Sun Tzu on choosing who runs the business next
“The wrong person cannot be appointed to command. Lin Hsiang-ju, the Prime Minister of Chao, said: ‘Chao Kua is merely able to read his father’s books, and is as yet ignorant of correlating changing circumstances. Now Your Majesty, on account of his name, makes him the commander-in-chief. This is like glueing the pegs of a lute and then trying to tune it.'”
You might be thinking about stepping down one day and handing the business off to someone in your family. That might be a great idea. Or it might be the worst idea ever. How do you know they’ll take good care of the business? Will they grow it, or will they burn it down?
This is the most important decision you’ll ever make for your business. The right leader carries on your legacy, grows the business, and protects your employees. The wrong leader can undo everything you’ve worked for. Sun Tzu’s point: it isn’t enough to give someone the title. They need the skill, adaptability, and vision to earn it.
The double-edged sword of nepotism
Nepotism gets a bad reputation. It isn’t inherently bad. In family-owned businesses, looking to the next generation is a natural step. When handled thoughtfully, promoting a family member can protect the business’s legacy and tap into the deep knowledge they’ve absorbed from growing up immersed in it.
When done poorly, nepotism leads to frustration, disengagement, and sometimes collapse.
The real issue isn’t nepotism. It’s appointing someone who isn’t prepared. Even when a family member has potential, the perception of favoritism creates challenges.
A tree farm owner I’ll borrow as an example promoted her eldest son to operations manager. He’d spent years around the business but didn’t have the leadership skills to direct a team or solve problems on the fly. Employees got frustrated. Customer complaints piled up. The owner recognized the issue and reassigned her son to work under the general manager with mentorship and training. Over time he developed the skills to lead effectively and earned the trust of the staff.
If you’re thinking about handing the business to a family member, build a development plan with specific training goals, mentoring, and regular evaluations. It shows your team that leadership is based on merit and sets your successor up.
Leadership isn’t about a name
Titles and last names don’t make someone a leader. Skills, experience, and adaptability do. Appointing the wrong person, no matter how well-meaning, destabilizes a business.
A café owner I know needed a new manager and was torn between promoting her niece, who had a degree in hospitality, and a longtime employee who had managed the café through its busiest seasons. The owner chose the experienced employee — she had proven her ability to lead under pressure. To keep the relationship with her niece strong, the owner encouraged her to take on a role in marketing, where she’d shown interest and aptitude. Over time the niece’s efforts brought in new customers and boosted weekend sales.
Build a detailed list of qualifications for your leadership roles. Hard skills — industry expertise, financial management. Soft skills — communication, adaptability. Evaluate your current leaders and potential successors against these criteria.
Experience beats theory
Sun Tzu’s criticism of Chao Kua highlights a common leadership pitfall. Theoretical knowledge isn’t enough to navigate real-world challenges. Leaders need hands-on experience to understand the complexities of the role.
A bookstore owner I worked with recognized the need for a new community events coordinator. Instead of hiring someone passionate about books, she selected a promising employee who shadowed the previous coordinator to learn event logistics, budgeting, and vendor management. The new coordinator avoided common pitfalls and organized a series of author readings that became the most successful events in the store’s history.
Identify one team member with potential but limited hands-on experience. Assign them a specific project. Pair them with a mentor who can provide guidance and feedback.
Picking the right skills
One of the biggest mistakes owners make is assigning roles based on assumptions. Many think their teenage or college-age relative should handle social media because they’re always on Instagram. Being a social media user is not the same as being a social media strategist.
Social media strategy isn’t about posting photos or going viral. It’s about campaigns that line up with business goals. Understanding analytics. Crafting messages that connect. Building trust. Driving sales. Assigning the wrong person to that role results in wasted time, poor results, and missed opportunities.
If you’re considering assigning someone to manage your social media — or any specialized role — evaluate whether they have the strategic skills, not just user-level familiarity. Can they create a content plan that lines up with your business goals? Can they analyze performance metrics to improve results? If not, invest in training or hire a professional with the right expertise.
Preparing the next generation
The best leaders are developed, not appointed. Preparing a successor takes time, effort, and patience. It’s the most effective way to ensure a smooth transition.
An inn owner’s youngest daughter expressed interest in running the business but had little experience. Instead of promoting her immediately, the owner started her with smaller responsibilities. Managing the farmer’s market booth during the summer. Over the years she gained skills in scheduling, customer service, and logistics. By the time the owner stepped back, she had the skills, confidence, and respect of the staff to run the inn.
Identify a team member with leadership potential and design a six-month mentorship plan. Start with a specific area of responsibility — a small team or a key project. Schedule monthly check-ins. Gradually increase the responsibility as confidence and skills grow.
Unprepared leaders destabilize
Sun Tzu’s warning about commanders who can’t adapt is as true in business as it is in war. An unprepared leader isn’t just ineffective. They destabilize the entire business.
A bakery owner I know promoted a cousin to oversee marketing. He was enthusiastic but didn’t understand digital marketing. Campaigns fell flat. Sales stagnated. The owner restructured the team, appointing a qualified barista with a marketing degree. Within six months, sales were up 35% with stronger customer engagement online.
Assess your current leaders. Identify one recent situation where adaptability was critical. Did they pivot effectively or get caught off guard? Outline training — scenario-based workshops, coaching — that could improve their ability to respond.
A culture where leadership is earned
A culture where leadership is earned, not inherited, keeps your business adaptable and resilient.
Prioritize transparency. Share the criteria for leadership roles with your team.
Invest in development. Provide the resources and training that help employees grow into leadership.
Celebrate merit. Publicly recognize and reward the leaders who excel based on performance.
Sun Tzu wrote, “Victorious warriors win first and then go to war.” Cultivating capable leaders before they take charge sets your business up for long-term success.
Audit your current leadership appointments. Are they based on merit? Build a leadership development plan with clear criteria, training opportunities, and mentorship. Regularly assess performance and make adjustments.
The success of your business depends on its leadership. Make thoughtful decisions. Prioritize preparation. Build a legacy of strong, capable leaders.
About the Author
Ron Tester is a physical therapist with thirty years in the field. He built, grew, and operated a multidisciplinary home health company employing PTs, OTs, and SLPs through a successful exit. He now coaches outpatient PT, OT, and SLP clinic owners on operating at the owner level. Certified Executive Coach and Book Yourself® Solid Coach. Learn more at https://rontestercoaching.com/about.