The House of Saud demonstrates how not to manage succession

The world has been prepared for King Abdullah of Saudi Arabia to die ever since December, when he was admitted to hospital with pneumonia. On Friday morning, to the accompaniment of mournful verses from the Quran, Saudi state television announced that the 90-year-old had breathed his last.

It has been an object lesson in how not to handle a succession. It’s true that most family businesses are not in the same league as the Saudi royal family. Few were founded in 1744. Fewer still have 15,000 members (that a core of 2,000 holds most of the power hardly makes it slimline). But family businesses can learn from them.

For a start, the House of Saud is a clear example of “key man risk”. King Abdullah exuded the aura of being all-powerful, although of course dozens of others have power in the Kingdom. Now Abdullah is gone, it’s very unclear who is in charge.

His successor Prince Salman bin Abdulaziz al-Saud, who is 79, is rumoured to be suffering from dementia, immediately appointed his half-brother Prince Muqrin bin Abdulaziz, as crown prince, and Mohammed bin Nayef as deputy crown prince. 

At 55 Mohammed bin Nayef is vaunted as a daisy-fresh member of the new generation, which tells its own story about Saudi Arabia’s gerontocracy. But who is really in charge? And who says so? It’s not obvious, which is very unsettling.

Perhaps the most important character in all this is not a family member at all, but Saudi oil minister Ali Al-Naimi, who has been in post since 1995 and recently said he doesn’t care if oil falls to $20 a barrel. According to energy analysts he recently wanted to step down, but was persuaded to stay by the old king. State TV said he will stay, but he is 80 and can’t go on for ever. What does that mean for policy? Who is his successor?

And what about the next generation? Mohammed bin Nayef led the defeat of a militant insurgency in Saudi Arabia a decade ago, but is hardly a moderate. What about his peers? After the Arab Spring the House of Saud made some concessions to its subjects. But is the next generation more liberal than the old one? What do they think about Saudi planes bombing ISIS? The uncertainty is problematic. 

The House of Saud is doing its best to radiate continuity, of course, but its essential characteristic is opacity, which is far from reassuring. Stakeholders – which given Saudi Arabia’s hold over the oil markets and influence on the Arab world includes everyone on the planet – are nervous.

This troubling succession reminds us that a generational transition should be a process, not an event. Older family heads – whether in charge of a geopolitically vital country or an adhesive manufacturer in Dusseldorf – should leave the scene slowly and surely, taking an ambassadorial role and visibly supporting their successor. Clinging to power until you die is a recipe for disaster.

The House of Saud is deliberately secretive and complex, which is designed to create fear and mistrust. If that is the impression your business wants to project, then fine. If not, then there are lessons to be learned.