principles behind Japan’s approach will remain highly relevant. Prioritizing these strategies can help family businesses not only navigate generational transitions but also secure their place in an increasingly competitive world.