In his October 4, 2015, NY Times column “Corner Office” Adam Bryant presented his interview with Gary B. Smith, CEO of the Ciena Corporation: “Gary Smith of Ciena: Build a Culture on Trust and Respect.” In it Smith shares some of his history, his early influences and his experiences as he took on his first management roles. In the beginning of his career Smith recalls, he managed people by the numbers. If they hit their numbers they were fine, and if they failed to hit them, they were not. Then, at a certain point, there came a kind “ah ha” moment that changed his thinking. From then on he viewed his role as facilitating and creating an environment that people could be successful in.

It struck me that the role of facilitating and creating an environment that will nurture the success of next generation leaders is relatively rare within family businesses.

In defense of family businesses however, it’s a role not often found in businesses of any kind. Perhaps it’s an anomaly, found in the character of particular individuals. But this role is vital for family businesses that are interested in building a multi-generational legacy.

Sounds too vague as a strategy? Smith offers a first-step towards achieving it. He stated that upon understanding his role of facilitating others’ success, he learned to listen more than he talked– a working axiom for success in any kind of relationship.

If you have any thoughts or question about your own listening skills or those of others in your family business, contact through my website.

This is the first of three important management principles I pinpointed while reading Adam Bryant‘s interview with Gary B. Smith. I’ll share my thoughts on the second: “It’s all about people” in next week’s blog entry.

A point is reached in the life of a family-owned or closely-held business where in order to continue growing it needs to begin a process of transitioning from an owner-centric to a management-centric enterprise. This is one of the top challenges for businesses where family members maintain tight operational controls.

In order to move forward from this point new systems and procedures need to be established in areas of organizational structure, fiscal management, operations, marketing and sales, business development and even in the way a receptionist answers the phone.

I recently joined business attorney Nina Kaufman on a podcast hosted by Business Exponential.com, where we discussed this challenge and ways to meet it. Click here to listen: Scale From Owner-Centric to Management-Centric with Rick Raymond.

I would like to hear your thoughts and questions about this and other family-business challenges and concerns. Please contact me though my website.

Seth Godin recently wrote in a blog that motivators for important actions come down to either fear or dreams http://sethgodin.typepad.com/seths_blog/2015/09/dreams-and-fears.html.

Godin is writing from the perspective of how marketing is positioned. Fear and dreams are equally strong motivators in family businesses, especially during times of impending transition.

Both parents and children can experience fears of being left out, of lack of purpose, inadequacy, being rejected, not being needed, becoming powerful, supplanting a parent, loss of financial security, or dying.

Dreams focus on the future and help us see beyond our fears. The catalyst for a successful transition lies in the answers to: When your grandchildren take over, what do you want for your family and business? What do you want your children to be like? What do you want your family and business to look like? How do you want them to be standing with respect to others and within their community?

Drop me an email or give me a call if this is a concern for you in your family or business.

…or we are a buggy whip or any other product whose purpose is largely irrelevant to the needs of the current marketplace.

Family businesses, built on the vision and hard-work of their founders, may no longer be viable a generation or two later because of the inevitable changes in the external business environment. Herein lies the danger of failing to envision a future for the business apart from the founder’s dream.

Building a culture of innovation into a family business can be challenging and require multiple approaches. To meet this challenge successfully, the stakeholders must come to grips with the fact that change needs to occur in order to save both the business and the family’s legacy.

However the need for innovative change may not be obvious. Even if seen, it may be resisted by the incumbent generation. Developing a culture that continually welcomes innovation as part of your ongoing business strategy–in talent acquisition, systems development, methodology, risk taking–will strengthen your possibility for success as a multi-generational family business.

A family business has been established for many years. It has been guided to a level of maturity and success and is firmly established. For the leader of such a firm, focus now shifts from financial concerns and growing the business to an emphasis on human contact and relationships.

Instead of seeking outside professionals whose primary goal is helping the business maximize its financial wealth, older leaders of family firms seek the advice and emotional support of an inner circle of friends and relatives. Close relationships take on central importance, as do family harmony and ensuring an enduring legacy.

Understanding this shift is critical for the success of aspiring next-generation leaders and their advisors.

This past Spring my daughter completed two years teaching high-school math in the Dallas-Fort Worth area with Teach For America https://www.teachforamerica.org. She is staying on another year so she can see the first class she taught graduate. Now in her third year, she is participating in a semester-long professional-development program sponsored by Teaching Trust http://www.teachingtrust.org/.

She showed me the resource they are working with: The Speed of Trust, by Stephen M. R. Covey, whose father, Stephen R. Covey, wrote The Seven Habits of Highly Effective People.

So many family enterprise stories come to mind with trust as a factor–the good, bad and in-between. Family businesses built on strong trust among family members are going to win out over any other kind of business, time and again.

Authenticity.

In a recent posting on Tech Crunch Network Justin Rosenstein writes that Apple and Google, both having reached the pinnacle of business success, are very different companies in their business style and leadership. What they have in common though is a culture of authenticity that is the source of their success. Rosenstein writes that what all great organizations and all great leaders share is self-actualization—working in a way that’s authentic to who they are. This requires, he adds, that they deeply know who they are.

Authenticity is largely believed to be inherent in family enterprises. And nothing could be more important for any business that put its family name behind who they are and what they do. For some family enterprises authenticity may be difficult to maintain as the generations transition. But this need not be so.

Rosenstein identifies six practices that a business can undertake to achieve authenticity. The top three are:

1. Achieve clarity of purpose
2. Determine and live your values
3. Define your brand’s personality attribute

To read his article and all six practices: http://techcrunch.com/2015/08/05/the-one-thing-every-great-company-has-in-common/

This is a question that should instill a sense of pride. The entrepreneurial spirit that started the family business is both a touchstone for the family and a competitive advantage in the market place. It is a story generally built on clear values, creative problem solving, experimentation and hard work.

Regrettably, most family businesses fail by the third generation, not for want of any of these qualities, but from changes in time, place, and markets.

Family businesses that include ongoing innovation as part of their strategic planning, similar to the spirit in which the business was started by grandpa and his brothers, are ensuring their multi-generational longevity.

Quote attributed to economist and entrepreneur Paul Michael Romer https://en.wikipedia.org/wiki/Paul_Romer.

It’s natural behavior that when things are good, business is growing and we are making money, we pay less attention to costs. It’s a time when expenses can creep upwards, but don’t matter significantly. Eventually though, they may get out of hand precipitating a crisis; which is, in Romer’s view, a terrible thing to waste.

I often use the metaphor of going down a river on a raft and encountering unexpected rapids. How do you react? In the rush of adrenaline do you panic, freeze up? Or do you act to maintain control–tie down what you need and discard what you don’t; keep the front of the raft headed downstream; steer away from rocks. In this crisis your ride down the rapids can be debilitating, even disastrous. Or it can be safely negotiated, even exciting, exhilarating–an experience that leaves you stronger to meet challenges ahead.

 Axiom and Challenge in Family Businesses

In discussions about successful multi-generational family businesses I frequently state what I believe to be an axiom: “each generation needs to respect the past and keep an eye on the future.” Challenges, often expressed, to achieving this ideal are a loss of perspective, and even worse, a sense of entitlement in our children–a result of giving them what we ourselves did not have–wanting them to have a better life than we did.

This is touchingly illustrated in a post (now removed) from This Blew My Mind http://www.thisblewmymind.com, shared by friend Joseph Meerbaum on his Linkedin page on June 21, 2015.

A young man went to seek an important position at a large printing company. He passed the initial interview and was going to meet the director for the final interview. The director saw his resume; it was excellent. And asked, “Have you received a scholarship for school?”

The boy replied, “No.” “It was your father who paid for your studies?” “Yes.” He replied. “Where does your father work?” “My father is a Blacksmith.” The Director asked the young man to show him his hands. The young man showed a pair of hands soft and perfect.

“Have you ever helped your parents at their job?” “Never, my parents always wanted me to study and read more books. Besides, he can do the job better than me.” The director said, “I have got a request. When you go home today, go and wash the hands of your father and then come see me tomorrow morning.”

The young man felt his chance to get the job was high. When he returned to his house he asked his father if he would allow him to wash their hands.

His father felt strange, happy, but with mixed feelings and showed their hands to his son. The young man washed his hands, little by little. It was the first time that he noticed his father’s hands were wrinkled and they had so many scars. Some bruises were so painful that his skin shuddered when he touched them.

This was the first time that the young man recognized what it meant for this pair of hands to work every day to be able to pay for his study. The bruises on the hands were the price that he paid for their education, his school activities and his future.

After cleaning his father’s hands the young man stood in silence and began to tidy and clean up the workshop. That night, father and son talked for a long time.

The next morning, the young man went to the office of the director.

The Director noticed the tears in the eyes of the young man when He asked him, “Can you tell me what you did and what you learned yesterday at your house?”

The boy replied, “I washed my father’s hands and when I finished I stayed and cleaned his workshop.”

Now I know what it is to appreciate and recognize that without my parents, I would not be who I am today. By helping my father I now realize how difficult and hard it is to do something on my own. I have come to appreciate the importance and the value in helping the family.

The director said, “This is what I look for in my people. I want to hire someone who can appreciate the help of others, a person who knows the hardship of others to do things, and a person who does not put money as his only goal in life”. “You are hired.”

A child that has been coddled, Protected and usually given him what he wants, develops a mentality of ” I have the right ‘ and will always put himself first, ignoring the efforts of their parents. If we are this type of protective parent are we really showing love or are we destroying our children?

You can give your child a big house, good food, computer classes, watch on a big screen TV. But when you’re washing the floor or painting a wall, please let him experience that too.

After eating have them wash the dishes with their brothers and sisters. It is not because you have no money to hire someone to do this it’s because you want to love them the right way. No matter how rich you are, you want them to understand. One day your hair will have gray hair, like the father of this young man.

The most important thing is that your child learns to appreciate the effort and to experience the difficulties and learn the ability to work with others to get things done.