Three Factors Behind the Failure
In an intentional attempt to avoid as much dramatic narrative as possible (watch Sonicgate for the full story), here are three factors that lead to the Sonic’s demise:
- Poor communication. Miscommunication was everywhere: Breakdowns between the selling group & buying group, lawmakers & owners, the league & fans, fans & lawmakers, fans & owners, the league & lawmakers. Stakeholder communication was often disjointed or worse, misleading, which accelerated an already volatile situation. Howard Schultz, leader of the selling group, said keeping the Sonics in Seattle was his “responsibility as part of the public trust.” Clay Bennett, leader of the buying group said, “we will act in good faith and give our best efforts to develop a successor facility.” Both statements were the epitome of very, very poor communication.
- Breakdown in trust. As communication lines became strained, negativity lead stakeholders to entrench deeper into their positions. (to the benefit of the pro-OKC crowd.) The situation was clearly in a fragile state, but trust evaporated when correspondence revealed conflicting motives. The leading culprit was an email string that revealed the new ownership group’s goal to move the team to Oklahoma City, despite public statements announcing their intention to keep the team in Seattle. Seattle City Officials stepped in to provide temporary hope via the judicial process, only to squash trust by brokering a payday deal that ended Sonics fans attempt to keep the team in Seattle.
- Failed leadership. The fatal combination of poor communication and erosion of trust eliminated any opportunity for effective leadership. As blame was shifted from known enemies to perceived allies and everyone in-between, contingency after contingency dried up. On September 3, 2008, the Oklahoma City Thunder made their public debut.
Hard (wood) lessons for Financial Advisors
As the average age of the financial advisor increases, prioritization of succession planning should follow accordingly. Clients may not be wearing the advisor’s jersey, but they’re clearly at the behest of a well-orchestrated succession plan. According to Cerulli, roughly 118,000 advisors are planning to retire within the next 10 years. Nearly 1/3 of those advisors have no succession plan in place signaling trouble on the horizon. A lack of succession plan is obviously problematic, but what about advisors with a succession plan…Is it possible that their peace of mind is flawed?
Succession plans where both parties say the “right” words and backed by the “right” contacts don’t always work out. There are countless stories of merged advisory practices that end up disbanding after roughly four-to-five years because of strategic and/or personality differences. There are even more cases of underlying turmoil between multi-generational members in the same firm:
Generation 1 (G1): “That’s not the way I built the business.”
Generation 2 (G2): “That’s not the way business is built today.”
The foundation of successful succession planning is rooted in the same principles as successful client relationships: communication, empathy, and trust. As G1 advisors embrace succession planning, the application of these tenets need to extend beyond client relationships to include their G2 team members. Increasing communication, while being mindful and empathetic of the other person’s perspective, deepens trust and facilitates succession success.
Winning (markets) cures all ills.
The Sonics’ last season was the worst in franchise history: 20 wins and 62 losses. Would a winning record have swayed public opinion enough to broker a different outcome? We’ll never know. But the poor product on the court facilitated an easier path toward the one-way ticket to Oklahoma City. Financial markets fuel the “scoreboard” in wealth management. Since the credit crisis, we’ve been on quite a winning streak.
Monday Morning Joe
A coffee cup’s worth of blog post delivered the first Monday of the month. Grab a dose of creativity and perspective before you hit the bottom of your mug.