06/4/20

The Passage In-Between

Below is the letter I sent to my graduating seniors at Baruch College’s Zicklin School of Business in New York City, where I’ve taught Family Business Management and Entrepreneurship for the past 10 years.

As I was acknowledging the students’ accomplishments and, upon graduation, their facing a transition into the unknown, I thought of parallels to family businesses I have known. They too managed transitions. Both the graduating students and the family businesses have come to that place where one door closes and another has yet to open. For the family business, this is where the parent, as the incumbent generation, and the adult child, as the rising generation, reflect on past accomplishments and encounter a sense of an uncertain future.

For family businesses, these are times of opposing life stages, where the parent’s tolerance for risk decreases and the child’s desire to bring change increases. Here the parent is transitioning from ‘doing’ the work of the business to being a ‘memory holder.’ At the same time, the child is transitioning from a supportive role to one of leadership — to being held accountable for the future of the business, the family, and the positive continuation of their legacy. As the transition occurs, there opens an ‘in-between passage’ wherein the role changes are not yet recognized or feel correct. This is a ‘liminal space’—a place of both uncertainty and opportunity.

Here is my letter to my graduating class:

Congratulations to those of you graduating. 

I expect when you first started college, you could not envision how your graduation would be. You may have had, upon starting college, a feeling of entering unknown territory – a liminal space – an in-between place where one door has closed and before another opens. 

Then over time and after hard work, you settled in, moving forward and upward in seniority among college students. Suddenly the time has come, and another liminal space appears. 

2020 continues to be a year unlike any other any of us have experienced prior. Anticipations and expectations evaporated in front of our eyes, replaced with ambiguities, uncertainties, and even, perhaps, chaos. And the year is not over yet. 

As entrepreneurs, we need to be able to accept the ambiguity within liminal space. It is the space where normal and familiar activities cease. It is the threshold if not substance upon which creativity and innovation thrive. 

Trite as it is, the future is yours. And remember; as you embark on your new ‘you,’ you may fail at times. It’s what we do. Remember then the imperative truism of entrepreneurship — that the creative process succeeds for those willing to fail fast and fail often, for creativity is a cyclical and spiral process that can require constant re-invention. If there is any lesson to take away, this may be it.

 

05/24/20

Challenges Facing The Artisanal Family Business

Artisanal family businesses are found in many areas of our economy today. The common thread is that their craft is passed from generation to generation.

Some of these artisanal family businesses are struggling under the weight of newer business models. Wanting to see a way forward as well as sustain their legacy, intergenerational family members can experience conflicts when confronted with calls for innovation and entrepreneurial action. A stalemate is dangerous to all.

In this light the axiom, ‘respect the past while keeping an eye on the future’ comes to mind. Respect for the values, accomplishments and legacy that are the foundation of the family is a force that can propel future success, and equips the family with a vision of what the next generations might realize.

04/24/20

Shifting Sands

I’m now going into my second month of ‘sequestering,’ a term I like better than ‘staying-at-home,’ or ‘social distancing’ (a misnomer because my social interaction has zoomed along with Zoom).

Thinking through topics for this week’s blog I settled on the quality of empathy among leaders in times of uncertainty and stress. Writers on business leadership in times of crisis call attention to their being proactive, keeping their team members safe, and providing them the same amenities they want for themselves: the ability to work remotely and the tools to do so. They also stress the importance of communication and transparency regarding plans for employee lay-offs.

The stressors in family businesses are more complex. They are the products of the interconnection and interplay among the family, the business and the equity members—their conflicting needs and demands. Essentially there are three teams that need taking care of instead of one. Here, honest communication is key. It’s important to clearly share among all concerned what you know; what you don’t know; what actions are being considered, and decisions as to which will be implemented. And it’s particularly important these days to communicate with an emphasis on empathy.

Our understanding of COVID-19 is changing daily. We continue to travel into uncertain terrain, trying to figure it out as we go. In my conversations with family businesses undergoing stress in these unprecedented times I have reminded them of their shared values and asked that they exercise empathy. I advise them to give each other slack—so as to remain balanced—as they travel together in our present landscape of shifting sands.

04/11/20

COVID-19: Responding to the waiting game

As the COVID-19 pandemic sweeps across the world and America, I’ve felt that I could not post a blog without addressing this unprecedented-in-our lifetime pandemic.

While waiting to see how the coronavirus pandemic and sheltering-in-place will play out, and grappling with my own anxiety and uncertainty, I paused my blog and newsletter for a while. I wanted to prepare a response that’s reflective of my own experience; and not to offer an interpretation of the information that’s changing as a fast as it’s being presented.

Professionally I’m a resource and advocate for family businesses. I teach best-management practices of multi-generational family enterprises; work with family members on improving family dynamics; advise on business growth and entrepreneurial leadership. Personally, I’m a husband; father; believer in higher purpose in our lives.

In my virtual-video conversations with clients I see people grappling with uncertainty, yet plowing ahead. And I see others for whom the pandemic is overwhelming, if not paralyzing. I understand both reactions.

Settling into our new reality, my internal strategy for maintaining a practical, emotional grip on the situation has become, “I can do only what I have control of: washing hands, social distancing, and doing all I can to keep my family safe and healthy.”

As I write this, there appears to be a glimmer of light. The number of new cases is stabilizing in major cities around the world. Still there remain precautionary statements that the disease might return. We should not let our guard down too soon.

I’m grateful to and appreciative of the many first responders and healthcare providers who continue to put their lives on the line for us. And I appreciate and support those businesses that provide essential goods and services we all need to in order to survive.

We are all human. We are all striving to keep our families safe, sane and healthy. I am striving to remember all the lessons I’m being taught by this pandemic. An axiom pertaining to family businesses transitions comes to mind: “respect the past and keep an eye on the future.”

03/14/20

Family Business Under New Management

Seth Godin recently posted a blog entitled: Under New Management. In it he wrote:

“That’s a pretty silly thing to write on the store window.

It says to loyal customers, “watch out, someone new is in charge.”

And it says to strangers and the apathetic, “this place failed.”[1]

How often do you see a sign on a store reading: “Family Business: Under New Management?” We rarely do. But what would it mean if we did?

The most likely interpretation is that the business transitioned from one generation to the next. That’s significant. But there are other important ways a family business can come to be under new management.

The three-circle model of family business developed by Renato Tagiuri and John Davis in 1978, describes three interdependent and overlapping components of the family business system: the business, the family, and the ownership. In each of these, new learning, under new management can occur every day.

Business owners recognize improvements can always be made to their management and operational practices. But the family and ownership subsystems are often overlooked.

We have come to recognize that multi-generational success of family business is dependent upon a co-evaluation and perhaps “new management” of each of these systems, and their complex interactions.

Godin continues: “If you think about it, though, every day, every store is under new management, if we define ‘new’ to mean, “we learned from what happened yesterday.”[2]

[1] Under New Management. Retrieve from: https://seths.blog/2020/03/under-new-management-2/

[2] Ibid.

02/29/20

Envisioning Family Legacy

While consulting with the head of a family business, I frequently raise the subject of “legacy.” It comes up in connection with strategies for helping family-businesses move along the path of intergenerational transition; toward multi-generational success. Often however, at the mention of this word, I’m met with a sort of attention disconnect. For my client, the challenges of managing the business day-to-day overshadow any thoughts of building a legacy. It seems that this short-term focus creates a sort of mental cloud that diffuses any comprehension of what legacy is. This cloud cover affords no vision of the importance of legacy, or of its function or its range. It’s as though contemplating a legacy for future generations demands too much energy right now, and is seen as a luxury.

What is it about the idea of a legacy that’s so daunting? According to the Merriam Webster online dictionary the noun “legacy” means:

1: a gift by will especially of money or other personal property: BEQUEST// She left us a legacy of a million dollars.

2: something transmitted by or received from an ancestor or predecessor or from the past[1]

This kind of disconnect is not unreasonable when legacy is perceived only according to these definitions. But in my experience legacy in family business is far less strictly defined. It’s much broader, and in many respects less tangible. It includes family history, values, stories and reputation. It reflects the family’s accomplishments and bears witness to its challenges. Legacy is the imprint left behind by previous generations for following generations to learn from and experience.

It’s said in family-business-advisory circles that legacy springs from seeds planted in a garden by earlier family members who, while they will never see the resulting fruit, provide for future generations. In that sense each family business’ legacy exists even before its birth.

It may be helpful then, for family-business leaders to understand that their task is not to create a legacy from scratch but rather to sustain the stories that inspire family members across generations, together with a shared set of attitudes, values, goals and behaviors that characterize their own particular family.

The result is a multi-generational culture of harmonious family relationships, shared wealth, ownership, meaning and purpose.

[1] https://www.merriam-webster.com/dictionary/legacy

 

02/16/20

This Is What I Want

While teaching my class on Family Business Management at Baruch College in New York City, I’ve had the opportunity to draw a parallel to the well-known axiom related to real estate—location, location, location. When applied to family businesses, it’s communication, communication, communication.

Critical for any business as well as any relationship, in family businesses the mandate for communication is needed to address the challenges of business operations, ownership, family dynamics, family-business goals and shared values.

Lines of communication are often thought of with regard to these collective concerns. But there’s an aspect of communication in a family business that’s not commonly addressed, and yet, if neglected, can precipitate internal discord and even cause the business to ultimately fail.

In a recent interview with Tharawat Magazine, consultant and author Chris Yonker touches upon the necessity for individual family members to feel free to communicate, and pursue, their own interests and individual values:

“Yonker’s outlook pushes for the assignment of roles within the organisation or otherwise based on interest rather than obligation or expectation; to Chris, success is the alignment of purpose and place.”[1]

Pressure upon next-generation family members to join the business can be obvious, or subtle. They can be driven by a sense of duty; a feeling of indebtedness to the family history; parental expectations. Often they feel deeply inhibited with regard to saying what role they are genuinely interested in; what kind of future they want for themselves. According to Yonkers: “Those in line to take over must have the opportunity to speak up if their interests lie elsewhere and, in doing so, bring clarity to the question: who is most fit to lead?”[2]

The wrong person in the wrong job can create many kinds of problems, particularly when they are placed in a leadership position. They may be ineffective, causing confusion, conflicts on the job and among family members, and even loss of valuable employees and necessary talent.

It does no good and potentially great harm for the business or the family to force a young “heir apparent” into a role they are not interested in, or unfit to fill. Given the complexity of the issue and of family dynamics in general, uncovering these types of concerns may necessitate calling in a skilled family-business consultant.

[1] McCabe, M. (2019, October 15) The Path to a Harmonious Business. Tharawat Magazine. Retrieved from https://www.tharawat-magazine.com/sustain/yonker-harmony-family-business/#gs.cbp8bi

[2] Ibid.

01/31/20

Professionalizing The Family Business

Professionalizing a business means to change its model from owner-centric to management-centric. A business dependent upon the owner’s presence to generate revenue and profit undergoes a metamorphosis into one which operates according to established systems and processes. Responsibilities to keep these systems on track are delegated to staff experts. This model allows the owner to focus on what they do best; that which brings about the most progress. Fast-food restaurants are commonly cited examples of business systemization. Staff members are trained to run the business and produce a consistent product.

In an owner-centric business nearly everything revolves around one individual. The problem with this model is that we all have the same 24 hours a day and the 7 days a week in which to get our work done. As the business grows, so grows the work load. Ultimately it becomes too large to be successfully managed by a single individual. After reaching this point, continuing as an owner-centric business results in stagnated growth or owner burn-out, or both.

Understanding the significance of creating systems and processes is a necessary step in undertaking professionalization. Such operations, when in place, enable the business to respond quickly and appropriately to the swift changes in today’s business environment.

Young family businesses—first and second generation—may typically struggle with professionalization, just as any young non-family business might. One may think, however, that a 125-year-old family enterprise will have long ago accomplished professionalization. This is not always the case. Myriad factors influencing business activities today may leave next-generation leaders behind. What worked to bring the business into the twenty-first century may not be what’s needed to continue into the twenty-second.

For all business types on the brink of the professionalism metamorphosis, things get complicated. For family businesses it’s even more complicated. They are built on an interacting three-part structure: the business, the family and the ownership. Clearly the business system needs to be professionalized. But the family system needs to undergo professionalization as well. I will address this in upcoming newsletters.

01/4/20

Family-Business Ikigai

Over the holidays I was given a copy of Ikigai, The Japanese Secret to a Long and Happy Life, written by Héctor García and Francesc Miralles.

Ikigai (生き甲斐) is a Japanese concept meaning “a reason for being.” The word, translated into English roughly means, the “source of value in one’s life;” the “thing that you live for” or “the reason for which you wake up in the morning.”[1] The literal meaning is contained in the Japanese characters. 生き, “life” and 甲斐, “to be worthy.”

As I read the book, my uncle Nick came to mind. I recognized then the importance of Ikigai to an individual in a family business like ours. Uncle Nick was a master carpenter, and through his craft he provided well for his family. He was also a mentor, a bearer of family values and the custodian of a strong work ethic; in nearly 40 years he rarely missed a day’s work. I recognize now how profoundly practicing his craft and providing for his family gave him his purpose, his reason for being. Sadly, he passed away within 2 years of retiring. We’ve felt his loss keenly. Looking back, I see that one reason for his untimely demise was that he no longer had a driving reason for continuing to live. Nor had he thought to try and find one.

To understand the basis for living a long life the authors of Ikigai studied communities around the world in which there was a population of individuals 100 years of age or more.

They found that these individuals had purpose and remained active—mentally, physically and spiritually. They found people who had Ikigai.

They found centenarians that were doing:

  • What they loved
  • What they did well
  • What the world needed
  • Work that could make a difference

The found individuals whose lives were about connecting, creating, serving, teaching, building, healing and nourishing others.

It’s widely known that living with purpose and meaning protects against stress and illness.

In western culture, retirement too often carries with it a sense of abandonment of purpose. This was the crisis my uncle experienced. In Ikigai, retirement is seen as a transition, if not an evolution. The process of discovering what to do next is built on a group of principles: passion, values, what the world needs, where you can make a difference and more. (See figure.)

Helping a leader, who has been at the helm of a family business for many years, discover a new purpose—that which comes next—is an important practice that successful multi-generational family businesses undertake. It’s a critical step for preserving the family’s tangible and intangible assets. Importantly it also fosters a significant sense of fulfillment for all family members, supporting successful transitions across generations.

[1] https://en.wikipedia.org/wiki/Ikigai

12/8/19

Commitment In Family Business

One of the secrets of successful multigenerational family businesses is their attention to three critical qualities within the family as a whole, and as possessed by the person who will be their next leader. These are: commitment, capabilities, talent for leadership. I intend to discuss each of these over the course of my next few blogs and newsletter postings, starting today with ‘commitment.’

Family business advisors often look at ‘commitment’ from the point of view of what motivates next-generation members to join the business. This is often assessed in terms of four factors. One: the young person knows and loves the business and the opportunities it provides. Two: the person knows they are expected to join the business. These expectations can escalate to bona fide pressure to do so. Three: Joining the family business is seen as their best alternative. Four: They have a sense of being dependent on the family and the business.

It’s always useful to define our terms. So what does the word ‘commitment’ mean? A visit to Merriam Webster online brings up this first set of definitions:

a: an agreement or pledge to do something in the future

b: something pledged

c: the state or an instance of being obligated or emotionally impelled

Some commitments are major, like marriage. Here there is a public statement of intention to fulfill the obligations inherent in the relationship, and to give priority to these obligations over lesser concerns. This commitment invokes a pledge by each partner to learn the tools necessary to support the relationship.

A commitment to a family business is also major. Members of family firms often have high levels of emotional attachment and are pledged to the firm’s success. They too are committed to learning the tools needed, in this case, to sustain the business.

For successful multigenerational businesses this commitment includes dedicating time and effort to consciously and systematically developing their next generation of family members and leaders. These strategies engender emotional attachment to the family business. This helps ensure that upcoming generations of family members make a commitment to join the family business from knowledge, love and appreciation, thus shaping its future.

11/23/19

Understanding Values, Vision and Mission In Family Business

Many businesses write their vision and mission statement so they read similarly, just with different words. This shows a lack of understanding of these two important guiding business principles. They may also be missing a clear statement of their values; the bedrock upon which a sustainable business is built. Once clearly articulated a vision and mission statement can be crafted

It’s important to make distinction between a vision and a mission. I hold that values are what’s fundamentally important — to an individual, a family, and as an extension, to their business. A vision is what the family aspires to build. Mission is a statement of how the family and the business will impact and share with the larger community. Together they clarify intention and facilitate trust within the family, leading to profitability and success across generations.

Remember Joan of Arc’s famous battle cry: “free France” (libérer la France). She states her mission as an action. The action is the fulfillment of her vision, “a free France.” Her driving value: freedom. Built on these, her strategy was to enroll the farmers. Her tactic, to cut the British supply lines. She succeeded because her mission was larger than herself.

One way to understand the larger purpose of your business’ mission is to ask yourself whether you would share it with your stakeholders (i.e. employees, client, customers, the public, etc.)

As an illustration: A bodega owner selling foods from his home country within his New York community stated his mission was to open two more stores. Asked if he would put that on the wall behind the check-out register, he demurred. He realized that more stores in and of themselves would not add value to his customers’ lives.

After considering the distinction he recognized that his mission, larger-than-himself, was to provide his New York community with the foods they remembered and enjoyed in their home country. In making the distinction he was enrolling his customers in his mission.

11/2/19

Generosity And Connection

Sitting down to write today’s blog piece I was thinking about several concepts related to family business. Among these, the difficulty of choosing the right successor, the significance of shared family values, the importance of stewardship (the passing on of family assets—wealth, reputation, emotional well-being, spirituality—in better condition than when you received them.)

As I do at times, I turned to others for ideas. In this case I found what I was looking for in a blog by Seth Godin.

Godin’s article Bread and Book, is not intended to be a comment on family businesses. But it’s one of the best—and more tragic—stories I’ve seen of succession, family values and stewardship https://seths.blog/2019/10/bread-and-books/. It’s a story of world-famous baker Lionel Poilâne and how Godin and Poilâne met and became friends.

Describing what he learned from his time with Poilâne, Godin wrote: “Ideas, bread and books are all the same–they’re better when they’re shared. The posture of generosity and connection replaces a mindset of scarcity, and Lionel modeled this philosophy every day.” From his friendship with Poilâne Godin learned about the magical intersection between generosity and idiosyncrasy.

Tragically, Lionel Poilâne and his wife were killed in a helicopter crash, leaving behind two teenage daughters. It’s here that the story enters the realm of family business.

The elder daughter, Apollonia, immediately stepped up and took over the running of the bakery. She’s made a success of it, with no diminution of quality. And she’s recently published a book.

In Poilâne: The Secrets of the World-Famous Bread Bakery, Apollonia relates her family’s story. It begins with her grandfather and now flows to the fourth generation. She writes: “The seeds of this book were planted by my father and mother in my sister and me. They are seeds of passion, determination, and love for our craft. My sister, Athena, helped me germinate those seeds, and with the birth of her son, we now have another generation with whom to share our family story.”

Family values, succession, stewardship. It’s all there for the learning,

10/12/19

On Taking Initiative

“The only way to get initiative is to take it. It’s never given.”[1]

That’s the statement Seth Godin begins with in “Initiative” his October 10, 2019, blog entry. Initiative would seem indispensable for success in business. But I’ve often found it lacking among family-business leaders when it comes to planning for a multi-generational future.

Over the course of my career as a family-business consultant, I’ve spoken with heads of third- and fourth-generation family businesses about their plans for transitioning the business to one of their children. I’ve asked what they thought the business and the family might look like when their children are leading them.

In answer to this question I’ve been told by that their focus is on surviving, one day at a time. They told me that thinking about the future is not possible right now. Of course, I’m not arguing with the importance of their assuring survival. But I’m convinced that for them, thinking about the future is less ‘impossible’ than they say, and more ‘uncomfortable.’

That’s unfortunate. And it takes initiative to go beyond this. But…

“From an early age, most of us were taught to avoid it. Do your homework. Take out the trash. Wait to get picked. Wait to get called on. Become popular. Fit in. Maybe stand out, but just a little bit. Failure is far worse than not trying.”[2]

Successful multi-generational family businesses recognize the need for developing next-generation leadership early. They’ve built in the ‘initiative’ to do so.

The initiative for planning succession in a family business starts simply—with a conversation. Then another and another. These are big conversation to be sure. Together the family learns about itself, its values, its strengths and weaknesses, and about its vision for future generations.

These conversations can be daunting. They can be uncomfortable. They can be confusing. But to build generations of family-business survival and success they must be initiated.

 

[1] Seth Godin. Initiative. https://seths.blog/2019/10/initiative/

[2] Ibid.

10/6/19

Family Businesses Have More Women Leaders

According to the Pew Research Center, the percentage of female Fortune 500 CEOs reached an all-time high of 6.4 in 2017 (32 out of 500) and fell to 4.8 percent in 2018 after several women left those roles. With women comprising at least 40% of the world’s workforce and half of the population, it’s remarkable the number of women CEOs is so low.

In family businesses, it’s a different story. Ernst & Young (EY) surveyed the largest family businesses from top global markets. They found that the world’s largest, longest-lasting family enterprises are advancing women further and faster that their non-family counterparts. Specifically, the survey revealed the percentage of women in top management to be 22% and board membership, 16%.[1]

The difference begs the question why.

One reason is found in the long-term perspective of family businesses. They are more conscious of preserving a family legacy than an individual’s legacy. This coincides with the fact that in a family business a CEO’s tenure is longer than in a public company—an average of 20 years compared to 6. EY suggests that longer CEO tenures may serve to break down conscious and unconscious biases against women by giving company leaders more time and opportunity to witness women’s contributions and accomplishments.

Family-owned businesses are also characterized by their focus on people and relationships, in addition to profits. Their more social and broader purposes help family members and employees engage with each other, the company and their community. These priorities are largely accepted as inherent in females leaders.

An article published by Women in Family Business (WiFB)[2], adds to this perspective, stating:

“Family businesses are often more socially conscious than their non-family business counterparts. They are more likely to hire people and less likely to lay them off, more likely to support their communities, and far more likely to be concerned with the long-term health of their communities. And they are not as concerned with quarterly cash flow and profits, likely because they operate with far less debt. This is truly a family-motivated attitude — what kind of leaders put their families at risk?”

Further, family businesses, by definition, blur the lines between work and family. And men today, more so than in past generations, are sharing the responsibility of balancing work and family obligations–issues that historically have been seen as women’s concerns. The result, more women in leadership roles, further balancing societal benefits.

[1] https://www.ey.com/en_us/growth/how-family-businesses-are-embracing-women-in-leadership

[2] https://www.womeninfamilybusiness.org/women_and_family_business_good_for_one_another/

09/21/19

SWOT Analysis And Family Business

A SWOT Analysis is a valuable strategic-management tool for helping businesses of all types identify strengths and uncover weaknesses. It pinpoints places where improvements are needed and spotlights pitfalls to be avoided. It’s also useful for identifying opportunities and threats. Entrepreneurs and their advisors use it to discover circumstances that stand in the way of goals. These can be marketing issues, management deficiencies, threats from competition and many other serious business challenges.

Family businesses differ from non-family businesses in that they function through the interplay of three subsystems. These are: the family, the business and the ownership, a/k/a equity shareholders. SWOT analysis of each of these subsystems provides insight into this interplay.

We at The Family Business Leader recently performed a SWOT analysis with a third-generation family business. In the ensuing conversation we discovered several strengths within the family. One is that the members enjoy strong and supportive relationships. Another is finding that a rising-generation family member had useful industry experience gained working outside of the family business.

The analysis also uncovered some weaknesses in the areas of management, leadership and entrepreneurship. Threats were identified, coming from changes in the industry. Opportunities were found for expanding sales.

Now in possession of a larger picture of their business and the environment in which it operates, family members—both those active and not active in the business—became encouraged to come together and act as an advisory group. Together they discussed the SWOT findings, acknowledged their strengths and developed plans for addressing their weaknesses. Their strong family relationships supported all members in the discussions.

As a direct result of their talks, the family member with outside experience was offered a position in the family business. This addition made it possible to take advantage of the opportunities to expand.

The SWOT analysis was also useful in shining a light on ownership issues reverberating within the family. The Ownership subsystem is the source of some of the thorniest issues in family businesses. Enabled by the experience of having productive conversations, the shareholders are now ready to plan open conversations about transferring ownership to the next generation.

These benefits and many more can be gained through SWOT analysis. Consider applying this invaluable technique to your own family business.

09/6/19

Paul Klee and Late-Life Productivity

In prior postings I’ve told stories about parents having difficulty letting go the reins of their family business, and handing them off to the next generation; stories of their inability to let go, even though the next generation is more than competent to run the business.

A major reason for this situation may be found in the realm of psychology. The business is what the parent has always done, and perhaps constitutes a large part of their identity. After relinquishing control of their business, the parent has nothing ahead to go on to. They may also find themselves face to face with a crisis of meaning. As sometimes happens, and perhaps even more than once in the course of our lives, what we have done before; what has gotten us to the present moment, no longer inspires us as it previously had. This crisis misunderstood, unexplored and unresolved, can become a point of contention within the family and can negatively impact the business as well.

An article I came across written by historian Christopher P. Jones about the painter Paul Klee: Paul Klee & Late-Life Productivity https://medium.com/@chrisjones_32882/paul-klee-late-life-productivity-a2ed7a4cab6f, seemed to have meaning in connection to this family-business crisis, and some thoughts that might point a way forward.

Klee was not the head of a family business, so the analogies to be drawn from his life are not direct. His late-life story is about innovation and growth in response to adversity; the Nazi takeover of his German homeland; his deteriorating health from an ultimately fatal autoimmune disease. He did not have a choice as to these circumstances, but he did have a choice in his response to them.

He never did stop what he had done since his youth. But through adversity he found new meaning in it; developed new methods. Adversity forced innovation and new directions. It resulted in his highest degree of lifetime productivity.

Jones writes “Paul Klee’s innovation stayed vibrant to the end. It was unceasing because he never let the sense having arrived take over. Search and growth were essential aspects of his practice, one complimenting the other, neither of them fully complete.” 

“Klee was always building on past achievements, often re-using sketches and half-finished compositions as the basis for new paintings. Inspiration of this kind is intimately related to growth.” 

I think the above statements are key. It’s important that a parent, in turning over control of the family business, not see this as a personal having arrived at the end. As Paul Klee found new expression through the updating of old sketches, and remarkably through the limitations of disease, a new life of growth and accomplishment can be born out of the hard work, skills, connections and wisdom built over a lifetime…so far.

 

08/16/19

The Hurdle Of Letting-Go

One of the biggest hurdles to overcome in the life of a family business is the reluctance, if not outright inability, of the founding parent to let go of the reins.

One of my first client’s opening comments to me was that he had been fired from his family’s business twice, by his father. He added that his father consistently voiced a desire to transition out of the business, but couldn’t seem to commit to it. My client’s attempts to assume more responsibility were met with staunch resistance.

Letting go was the issue. Letting go of the business routine; of the day-to-day activities; and slipping away from relationships established over many years.

Most transitions are difficult, but can have an upside. Letting go of the reins of a family business may have a similar beneficial effect as getting rid of clutter. It frees up space for new activities and experiences.

For myself I find, as I’m entering a transition phase of my own, I’m busier than ever with aspirations and activities that pull me forward. These however do not make it easier. I’m realizing I need to include others.

I’ve come to believe that we don’t have to do it alone. Maybe even cannot. I often tell a story similar to the one told above, where the head of a family business was ready to let go; his son ready to take over, but nothing was happening. Nothing continued to happen until the family came together and talked about a next phase for the father’s life.

It didn’t happen overnight. There were many hours of discussion. Together with the family, the father created a new purpose for himself, and a plan for going forward. He then eagerly completed the transition.

05/23/19

Family Business Pros And Cons

I was recently asked, “what are the pros and cons of working in a family business.” Pausing for a second, I responded, “that it’s a family business.” I added that I did not mean to be ‘flip’ in responding, but meant instead that family businesses are too complex for that question to be answered in a few sentences.

Understanding the context in which such a question is being asked is important. In addressing it I find myself quoting the opening line of Tolstoy’s Anne Karenina, “All happy families are alike; each unhappy family is unhappy in its own way.”

I want to know the experience of the person asking it.

A family business operates on interactions between two systems. The family constitutes one system. The business constitutes the other. Each has its own values. Each demands recognition of its values. Taking goals for example, those of a family are thought about in terms of the development and support of its members. Business goals are thought of in terms of profits, revenues, efficiency and growth. In the family system, evaluation or reward of family members is based on who they are. Effort counts, but there is unconditional love and support. Evaluation within the business is based on performance and results. On these criteria, individuals are likely to be promoted or terminated.

Returning to the question of pros and cons, I have come to believe these depend to a large degree on the happiness of the family. I have seen this reflected in widely differing attitudes—a family-business member telling me that she could not imagine working anywhere else but in the family business; a second-generation family business owner saying that he did not want his children working in the business because “he loved them too much.”

05/17/19

Working On Succession Planning

The term “working on your business” may not be new to you. The idea of working on your business pertains to doing the work of creating a business that is sustainable and functions independently of you. One in which the day-to-day operations are managed by the systems and processes you established, and the people you developed to implement them. A business that runs on systems and processes, rather than on your daily efforts, allows you to focus your time and energy on challenges and opportunities that arise for innovation and growth.

We all have the same 24 hours a day and 7 days a week to accomplish our tasks. Without systems, and people trained to manage those systems, we business owners have basically created a tireless job for ourselves. Without a conscious effort to change this situation, the business will likely remain as it is, without significant growth.

Succession planning can be thought of as analogous to working on one’s business. Family businesses consist of systems within systems; the family, the shareholders, and the business itself. Rather than on processes, these systems thrive on policies.

Similar to how systems and processes help your business grow, policies that effectively govern family members, shareholders and the business itself make it more likely that your family and business will continue to grow into the far future. Unless you work on developing these policies, your chances for a successful succession and multi-generational survival are threatened.

Like the conscious effort required to establish a sustainable firm, for a family-business leader committed to creating multi-generational stability a conscious effort is required.

05/4/19

Family Businesses—Changing the World

Inc. Magazine dedicated its May 2019 issue to businesses tackling big, complex challenges that affect everyone—companies that are pushing fresh approaches and creating the industries of the future. Inc.’s editor noted the mindset of one the companies they profiled—now successful and hardly standing still. One major theme running through this issue is about ‘Helping Entrepreneurs Change The World.’

This got me thinking about family businesses that are making significant impacts on the world.

Family-operated businesses have some advantages over non-family-operated businesses when it comes to initiating innovation in response to market changes. They can make decisions and implement them faster. But innovation and staying relevant in the marketplace are not the same as ‘world-changing.’

There are credible reasons that can interfere with a family business implementing world-changing initiatives. Decision making must coordinate with the interests of family, the business and the ownership. And the heads of family businesses tend to stay in control longer than leaders of non-family businesses. This tendency carries both pros and cons. A long tenure sustains stability and family values. However, long-serving family heads may have blind spots and not recognize the need for change when it’s readily apparent.

Despite these impediments, examples exist of family enterprises that are about changing the world. In his book, Family Champions and Champion Families: Developing Family Leaders to Sustain the Family Enterprise, family-business consultant Joshua Nacht describes how innovation rises from the energy and skills of younger family members who take initiative and introduce new ideas. He calls these youngsters ‘family champions,’ and tells how they are balancing tradition and innovation, values and profits, with both short-term and long-term views.

Reviewing Nacht’s book In his Forbes Magazine article “How Champions Of Change From The Rising Generation Transform Their Family Businesses,” long-time family-business consultant Dennis Jaffe comments that, importantly, these young champions have the ear of the family leadership in a way that does not exist in non-family companies. But, unfortunately, many families do not facilitate exchange of ideas between generations; a necessity for developing champions. https://www.forbes.com/sites/dennisjaffe/2018/10/03/how-champions-of-change-from-the-rising-generation-transform-their-family-businesses/#b4b45b05a55f

04/20/19

Impermanence And Continuity

Construction on the Cathedral of Notre Dame was begun in 1163 and completed in 1345. Today, 856 years later, it stands in its home city the awesome result of 182 years of hard work, dedicated intent, inspiration, innovation and Gothic artistry of the finest quality. Last Monday, April 15, 2019, this center of devotion and indescribable beauty caught fire and underwent millions of dollars In damages.

It’s a tribute to its unquestionable and continued value that those millions of dollars for repairs have been pouring in. Albeit among controversy as to just how to accomplish the task, the cathedral will be restored.

Family businesses too can have long histories. They too have been built, over centuries, by devotion and dedication, innovation, inspiration, hard work, high standards and pride.

Japan’s Hotel Hoshi Ryokan is the world’s oldest family business. It was founded in 718 and is now, more than 1300 years later, under the management of its 46th generation of family members. The family’s watchwords: diligence, humility and resolve. https://www.ho-shi.co.jp/en

But is it permanent? Arguably nothing is. Paris’ historic cathedral will never again be exactly as it was on that day, centuries ago, when it was completed. Hoshi Ryokan has unquestionably undergone many changes to ensure continuity over the centuries—to keep up with the times; to add value that attracts today’s visitors. Change, whether accidental or intended, is perhaps the only constant.

Most family businesses are far from permanent. It’s an accepted fact that most do not last beyond their third generation. For them, that which built a monumental cathedral and a 46-generation business is missing.

Contemplating all this, I stopped to read Seth Godin’s blog entitled Impermanence. https://seths.blog/2019/04/impermanence/. With regard to whether the future will or will not turn out the way we hope it will, he offers the following:

“We have much less direct control over the future than we hope, and that it will always surprise us.”

“We can’t control the future, but we can bend it. And we can’t freeze the world as it is, but we can figure out how to be a part of it.”

To build a family business with a basis for continuity, one can take inspiration from those long-ago builders who intended a great cathedral; saw it standing complete after nearly two centuries of continued work; inspiration also from the Hoshi Ryokan family, whose values transcend time. Accept surprise, and intend your business to be part of the future, both permanent and impermanent.

04/5/19

Time For Letting Go

Sitting at my desk considering what to write for this newsletter I thumbed through the folder of clippings and notes I collect just for this purpose.

I came upon an op-ed piece that’s close to home for me in more ways than one. It was published in the August 5, 2012 edition of the Scranton Sunday Times; written by its publisher, Scott Lynett. I grew up in Scranton and went to school with the Lynetts. And while I’ve lived most of my life elsewhere, a strong family connection to Scranton continues.

What’s the second way this article’s close to home? It’s there in its title: Letting go vital to passing on bright torch. For me, as a professional family-business consultant, this op-ed piece presents a lexicon on how best to pass the business on to the next generation.

The Scranton Times is a family business that was founded in 1895 by Scott Lynett’s great-grandfather. The piece he wrote tells the story of the day his father followed his brothers into semi-retirement, stepping down from leadership and into part-time positions in the firm.

That day was fifteen years in the planning.

Most family-business leaders simply cannot let go, a factor that often leads to the demise of the business within three generations. The Scranton Times family is exceptional. Fifteen years in advance of their retirement, Scott’s father and his brothers hired a family-business consulting firm that specialized in intergenerational transition. They provided guidance for the road ahead.

Over the years many challenges were uncovered, many family meetings held; many difficult conversations. There were issues of management, ownership and governance structure to deal with. Rules and requirements for employment of future generations in the family business were collectively agreed to.

When the day came for Scott’s father to retire, the family was ready. They were all ready, and so was the business. And Scott’s generation is already deep in discussions about how to bring the fifth generation into the family business.

What was it that led Scott’s father and uncles to retire, and let go? In Scott’s words: “Ironically…dedication to the future of the business.”

Successful succession takes planning… optimally many years of planning. It takes that dedication to the future that Scott Lynett, The Scranton Times’ fourth-generation publisher, wrote about in his op-ed for circulation in his family’s own multigenerational publication.

03/23/19

Toward Entering The Family Business

I recently did a presentation on the principles of family-business-best-management practices to an industry group of 2nd and 3rd -generation leaders. One participant commented that she loves the family business and that it would be unfathomable for her not to be part of it.

Her statement reflects some of the important qualities of next-generation leadership in successful family businesses. Those of us who work as advisors to family businesses recognize several characteristic attitudes held by next-generation leaders:

  • I know and love the business
  • Working in the family business is considered my best option
  • I have no other option
  • I am expected to work the family business

Each of these attitudes has consequences for the individual, the current head of the family, and the future of the family business. Knowing and loving the business promotes multi-generational sustainability more than the others.

03/8/19

Give Failure A Chance

In my last newsletter I referenced a Wall Street Journal article* that highlighted two issues not uncommon in family businesses: the value of experience and the rewards of failure. I addressed the first in that newsletter, pointing out the advantages of having next-generation family members gain experience by working outside the family business. In this writing I address the second issue: failure. The article connects failure and experience, saying that that the main reason veteran leaders (those I interpret as having experience) rarely fail dramatically is that they’ve failed before.

The value of learning from failure is incontrovertible. An internet search on “learning from failure” yields upwards of 500,000,000 results in a split second. Not all contain reasons and/or solutions that apply to family enterprises. Not all approaches to learning from and mitigating failure in family businesses apply to non-family businesses.

In family businesses, which may be risk averse, fear of failure can be a significant point of contention. They are often inured to tried-and-true methods of operation. So it’s not uncommon for a next-generation family member to hear from their elders:“ “Do as I told you. When you ‘re in charge you can do it your way.”

The psychological source of contention might be adolescent rebellion being acted out in the business. It might involve a parent not recognizing that the child has grown up. The child also might not realize they now need to build an adult relationship with their parent. It can also be an expression of a parent’s uncertainty of their continued relevancy. Or it may simply be that a first-generation parent has forgotten how they learned from their own mistakes.

Whatever the source it’s important to uncover and deal with it. If not, the future of the family and the business can be compromised; opportunities lost.

Giving a rising-generation family member authority to implement and run small or dear-to-the-heart innovative initiatives—risking their possible failure—allows growth and instills accountability. If they do fail—even dramatically—they will learn what doesn’t work; what not to do again. It’s a first step to becoming a veteran leader; a gain for the young person and the family as a whole.

* https://www.wsj.com/articles/the-truth-about-failing-spectacularly-11550293225?mod=hp_lead_pos9

 

02/24/19

Leaving The Family Business—A Best-Management Practice

A recent Wall Street Journal article, The Truth About Failing Spectacularly* highlighted two issues I find not uncommon in family businesses: the value of experience and the rewards of failure. In today’s article I am addressing the first of these.

The experience connection for family businesses relates to the best-management practice that requires next-generation leaders to gain work experience outside of the family business. This practice adds value by ultimately bringing in skills and knowledge beyond that which had been fueling the family business up to that time. It provides third-party recognition of leadership abilities. It alleviates the concerns of non-family leadership about the value that then next generation can bring into the business. And it reassures them that they won’t be reporting to someone who doesn’t have enough experience to lead.

These advantages are absent when this best-practice is omitted. Working only within the family business can be insular and perhaps even incestuous. The door is closed to new knowledge and fresh ideas.

Attitudes differ widely with regard to these two practices.

I recently had a conversation with a young man who is second generation in his family’s business. His father is adamant that he should not work elsewhere. Respecting his father’s wishes, he doesn’t push the issue, though he would gladly accept an offer of outside employment.

Mindful of fostering sustainability in the family as well as the business, some families not only require ‘working somewhere else,’ they also require that a candidate son or daughter have the necessary experience for the position, within the family business, that they are applying for. This places the child on the same playing field as a potential non-family candidate. For other families providing opportunities for all family members is a priority, and this practice would be unacceptable. The more successful family businesses have found ways to balance these two approaches to next-generation employment.

In striving to achieve this balance, the axiom a strong business supports a healthy family is not to be overlooked.

In my next article I will go into the rewards of failure.

* https://www.wsj.com/articles/the-truth-about-failing-spectacularly-11550293225?mod=hp_lead_pos9

 

02/8/19

Hiring Professional Expertise For Your Family Business

I’ve always been careful about using my blog and newsletter to support the engagement of family-business advisors, because, while in the many situations the outside expert will provide tremendous benefit, I’ve been concerned that doing so would be perceived as self-promotion rather than honest advice.

Putting that aside, in my experience most successful family businesses, large or small, work with family-business advisors to align goals for the family, the shareholders and the business and future-proof the business against challenges that will be faced by emerging generations.

In looking for professional advisors for your family business it’s important to recognize that family businesses are complex and the expertise needed for a well-run family business is multi-disciplinary. Each area of expertise addresses one of the business’ three primary subsystems: ownership, management and the family itself.

As humans we have a tendency to seek advice from those we know and trust. But as I wouldn’t have my CPA do a root canal for me, I should not ask my business attorney to draw-up my will, or ‘have a talk’ with my children who are playing out their rivalries in the office. Equally, I would be wary of the advisor who does not recognize the multiple disciplines that make up a family enterprise or see a need for expertise beyond their own.

Unfortunately, it’s not uncommon to encounter resistance within a family against hiring outside expertise. In her January 29, 2019, Next Avenue article, Hiring an Outside Expert for Your Family Business*, entrepreneurship and personal finance expert Kerry Hannon brings up the psychological or ego issues around hiring professional expertise for a family business. She suggests that when a family believes they are smarter than an outside person or that they don’t need outside perspective, it’s a sign that they do need to bring in outside people.

There’s a reason 125-year-old family businesses are 125 years old. These families have been studied, and it’s not accidental. Hiring outside professional expertise to teach and implement best practices is vital to the multi-generational success of every family enterprise.

* https://www.nextavenue.org/hiring-outside-expert-for-your-family-business/?hide_newsletter=true&utm_source=Next+Avenue+Email+Newsletter&utm_campaign=1ca7a1cd48-02.05.2019_Tuesday_Newsletter&utm_medium=email&utm_term=0_056a405b5a-1ca7a1cd48-164957277&mc_cid=1ca7a1cd48&mc_eid=6bb3a49c82

 

01/26/19

Competition—It’s Not All Win-Lose

Competition between siblings can be one of the fiercest dynamics in a family business. Unbridled competition between parents and children can be one of most devastating. But seen from a constructive point of view, inter-family competition can be one of the greatest advantages of family business.

I have been bewildered by stories of cultures that play games in which no one wins. I am equally perplexed by the attitudes of those who see winning or losing as a measure of their prowess and superiority over others.

I like to compete as much as anyone else, and thus found myself in a self-imposed paradox until I considered a perspective of competition that supports winning by all the parties involved. Consider tennis players who appreciate playing against skilled opponents. Both players win by testing themselves and by learning from each other’s game. Don’t get me wrong, I’m not opposed to sports events declaring a winner, rather I recede from intentions of proving inherent superiority by winning.

In family business, I imagine a scenario similar to a sporting activity involving an older and younger sibling. The older, more skilled and stronger, can easily beat the younger in a way that demonstrates superiority, and plays to win accordingly. In a win-win scenario the older sibling derives gratification when the younger achieves increased ability and skill, even to the point where the younger often comes out the victor. Inside the family, strength has been added to strength. By the same token, when a child becomes able to perform a task better than their parent, the parent recognizes a job well done. The family wins too, because new capability has been added.

Family businesses can benefit by understanding that internal competition is not all win-lose. They can learn much by watching its outcomes, becoming aware of the growing strengths within the family that competition showcases.

01/13/19

Family Business And Organizational Culture

The Questions Every Entrepreneur Must Answer, by Amar Bhide, published in the December 1996 issue of Harvard Business Review[1] is one of my perennial favorite articles to use in teaching my class on entrepreneurism at Baruch College, City University of New York.

Rereading the article recently, several thoughts came to mind as being significant when reframed in the context of family enterprises.

Speaking of entrepreneurs the author writes: “To secure the resources demanded by an ambitious strategy, they must manage the perceptions of the resource providers: potential customers, employees, and investors.”[2] Further into the article he adds that “… the entrepreneur must design the organization’s structure and system, and mold its culture and character.”[3] and that “When entrepreneurs neglect to articulate organizational norms…, their organizations develop a culture by chance rather than by design.”[4]

Successful multi-generational family businesses come about more by design than by chance. Considering the article in this context one might view the founder or current head of the family business as ‘the entrepreneur.’ And continuing the simile, family members might be viewed as resources—for the family or the business or both, and managed accordingly. The perceptions of family members have impact regardless of their roles in the business. They help to articulate and establish organizational norms. When these are appreciated and employed as a resource to be developed, a culture arises by choice from within the family.

The perceptions of stakeholders are not the only issue the head of a family business should be alert to, but it is important one when seeking to create a multi-generational legacy.

[1] Bhide, A. (1996, December) The Questions Every Entrepreneur Must Answer. Harvard Business Review.

[2] Ibid.

[3] Ibid.

[4] Ibid

11/28/18

Thinking About Family Business

Hi Rick,

I was parking my car over near the Vitamin Shoppe, and for some reason I started to think about family businesses.  I thought about how they usually do not last past their third generation. I’ve learned that from you, and always accepted it as fact.  I still know it to be fact, but this time it struck me very hard. Why should that be? What makes the difference between three generations and out, and a multi-generational family business? And what makes that business one that continues for 100 years or more?

Well, it occurs to me that times change. The economy changes. Opportunities for upcoming generations change. The way young people view their futures; their attitudes toward work changes. Is their family business one they can be proud of? Does the business’ values match the values of the current time? Can it’s products or services be updated again and again? What impact does the incumbent generation have upon their thinking? How often can/do they impart a vision of the business in the future?

What makes a young person wish to stay with and build their family business?  And where is the tipping point between the second or third generation, and the next hundred years?

You’ve said it begins with intention.  Where does intention begin?

Suddenly I find this a deep and meaningful mystery.

***

Some thoughts from the Vitamin Shoppe parking lot – November 27, 2018

11/10/18

Moving Into Eldership Roles

In last week’s blog article I presented a situation in which a daughter, now CEO of the family business, wanted her father to take on a different role in the business. Her father was content to be managing some of the business operations. His daughter wished him to assume the role of the firm’s ‘ambassador.’ With his industry knowledge and contacts she envisioned him spreading goodwill, identifying potential opportunities and mentoring next-generation family members.

A reader of this article took exception to the daughter’s attitude. The reader wrote that the daughter should not object to her father pursuing his own interests, within reason. That she should not be the judge of how her father can be most beneficial. That she should be honoring her father as founder of the business. That she should have respect and faith that her father knows what he is most comfortable doing and where he might bring the most value to the firm. My reader added the opinion that the daughter’s thinking was potentially based more on her own goals than on her father’s interests.

I’m grateful to my reader for the thoughtful and useful feedback. It highlights how many different viewpoints exist in situations like this and many strong emotions as well.

We, as professional family-business consultants, recognize various roles that elder family-business leaders can move into as they age and next-generation family members take over the business, or are ready to. There is the role of ‘ambassador,’ described in the first paragraph. There are ‘monarchs’ who hang onto authority and control until they die. There are ‘generals’ who leave but don’t give up their authority and may even return to ‘save’ the business.

As it happens, in the family business described above we see the father assuming yet another common role, that of ‘inventor’ He has returned to developing the firm’s core business. He is in a position, now with his expanded knowledge and experience, to add value to the firm with innovative management ideas, production methods and products.

The ‘ambassador’ and the ‘inventor’ are two of the more valuable roles a family-business elder can embrace as they pass leadership onto the next generation.

10/27/18

Relevancy Reborn

Recently I had a conversation with a woman who is heading her 2nd generation family business.  She spoke about her father who is in his mid 60s. She told me he does not interfere with her management of the business but does insist on retaining control of some day-to-day operations. She added that he had recently divorced her mother and was dating again.

She doesn’t want to get involved in his personal life, but does want him to play a different role within the business. She believes that with his 30 years of experience he would be more beneficial to the firm as its ‘ambassador.’ In this role, with his industry knowledge and contacts he had nurtured over the years he can spread goodwill, identify potential opportunities and mentor emerging next-generation family members.

This situation shines light on the question of how an older-generation business leader can maintain personal relevancy after the younger generation has assumed control. It’s not uncommon for someone approaching their elder years to be facing this passage. Instead of letting go and moving forward, they may attempt to relive times of their life when they felt most alive.

By transitioning to the new role his daughter wishes him to assume—one that neither he nor the family may have envisioned before—her father’s personal and work relevancy can be reborn.

10/6/18

What’s Important At Thanksgiving Dinner

I recently had a conversation with a potential client that would eventually involve her husband, elderly parents and two siblings. The issue, as brought to me, involved transitioning the management of the family business from her parents to her husband. I learned that among the family members there are differing thoughts regarding the value of the business. There is also some resentment about her husband’s ambitions for the business. Moreover, her two siblings believe that their sister and her husband are taking advantage of their parents.

This situation is complex, yet not unheard of. In the course of our conversation we discussed how developing a clear statement of individual and family values will lay important groundwork for its resolution. We spoke as well of the importance of educating the family members about the systems that underpin the workings of family businesses, and helping them understand best practices employed by successful multi-generational family businesses. Most important though, in our conversation, was the question of how to convince the family members to undertake this education with the help of an outside advisor.

What is fundamentally important here? I suggest it’s family harmony. Will this family be able to sit down together for Thanksgiving dinner next year and enjoy the company of everyone there? If not, the business and everything and everyone associated with it are left in peril.

 

09/22/18

Toward An Entrepreneurial Mindset—Seven Skills

Family businesses are described as having three complex, interrelated subsystems. The family comprises one subsystem; the ownership and the business itself comprise the other two. Over the past couple of decades particular attention has been given, and necessarily so, to understanding and addressing the needs of the family subsystem. But a shift of focus is now required. Marketplace and consumer expectations are changing overnight. Consequently the way we do business has changed. For family businesses to remain successful, greater attention must now be focused upon the business subsystem, and of particular value today is the cultivation of an entrepreneurial mindset.

A mindset consists of our attitudes about something. Today, the entrepreneurial mindset is considered more important than experience, knowledge and family history for the success of a business venture.

Seven critical skills contribute to an entrepreneurial mindset:

1. Plasticity: The ability and willingness to change actions and plans to overcome present and future challenges.

2. Communication and Collaboration: The ability to clearly express ideas to an intended audience, including persuading others to work towards a common goal.

3. Creativity and Innovation: The ability to think of ideas and create solutions to problems in the absence of clearly defined structures.

4.Innovation and Problem Solving: The capacity to apply higher-level, process-oriented thinking, consider an issue from a range of perspectives and use that reasoning to make decisions.

5. Future Orientation: An optimistic disposition with a concentration on obtaining the skills and knowledge required to transition into a career.

6. Opportunity Recognition: Seeing and experiencing problems as opportunities to create solutions.

7. Comfort with Risk: The capacity to act upon a decision despite uncertainty and challenges.

The mindset of a given business leader toward applying these skills reflects one of two fixed perspectives: a fear perspective defined by thinking, “when I fail I am no good,” or a growth perspective, defined by “when I fail I learn.”

09/8/18

Full Stop—The Fear Factor

 Better not to hire a coach or go to a therapist or even pick a doctor, because you might discover that you’ve been doing something wrong.[1]

Many times I have spoken with principals of family businesses about their plans for transitioning to the next generation. Many times I have seen that they do not understand how to do this successfully. They listen to what I have to say, but do not ask for help. I have seen heads nodding in agreement about the benefits of hiring a professional with family-business expertise to guide them and their family in achieving a multi-generational family business, and reaping the rewards of having an established multi-generational family. And too frequently, I see no further action taken. It’s sad. because I know the difference that an expert in family-business best-management practices can make.

In his blog article, The Overwhelming Fear of Being Wrong, Seth Godin suggests that fear engendered by uncertainty stops forward action. In the case of family-businesses leaders, fear of asking for expert help may stem from not knowing how to assess the guidance being provided. There may be fear that other family members may object; that they personally may be supplanted; that they may be seen as being wrong in hiring an “outsider.”

Most family businesses do not survive beyond their third generation. Their failure is largely due to a lack of understanding of the best practices and unique dynamics of family enterprises. Family-business consultants have the know-how to guide your family business safely through this critical transition. When it’s forward motion or stop, perhaps it’s best to overcome the fear of being wrong. and ask for help.

[1] Seth. Godin. The Overwhelming Fear of Being Wrong, https://seths.blog/2011/07/the-overwhelming-fear-of-being-wrong/

08/11/18

Elder Or Elderly—Inspirational Reading

I recently finished reading Thomas Moore’s most recent book: Ageless Soul: The Lifelong Journey Toward Meaning and Joy https://www.amazon.com/Ageless-Soul-Lifelong-Journey-Meaning/dp/B075X2S2Y8/ref=sr_1_1?ie=UTF8&qid=1533849488&sr=8-1&keywords=ageless+soul+thomas+moore.

I find the book extremely important and have described its premise—distinguishing between being elderly and being an elder—as critical for living a life with meaning and joy. I also immediately saw its importance to the survival of both the incumbent head of a family business and the business itself.

Within the mainstream of our contemporary culture ‘elder’ is perhaps an elusive term. Moore though, uses this term as he writes about elders he has known in his life, and about their qualities. Surprisingly, these qualities are not elusive, though they may be challenging. In the section of the book entitled “How to Be an Elder” (pp 178-185) he presents this list:

  1. The first requirement is to be comfortable with your age
  2. Have confidence in your education and experience to the point you may guide others
  3. The elder has to love young people
  4. The elder uses any knowledge and wisdom he or she has to benefit others, especially the young
  5. Cultivate your power to inspire others

 

07/27/18

Defining Productivity For Family Business

In a recent blog post, entitled Business/busyness https://seths.blog/2018/07/busyness/ Seth Godin states that what matters in business is the question: “did I spend my day producing enough benefit for all the time invested?”

Seth is asking an important question; I recommend that you read the entire blog post.

Further into the post he provides a suggestion for answering the question: “Once you know what you seek to produce (not an easy task), add up all the time you spent to create it.” While not exactly what he was writing about, I fixed-on the phrase “once you know what you seek to produce” and related it to family enterprises.

It is not uncommon for a family business to come about accidentally. One starts a business, gets married; has children. The children help out and eventually assume control of the business. If things go well the business grows and the second generation passes it on to their children, likely in the same way they received it. They in turn assume responsibilities and eventually control the business.

In this scenario the business is looked at in present time, and productivity is largely measured in the context of the business’ balance sheet. Family is important; but as an entity separate from the business itself. There is not yet generational thinking and recognition of a family-business legacy.

With each generation as they grow, family businesses become more complex. The simple mechanism of succession described above no longer works. For the business to continue now requires planning. It requires a longer view; an intention to produce a multi-generational family enterprise. “…once you know what you seek to produce” is key. Intention aligns family members, resources and practices in the direction of a shared goal.

07/14/18

Family Meetings—Rules Of Communication

In recent blog/newsletter pieces I wrote about the importance of a specific type of family meeting whose agenda is to discuss the family itself in the context of the business, but not business management or operations. Subsequently I was asked what important actions could help these meetings succeed. At the top of my list: Establish rules of communication.

In his blog piece Rules of Communication in Family Meetings, Dana Telford of the Family Business Consulting Group wrote about an experience with a family he was working with. He had asked them to suggest some actions they would take, as part of their family meetings, to ensure everybody is listening and being heard, and that meetings will be productive. Telford includes the list of rules the family developed and adopted

  • “No interruptions
  • Be honest but respectful
  • Seek first to understand
  • Everyone has a responsibility
  • Set an agenda and stick to it
  • Set time limit for topics in debate
  • Anyone can call a timeout
  • All are equal
  • Everyone is included
  • The rules rule
  • Notes will be kept by the secretary”[1]

Rules may differ for different families, but having established rules of communication undoubtedly “can save a family meeting from falling apart and becoming a wasted, frustrating use of time and energy.”[2]

These same rules when carried over into all family communications will support the long-term success of both the family and the business.

In future articles I will explore some of these rules in depth and help you understand how to implement them.

[1] from Dana Telford, Rules of Communication in Family Meetings. The Family Business Consulting Group. May 14, 2015 (http://blog.thefbcg.com/author/danatelford/

[2] Ibid.

06/25/18

Fear Of Formal Family Face Time

Although the critical importance of bringing the family together for structured meetings is universally acknowledged, the idea of holding these meetings may meet with resistance among family members. Their resistance is largely based on unfounded fears.

Family members may believe that the current communication within the family is good enough. They may fear that structured meetings will stifle the informal spontaneity with which the family currently addresses issues. Some may share the misapprehension that structured meetings will provide fertile ground for difficult topics to find their way to the surface and cause harm.

Another common concern is that the democratic spirit inherent in family meetings may seem unsuitable given the natural inequality of parents and children, or the hierarchical inequality of ownership, management and staff. Some may fear that the open nature of the meetings may lead some to push to democratize the business’ management. In fact, however, family meetings in no way negate the prerogatives of ownership, leadership and experience.

It will benefit family members to address these fears and work through them. Structured family meetings have a proven record of positive outcomes that strengthen both the family and the business. The example of multi-generational family businesses worldwide proves that formal family face time is not to be feared but embraced.

06/15/18

The “Why” of Family-Business Meetings

Successful multi-generational family businesses recognize that family meetings are critically important to their longevity.

Family meetings create time and space for family members to discuss the family in the context of the business. In these meetings operational  and management issues are not on the table. Conversations here are about issues like criteria for participation in the family business; sharing values; meeting challenges; resolving conflicts. The result: a stronger family, and thereby a stronger business.

There’s no one-size-fits-all when it comes to family meetings, but family members coming together on a regular basis ensures open lines of communication. Open communication in turn helps avoid the characteristic pitfalls that await so many family-owned businesses, threatening their survival.

05/5/18

A Family-Business Crisis Of Perception

Family businesses are subject to a range of crisis that are unique to them; not encountered by non-family businesses. Here’s a common and potentially excruciating one:

The incumbent leadership of a family business may or may not be confident that the upcoming generation has the competence to lead the family business going forward. Members of the upcoming generation, on their own part, feel entirely confident that they have what it takes to successfully lead the business into the future. It’s a crisis of perception.

To bypass this perceptual disconnect, long-lasting multigenerational family businesses have structures in place that foster family and generational coherence:

  • Avenues for good communication: Perhaps the most important trait of successful family businesses. It seems easy but we all know it isn’t. Opportunities for family members to share stories about goals, plans, hopes, aspirations, dreams, challenges and even failures can foster a cohesiveness that avoids conflicting perceptions of confidence and competence.
  • Established values: Descriptors of ‘what’s important to us.’ Families who know and respect one another’s values are better able to sustain a vision for the family and the business that crosses generations.
  • Respect for the past: With an eye on the future. Successful multigenerational family enterprises know that each generation needs to determine a vision for the business under their leadership, while remembering and genuinely valuing what preceding generations accomplished. A place to begin engendering this respect may be writing the story of the family’s founder and telling it to all generations that follow.

These structures help to create a shared perception of what is real with regard to the readiness and competence of the family’s next generation to lead; and they also help build this competence long before the doubts and disconnects have a chance to arise.

 

04/20/18

Employment Policies In Family Business

In all social structures, policies provide a process for aligning an organization’s values with its actions. In family enterprises, where there is an overlap of family, business management, and ownership, a family-employment policy is one of more important policies a family can develop.

It can be difficult for family business owners to be objective about hiring—and firing—family members. The family-employment policy helps by providing an established process and procedure for hiring family members. It outlines the factors necessary for employment, and when applied consistently, helps family members understand their relationship to the business.

“The policy is intended to avoid conflict, and should focus on what is best for the company and should stay consistent for family and non-family members[1].” It sends a message that employment with the company is not a birthright–it must be earned.

For instance, the policy may specify that a family member must have gained experience and earned a promotion in an outside firm; achieved a certain educational level; be a good fit within the company, and have skills commensurate with the current market salary for a legitimate job opening.

The policy may also include a statement of philosophy such as: “We are a family committed to our members and descendants being responsible, productive, well-educated citizens who practice the work ethic and make constructive contributions in the local community and the world at large”[2], thereby reinforcing family values.

While all families are different, it’s clear that development of a family employment policy is dependent upon good communication among family members and between generations.

[1] Family Business Wiki. http://www.familybusinesswiki.org/Family+business+Policies

[2] Bork, David. 1991. https://www.aspenfamilybusiness.com/PDF/Sample_docs/Employment_Policy_Form.pdf

04/7/18

Developing Future Leaders

For family businesses to thrive through succeeding generations, the development of future leaders must not be left to chance. It’s the responsibility of the current head of the family business to recognize and nurture leadership qualities in members of the rising generations. Here are seven strategies for accomplishing this critical task: 

  1. Be a model of leadership yourself.
  2. Demonstrate honor and respect for family members who are leaders.
  3. Recognize that there are as many different leadership styles as there are leaders. Consider the differing yet effective leadership styles of Martin Luther King, Mahatma Gandhi, Eleanor Roosevelt, Malala Yousafzai, Oprah Winfrey, Stephen Hawking, Winston Churchill, General Patton, and Steve Jobs. Encourage the development of individual and innate leadership styles within your own family.
  4. Provide younger family members with opportunities to lead.
  5. Help them learn to identify leadership opportunities within and outside the family business.
  6. Encourage their involvement in leadership activities in a variety of life areas such as in school, in professional associations, in your community as well as in your family business.
  7. Encourage them to think in terms of what they want to accomplish for the family and the business.

Of course, it’s important for the head of the family and current leadership to monitor the path of potential next-generation leaders; to see where they succeed; where they struggle; to guide, correct and mentor them. The future of the family and the business will be in their hands.

03/11/18

Best Practices Common To Successful Family Businesses

“All happy families are alike; each unhappy family is unhappy in its own way”

—Leo Tolstoy, Anna Karenina

 I recently read, again, this first sentence from Anna Karenina. Thinking about the truth of this statement as it pertains to family businesses, I have found much inspiration in: Perpetuating the Family Business, 50 Lessons Learned from Long-Lasting, Successful Families in Business by John L. Ward—quoted liberally here—to present six best practices common among successful multi-generational family enterprises:

  1. Establish a shared Intention to become a multi-generational concern.

By establishing an intention we declare an objective and foster a determination to succeed. This creates a focal point around which family members can coalesce, facilitating the birth of a long-term vision for the family and the business. Critically, this established intent places the responsibility on each new generation of leadership to pass the business on to the next in better condition than that in which they received it.

  1. “…Develop policies for family participation in the business -before the need.”[1]

“Long before the second generation is ready to come into the business, for example, the first generation develops and writes down on paper an employment policy that sets forth the requirements for family members who want to join and move up in the business. And long before the second generation enters the business, the first generation puts on paper a policy that guides decision making on compensation and performance appraisal issues.”[2]

  1. “…Enduring family businesses work very hard at defining a Sense of Purpose.”[3]

“They ask and discuss such questions as: Why are we doing this? Why are we working so hard? Why are we spending the time to develop policies? Why are we exerting so much energy to prepare for the future?”[4]

  1. Build Processes

“The capacity of a family to deal”[5] continually and “effectively”[6] with issues as they come up “will be a function of its skills as a group to communicate, solve problems, reach consensus, develop win–win solutions, and collaborate.”[7] It is “all the thinking and meeting and discussing that family members do together to resolve issues.”[8]

  1. Next-generation responsibility and leadership starts with good parenting.

“…One of the things that we can never underestimate is how much good parenting affects the future of a family business. After all, what is a family business about if it is not about the next generation?”[9]

  1. “Communication is Indispensable.”[10]

“Successful families recognize how profound, complicated, and perilous–and rewarding –communication can be. Business families with a long history of success are families that work very hard at communication.”[11]  They do this by maintaining open dialogue between family members—sharing family stories, writing family newsletters and other creative strategies that work for them. “Some once-successful family companies that lost their ability to continue as family firms lay that to a lack of sufficient communication.”[12]

Each of these practices is a scaffold upon which to build an enduring multi-generational family business. They are easy to write about and difficult to achieve. But having examples of workable strategies set by successful long-established businesses takes the guesswork out of what is necessary and provides guidelines to the possible.

[1] John L. Ward, 2004. Perpetuating the Family Business, 50 Lessons Learned from Long-Lasting, Successful Families in Business, Palgrave MacMillan, p. 23

[2] Ibid, p. 23

[3] Ibid, p. 24

[4] Ibid

[5] Ibid, p. 26

[6] Ibid

[7] Ibid

[8] Ibid

[9] Ibid, p. 27

[10] Ibid, p.15

[11] Ibid

[12] Ibid

02/23/18

A Warrior Heart

In preparing this blog piece, I turned for inspiration to one of the most important books I read last year, Money and The Soul’s Desires: A Meditation on Wholeness by Stephen Jenkinson. I had gotten no further than the author’s ‘acknowledgements’ page when I came across a statement about his son that stirred images and a longing in me, both as a father and as a son: “My son, Gabriel shows me the grace of his brawny warrior heart. I remember him taking his canoe out through the mist alone, and I honor him and kiss his brilliant feet for finding their own brilliant way.”[i]

To be successful as a multi-generational family enterprise, we must be able to honor our children for finding their own brilliant way—for themselves, the family and the business under their leadership. While this places responsibility on the child for setting out to brave the mists of next-generation leadership, it places equal responsibility on parents for helping our children develop their own warrior hearts.

[i] Stephen Jenkinson, 2002. Money and the Soul’s Desires, A Meditation on Wholeness. Iron Gold of Mercy Publishers, Ltd., Ontario, Canada. Page xi.

 

 

 

02/10/18

The Future Begins With Intention

An intention to be a multi-generational family business is a requirement for becoming one.

At the Family Business Mastermind™ meeting this month, one of the participants spoke about the importance, to her, of preserving the hard work her parents put into growing the family business. She and brother were witnesses to the building of the business and it was a very large part of their childhood.

She mentioned that although she and her brother are pursuing careers elsewhere, she has come to see the significance and meaning the business has to each of the family members as a common bond between them, in addition to being a resource that has supported them financially.

She recognizes also that a transition will inevitably come about, and there has been very little discussion with her parents about the future. Her hope in attending the meeting was to hear of ways to preserve the integrity of the family and the business.

She was clear that her intention, through the glue of the family business, is to keep the family bonds strong between her and her brother, and to her parents who founded the business, and to extend them to future generations.

Her intention will supply the force to help her clarify and expand this vision. She conveyed that she will continue seeking answers. It was heartening to hear.

01/27/18

Time Together–Indispensable To Family-Business Success

What keeps venerable old families together?
They are, after all, only as strong as the roots that bind them.[1]

The above quote comes from a Dec 30, 2017 article in the NY Times that I had saved because in it I see an important message for all family businesses—a message that cannot be repeated enough.

The article, Keeping the Family Tree Alive https://www.nytimes.com/2017/12/29/your-money/family-business-wealth.html features descendants from three famous families: Sylvia Brown, whose family name adorns Brown University, Alessia Antinori who is a 26th generation member of the Italian wine making company bearing that name and Mitzi Perdue, heiress to the Sheraton Hotel chain, and widow of chicken magnate Frank Perdue.

For me, the overriding message is: members of successful family enterprises spend time together. Eating dinner together and vacationing together are examples. Time together helps family members embrace a common sense of purpose, create and sustain a culture of cohesiveness across generations.

It’s interesting to note that the representatives of the three families written about in this article are women. Women are typically perceived as the archetypical force for family cohesiveness. Considering that more family businesses fail because of family related challenges than business ones, the extent to which women participate in their family enterprises might justifiably be seen as a significant factor for failure or long-term success.

 

[1] Sullivan, P. (2017, December 29) Keeping the Family Tree Alive: Retrieved from https://www.nytimes.com/2017/12/29/your-money/family-business-wealth.html

 

01/23/18

Sharing your family story makes your business stronger

Guest Blog: By Sally Collings

“We have no direct access to historical truth … Our only truth is narrative truth, the stories we tell each other and ourselves.”
— Oliver Sacks, The River of Consciousness

A team of researchers who set out to analyze the business attributes of family-owned wineries in Germany came across a strange fact. They were studying 21 wineries that were, on average, 11 generations strong; the oldest dated back to the 10th century, when Vikings were still colonizing Europe. About half of these family wineries had continued to innovate across generations in areas such as growing new grape varieties or adopting the latest production technologies. The other half were more inclined to follow than to lead, only adopting new techniques or entering new markets after their competitors paved the way.

Among the attributes that distinguished the more entrepreneurial wineries, one in particular was somewhat surprising. These business families had what you could call an “entrepreneurial legacy story” that they shared from one generation to the next. It might be the tale of a great-great-great-great-uncle, say, who rode his horse to Paris so that he could attend an auction to buy back the family winery after it was seized by Napoleon. At family meals and festive gatherings, stories of persistence in the face of peril, theft, adversity and war were told over and over again.

What is the significance of that? “These stories give meaning to today’s entrepreneurial actions and put current risks and problems in a broader context,” Peter Jaskiewicz of Concordia University’s John Molson School of Business reasoned. “It is hard to complain about losing a customer knowing your great-grandparents overcame war and starvation to build the business.”

From speaking with both the current generation’s leaders and their children, the research team found that the families less inclined to innovate lacked pride in their ancestors’ achievements. They either did not know the stories, or they played them down as being simply a matter of chance with no enduring significance.

Who would have thought that stories could actively make a difference to the capacity for innovation? Of course, this correlation will not be confined to German wineries. Stories are the glue that hold any family together, and the mortar that makes a business strong going into the future. If the current leadership connects the next generation to their shared narrative, the result is a more cohesive unit with aligned values and goals.

When the Mouawad family celebrated 125 years in the diamond, jewelry and watchmaking business, they set about creating a book that would capture their heritage so that future generations could appreciate it, as well as providing insights for other families seeking longevity for their business. After completing the process, current business leader Fred Mouawad says, “By better understanding our history we were able to set a better trajectory into the future.”

Set aside some storytelling time at your next family gathering. It is far more than an indulgence for the older generation: it could be the difference that makes your family enterprise a leader in its field, rather than a follower.

Sally Collings (founder and CEO of Red Hill Publishing, specializing in writing books for family businesses and social enterprises)

01/15/18

Family Business—A Three-Way Balancing Act

Open up a family business and you will find within a three-way structure of dynamic subsystems; the family, the ownership and the business. These three must continually adjust to one another to maintain balance among themselves for their own health and that of the entire business. What’s tricky about that? Each of the subsystems has its own set of priorities.

Priorities for the Family subsystem are:

  • Harmony
  • Unity
  • Acceptance
  • Loyalty

Priorities for Ownership are:

  • Dividend Distribution
  • Stock Appreciation
  • Control

For the Business subsystem priorities are:

  • Growth
  • Profitability
  • Market Share
  • Innovation

Set out like this, it becomes easy to see where points of contention may exist as the systems’ moving parts meet and inevitably impact one another; where family harmony intersects dividend distribution; where innovation meets control; where market share runs aground of stock appreciation…

These are a just a few of the many ways these three subsystems can become unbalanced, creating inter-family conflict, operations slowdowns, loss of profitability and overall damage to the sustainability of the business and the family.

01/3/18

Thoughts On The New Year

The Holiday Season has come and gone, with it’s festivities and colors lighting up the winter darkness. And it’s January 1st once more. We have again accomplished that crossing between year’s end and another beginning.

As we reflect on this crossing, make promises or resolutions. and set our sights on the challenges and adventures that beckon ahead, we may pause to contemplate that yet another year of our life has gone by.

One can see time as passing by, and we can also see that we are travelers, participants on a journey of possibilities from youth to the wisdom of old age—through days, months and years.

It is a journey not to be feared, writes Thomas Moore in his book Ageless Soul, The Lifelong Journey Toward Meaning and Joy.[1] Rather, he writes, it should be embraced and cherished. In Moore’s view, aging is the process by which one becomes a more distinctive, complete, fulfilled, loving, and connected person. May this be, in 2018, a promise for you and all your loved ones.

We, at The Family Business Leader™, wish you and all your family
a very wonderful and prosperous New Year.

 

1  Moore. Thomas. (2010) Ageless Soul: The Lifelong Journey Toward Meaning and Joy, New York, New York: St. Martin’s Press.

 

12/16/17

Strategies For Presenting Change Initiatives In Family Business

When a member of the rising generation in a family business proposes changing some aspects of how the business is run, members of the incumbent generation may, incorrectly or not, perceive their initiative as telling them that they, personally, are outdated. That they are no longer needed and should surrender their leadership role. The incumbents’ reactions to this perceived threat can have a caustic effect on the business with reverberations felt by all stakeholders.

This situation is particularly challenging if the family has not developed a culture of conversation about the interface of the family and the business, whether about introducing innovation and change initiatives, or about the transition of leadership between generations. Conversations like these may be difficult, but if avoided the outcomes born of silence can be even more challenging.

If you and your family have established protocols for conducting conversations like these, you have taken an important step towards ensuring your long-term success.

Lacking an established protocol for conversation, a perceived threat can be diffused if a proposal for change is offered with care and tact, in a way that—by reflecting human nature—facilitates the incumbent leadership receiving it openly. Key elements of this strategy are:

  • Showing respect for the past while presenting a vision for the future.
  • Recognizing and acknowledging the vision, labor and accomplishments of the incumbent generation and those that came before them.
  • Declaring an understanding of the importance of the family legacy and the desire to carry that forward.

Since this tactic supports and validates the efforts of the incumbent generation, it may circumvent the perception of the proposed change being seen as a threat.

However, that the incumbent generation will eventually be supplanted by the rising generation is not a threat, but a fact. So for them a different strategy may be appropriate. It may be valuable for them to recognize that transitioning out of the leadership role does not signify a departure from the business or the family. They may assume new and equally important roles; as spokesperson, senior advisor, nurturing next-generation leaders, and passing on the family values and history.

Change, for better or worse, is of course inevitable. For the family that is prepared to embrace it, new adventures beckon for both the generation that transitions out of their leadership roles and for the new generations that succeed them.

12/2/17

Challenges To Creating Change Initiatives In Family Businesses—Two Kinds Of Practice

Recently I’ve been writing about the challenges of creating change initiatives in a family business where the older generation is in charge. One of Seth Godin’s recent blogs, Two Kinds of Practice, http://sethgodin.typepad.com/seths_blog/2017/11/two-kinds-of-practice.html touched on what I see as a critical aspect of this inter-generational dynamic.

According to Godin, in the first kind of practice, we learn to play the notes as written, coming as close to a specified standard of perfection as we can. Applying this to family business, we learn to conduct business as the generation in charge does it. Practicing this way, Godin adds, we can become very proficient.

Learning to play the notes as written is sound advice. It respects the past while helping to develop an understanding of the family’s values and why we do business the way we do. The business environment though, is in constant flux—today more so than ever. The successful business will keep an eye on the future and have a mindset that embraces innovation.

The second kind of practice Godin describes as being “more valuable but far more rare.” This he says is the practice of failure. “Of trying on one point of view after another until you find one that works. Of creating original work that doesn’t succeed until it does.”

Founders of family businesses sometimes forget that their know-how was gained from their own painstaking efforts that resulted in errors early in their careers; or perhaps are reluctant to return to those times of uncertainty and anguished miss steps. But when founders seek to maintain their own comfort by denying this process of learning by trial and error to members of the next generation, their actions may lead to a painful decline of both the younger generation family members and the business; a decline fed by an inability to adapt.

Some families build their businesses on the practice of failure as a value. For them innovation is seen as a key to growth. But they are rare. In the majority of business families, the natural conservatism of the generation in charge is at odds with the natural forward-thinking innovative attitude of youth.

These two sides for different reasons are often blind to each other. And being blind, a clear vision for the future of the business is compromised. At this point it becomes wise to seek the help of an impartial outside observer. An expert family-business consultant can help take the blinders off, reawaken the incumbent generations’ memories of struggle and failure, remind them about how they succeeded, and set the new generation free to do the same.

11/12/17

Challenges To Creating Change Initiatives In Family Businesses–The Middle Passage

One of the challenges encountered by younger-generation family members as they try to initiate change in their family businesses while the older generation is still in charge is driven by the psychology of the lifecycle transition experienced by the older generation at the time this push for change is taking shape. Jungian analyst Dr. James Hollis describes this transition in his book, The Middle Passage: From Misery to Meaning in Mid-Life.[1]

The ideas presented in Dr. Hollis’ book help us understand the emotions in play in the midst of this common crisis in family businesses. Inevitably, as the son—or daughter—pushes for dominance, the father—or mother—is concurrently undergoing a significant change—a ‘middle passage’—from the first to the second half of life.

A person traversing the middle passage begins to view his or her life as something more than a linear succession of years. One re-examines their life and asks the sometimes frightening—but always liberating—question, “who am I apart from my history and the roles I have played?” Many may find this somewhat shaky and perhaps even hazardous ground to navigate.

Dr. Hollis describes how in the first half of our lives—which in itself is a lifecycle stage—we come to know who we are through our social roles, work and psych reflexes.* Our task then is to attain sufficient ego strength to live independently and enter the world. Importantly, this strength is required in the second half for the larger journey of seeking connection and deeper meaning. What we need to know for this second half of life comes from what we learned from the first half, and the resources we have built within ourselves; not dependent on others or something new from the outside world.

According to Dr. Hollis, it is during the middle passage one asks anew those deep questions about meaning that all children ask—then vivid and compelling—but faded over the years. The middle passage begins when one is required to face certain categories of issues that heretofore had been glossed over. The question of identity returns and one can no longer evade the responsibility to answer it—again—and in a new way.

As the older generation struggles to traverse the daunting middle passage, their sons/daughters are entering the passage that Hollis calls the ‘adult first half.’ The clash of differing lifecycle perspectives can precipitate significant tension between the generations. The more conscious of these passages and the more they are understood by those traversing them; the more peaceful will be both their personal transitions and their intergenerational relationships. And following from this, the more likely the family business will be to remain vigorous and productive as leadership passes to the new generation.

_______________________________

[1] Hollis, James. The Middle Passage: From Misery to Meaning in Mid-Life. Inner City Books. Toronto. 1993

* Automatic reactions related to attention, decision making, learning, judgment, memory, motivation, perception, reasoning, thinking, cognitive processes, etc.

10/28/17

Father/Son Conflict—Hidden Depths

In the past few newsletters and blog pieces I have been focusing on challenges younger-generation family members meet when trying to initiate change in their family businesses while the older generation is still in charge. This is a significant issue in family business and I want to go a bit deeper into the subject.

While these challenges may not exist in every family, their occurrence is all too common and all too important to ignore. Exploring these situations, several trigger factors have been observed: levels of emotional intelligence, experiences of intimacy and connection in the father’s and the son’s earlier development, and natural life stages of father and son.

Note:  At this point, for simplicity, I am speaking about these challenges in terms of father and son relationships. And while recognizing there are important differences between sons and daughters in family businesses, I do not mean any of this to be relevant only to fathers and sons.

In earlier articles I have quoted from Maps for Men, A Guide for Fathers and Sons and Family Businesses, written by the father/son team of Pyles and Pyles. [i] In it they point out that the overlap of family and business dynamics, unresolved personal conflicts, lack of trust, difficult interpersonal relationships, sibling rivalry, and generational communication issues are just some of the human issues a father and son must manage.

A good, intelligent starting point to understand these dynamics is to look at the family business and what it means to the father:[ii]

In his book Fighting for the Crown: the father/son relationship in first generation family enterprises, Moveed Fazail noted three vital issues at play within the father’s psychology:

  1. The business is a source of personal identity, pride, legacy, opportunity, and means of providing for his family

2. Fathers do not normally wish ill for their children, but they (fathers) can fear being diminished by them

3. Many individuals in the father’s generation have witnessed the rapid decline of their contemporaries’ energies when they retire, and cannot accept a similar fate

These issues are both subtle and complex. But knowing they exist provides a starting point for conversations that open them up, providing an opportunity for moving forward that respects both the father and the son.

[i]  Edward Pyles and Thomas Pyles. Maps for Men, A Guide for Fathers and Sons and Family Businesses. 2016. Westbow Press. p. 178

[ii] Moveed Fazail. Fighting for the Crown: the father/son relationship in first generation family enterprises. FFI Practitioner, Family Firm Institute, July 16, 2013.

10/15/17

Facilitating Change In Family Businesses—Conversations

In my last article I spoke about the disconnects often present when the younger generation attempts to introduce change into the family business while the older generation is still in charge. Specifically, I spoke about the challenging dynamics between fathers and sons, but what I said is applicable to relationships between members of the incumbent and upcoming generations in general.

So how to bridge these disconnects and transform the nature of these dynamics from challenging to productive? The process requires time, patience, strategy, tact, and a practice of ongoing conversations.

Open, honest conversations are needed to uncover the possibilities for the business under the leadership of the next generation; needed too as a forum for older-generation members to express their concerns and objections. And necessary as well are conversations involving areas in the business where the next generation can be given uninterrupted ownership and control. These help the rising generation develop experience and gain their parents’ trust.

Conversations help the family identify problems and find solutions together. With this aim in mind, the best conversations seek understanding and agreement among multiple stakeholders and concentrate initially on the solutions easier to sell, with measurable actions.

And to conduct perhaps the most fruitful of conversations…, In Maps for Men, A Guide for Fathers and Sons and Family Businesses, the authors write: “Take a walk. Father-son struggles can be reduced, loyalties strengthened, and succession completed on the walk they take together.”[1] No doubt this applies to fathers and mothers and daughters too.

The importance of constructive conversations cannot be overstated. It’s true of course that some families are better at it than others. But with careful guidance—optimally by trusted outside advisors—these conversations can lead to understanding, respect and trust.

[1] Edward Pyles, and Thomas Pyles, Maps for Men, A Guide for Fathers and Sons and Family Businesses. 2016. Westbow Press, p. 177

09/30/17

Father/Son Conflict—An Obstacle To Change In Family Business

Often I hear a son in a family business speaking harshly about how his father rejects the initiatives he proposes for changes in the business. Frustrated by rejection, the son may interpret his father’s attitude to mean that he cannot accept opposition to his authority.

Alternatively, the father’s view of the situation may be that his son means to push him aside, eager to take over control. The father, threatened, fears a feeling of diminishment and loss of identity.

The above—although simply put—is a recognized dynamic in family businesses. The details vary as the families and their businesses vary; no two being the same. But behind the simplicity lurks a world of emotional complexity on each side.

What does the business mean to the father? What sacrifices did he make to build it? What were his beginnings? What obstacles did he overcome to establish a viable enterprise? In what way does his business reflect his values, and stand as a source of pride in his life’s hard work? What will happen to him should he one day have nothing to do?

What motivates the son? Ambitious, energetic; educated; enthusiastic; he wants to prove himself and his new ideas. Underneath this though, a range of emotions dwells. For example, he may feel that his abilities will not measure up to his father’s; that he cannot fill his father’s shoes. He may not be able to comfortably articulate his thoughts and vision. And he may be genuinely overconfident—overestimating the value of his modernizing ideas, born as they might be from an education at the best of contemporary business schools.

The two are, in a very real sense, unknowns to each other. And, to avoid potential business disaster, it is critical that they be introduced and reconciled.

This is the delicate work of family-business advisors, who, through disclosing relationship patterns; applying techniques such as psychological assessment tools and behavior modification; teaching skills in diplomacy and negotiation; prepare a ground for mutual understanding and respect.

It seems inevitable that there will be contention between fathers and grown sons in a family business. But by learning each other’s abilities, desires and ideas a ground can be prepared where each generation learns from the other, and a constructive forward motion established.[1]

_______________________

[1] This article reflects ideas in Moveed Fazail, 2013. Fighting for the Crown: The father/son relationship in first generation family enterprises. Family Form Practitioner, July 16, 2013

09/16/17

Women In Family Business—A New Report

An article about women in leadership roles that appeared in the New York Times on September 15, 2017, calls Germany’s Chancellor Angela Merkel an anomaly. Yet women are more likely to have leadership roles in politics than in business. According to Kim Harland, though, this is not the case in family businesses.

Harland is Managing Director of Insights, a not-for-profit organization operating out of Brisbane, Australia. Insights provides online education and tools to support the long-term sustainability of family businesses. Women in Family Business, their recently published e-book, offers a wealth of eye-opening facts about its subject—the impact of women in leadership positions on the health and success of their family businesses.

Here is a small sample of their findings:

“Family businesses are more socially conscious than their non-family business counterparts.” And they are not as concerned with quarterly cash flow and profits, likely because they operate with far less debt.” A comment follows: “This this is truly a family-motivated attitude — what kind of leaders put their families at risk?”

“And that attitude, encompassing social and human awareness, may be one of the reasons why new research has shown that the world’s largest family businesses are far ahead of their non-family business peers in valuing gender diversity at all levels of the enterprise — from ownership, the boardroom and C-suite to every tier of the business.”

“…when women are included, they in turn support inclusiveness in the business. They help to maintain a close and cohesive family that finds value in being together beyond financial wealth. This cohesion shows all stakeholders that they are cared about, building motivation at all levels and creating passion that translates into performance, both financial and non-financial. Eventually, this cycle of care–passion–success becomes self-reinforcing, as success allows for even greater caring.”

The 40-page e-book reveals insights on women in family businesses seen through the eyes of the women who lead them. Illustrating its findings through case studies and Q&A, and culminating with an Action List for women in family business, this publication is well worth a read for both men and women in family businesses, and perhaps a place in your ‘must-keep’ reference files. 

You can download the e-book at: http://www.insights.org.au/women-in-family-business

08/16/17

Toward A Family-Business Exit Plan

In the course of investigating the perceived crisis in business transition planning, U.S. Trust Company collaborated with the Eugene Land Entrepreneurial Center of Columbia Business School to produce a white paper entitled: The Owner’s Journey: Experiences Shared and Lessons Learned.*

The white paper reads as a thorough, in-depth, many-faceted alarm bell. The clarity with which it makes the case for early transition planning—in its multitude aspects—cannot comfortably be ignored—and certainly not by family businesses that wish to survive and transition their mission, vision, knowledge and wealth to future generations.

The authors found that few entrepreneurs started companies with the sole goal of getting rich. Rather they launched companies to fix a problem, to create something new, to act upon an insight that they alone saw, or simply to make the world a better place.

Getting rich or creating a legacy family business may not be the primary motivation of an entrepreneur, but as time goes by:

…capturing wealth and ensuring the sustainability of one’s life’s work becomes, very important.

To attain these goals, broad and careful planning is indispensable. For any business this is a lengthy and challenging process. For family businesses the difficulties involved are even more complex.

Families who have significant business assets need to acknowledge that there are two dynamics: one for the family and one for the business, and these dynamics need to be addressed in coordinated estate, exit and succession planning.

Several exit scenarios are described in the white paper. But for family-business owners, the most desirable among them is to pass the business on to a new generation of family members. However, the authors warn, an owner cannot always count on his/her children to be part of an exit plan. In keeping with the paper’s theme of long-term planning, a list of recommendations are supplied for preparing a family’s next generation to effectively take their places within the business, with a view toward multi-generational success:

  • Communicate your goals regarding the company with family members regularly.
  • Expose children to the business at an early age.
  • Encourage children interested in the business to educate themselves in appropriate skills with formal education and job experience outside the firm. Determine the appropriate person in the family with the right temperament, skills and experience for leadership.
  • Working with a professional psychologist can help with decisions about family succession.
  • Having a board with a majority of nonfamily members can be helpful in professionalizing the plan.
  • Regular family meetings, which can include a third-party expert in family business dynamics, can be helpful.

These recommendations are recognized family-business best-management practices that every family business would benefit from. The emphasis however is on persistence and flexibility through inevitable changes, while preparing for and accepting an unpredictable future.

——————————————————-

*All text in italics are direct quotes from The Owner’s Journey: Experiences Shared and Lessons Learned. Prepared by Eugene Lane Entrepreneurship Center at Columbia Business School in collaboration with U.S. Trust, Bank of America Private Wealth Management

08/3/17

Relationships In The Red

Family businesses fail more often due to relationship challenges than for strictly business reasons.

For some of my blogs and newsletters over the past month or so, I have been mining the wisdom found in Maps for Men, A Guide for Fathers and Sons and Family Businesses by Pyles and Pyles. In it this father and son team has shared an incredibly meaningful understanding of and guide for families in business.

Here is one of their observations about relationships that I find important when thinking about these challenges:

“Relationships are the emotional bank in a family business. Communication is the main currency of the bank, where deposits and withdrawals are constantly being made. Like any bank, when the withdrawals outnumber the deposits, the relationship is in the red. High stakes situations require trust and leadership skills in order to turn anger and hurtful situations into meaningful and constructive dialogue and decisions. Those leaders who have the most influence create a parallel process of solid relationships and effective results.”[1]

As social beings we are dependent upon good relationships and open communication. Failure to cultivate these within both the family system and the business system is a major threat to multi-generational success.

[1] Pyles and Pyles, Maps for Men. A Guide for Fathers and Sons and Family Businesses (WestBow Press, 2016), 162

 

07/7/17

Wealth Transfer And Human Capital

This week I am continuing to present ideas and passages from Maps for Men: A Guide for Fathers and Sons and Family Businesses by father and son authors Edgell and Thomas Pyles.

On page 186, the Pyles’ reference Family Wealth: Keeping It in the Family by attorney and family business consultant James E. Hughes Jr. According to Hughes, the top reason for failure of transferring wealth across three generations “is that family leaders concentrate on the family’s financial capital to the exclusion of its human and intellectual capital.”

The Pyles’ go on to present results of a study by Dr. Dennis T. Jaffe with Wise Counsel Research. The researchers identified a set of seven core qualities common among families whose net worth exceeds $200 million who, through at least three generations, have successfully transitioned their wealth. Among these: Active development of human capital.

When it’s so important, why is this core quality so often neglected? The Pyles’ research shows that the reasons are primarily psychological. Loss of trust, lack of communication exact a high price. Building relationships among family members; accepting weaknesses, developing strengths, encouraging ambitions, imparting values is essential for transitioning “talent” capital through the next generation, and thus ensuring the successful transitioning of monetary wealth as well.

The Pyles’ issue a warning: “Considerable creative and constructive effort can be directed at crafting sophisticated trust documents, elegant business plans, and family constitutions, but the keys to implementation are locked up in the family psychology.”

06/23/17

Maps For Men—A GPS For Fathers And Sons

In my previous newsletter and blog post I referenced one of the most important books on my family enterprise bookshelf: Maps for Men: A Guide for Fathers and Sons and Family Businesses, authored by Edgell and Thomas Pyles—father and son.

The Pyles’ argue that for a family business to be successful fathers and sons must consistently confront sensitive situations and implement crucial decisions—both financial and emotional—in a forthright manner. They believe there is no room for passivity or neglect.

Early in the book the authors acknowledge their deliberate exclusion of mothers and daughters from their discussions—a point of contention which has been raised when I have spoken to others about their book. They write that they have a “deep appreciation for the heroine’s journey, the role of the mother in the family and the leadership provided by women in the business world.” They also recognize their concepts with regard to men may parallel a woman’s journey. However, their work is directed toward helping men understand their relational and generational issues.

The authors define their purpose for the book—set up a framework to help fathers and sons understand and solve their personal and professional issues, improve their communication and decision-making skills and achieve a leadership advantage in growing and managing a family company. Their premise—the way fathers and sons live their lives will be decisive for how the business turns out.

06/9/17

I Have Been Fired Twice By My Father.

No, not me.

Rather this is an opening line I often use when introducing what I do professionally. The original statement was made by a student in a class on entrepreneurship I was teaching at New York University.

The student had related that his father had been saying he wanted to retire soon. The student’s response to this was to increase his own involvement in the business, proposing ideas for expansion and operations efficiency—areas his father struggled with. The student’s father resisted all of his suggestions and told his son in so many words: “Just do what I tell you to do. When you are in charge, then you can do what you want.” When the young man persisted in his bid for increased involvement, his father issued an ultimatum: “My way or the highway.”

Dynamics like these are not uncommon in family businesses, where a son or daughter is pushing to have relevancy; significance; to make a difference, and having their ideas rejected. When their aspirations are interpreted by incumbent leadership as irritants, or threats, an invitation to ‘hit the highway’ becomes an obvious solution.

The foundations of these dynamics are not simple, and solutions may involve psychological intervention to address deep-rooted conflicts. Apart from that, or perhaps in conjunction with it, taking deliberate steps to open lines of communication can be very helpful, providing for honest and constructive conversation about such important considerations as:

  • Values and vision for the business and family
  • Possibilities for the business under the leadership of the next generation
  • Policies and procedures for next-generation family members wanting to enter the family business
  • Areas of the business the next generation may be given ownership or uninterrupted control of
  • Goals of individual family members for themselves and for the family today and ten years from now

It is important to recognize that multigenerational success in a family business is not a random occurrence, but something that requires the guidance of the older generation. In their book, MAPS for Men: A Guide for Fathers and Sons and Family Businesses, Edgell Franklin and Thomas Edward Pyles point out that, “Research on the correlation of success in family business shows that a positive relationship between a father and son represents a strategic advantage.”[1]

I believe this finding is relevant to a positive relationship between any parent and child.

[1] Edgell Franklin Pyles, Thomas Edward Pyles (2016). MAPS for Men: A Guide for Fathers and Sons and Family Businesses. Bloomington, IN: WestBow Press.

05/26/17

Facebook Leadership—Triad For Success

“In a relationship as critical as the one at the top, how do you create open lines of communication, respect differences and grow the business together?[1]“

In his article Sheryl Sandberg Shares the Key to Creating Chemistry at the Top, Zillow Group CEO Spencer Rascoff asks this question. He is probing into the secret of the successful collaboration between Facebook’s “oddest couple” leadership team—Sheryl Sandberg and Mark Zuckerberg. The answers he elicited hit the nail on the head for me when considering what’s needed for growing a successful family enterprise: “carve out time to communicate; prioritize the relationship; find a partner who shares your values.”

The ultimate management challenge for a family business is to open communications.

Without functioning lines of communication a palpable underground of misunderstandings, resentments, personality conflicts, will ripple through the family and the business impacting their workings and the bottom line.

Family meetings and staff meetings held on a regular basis provide groundwork for clearing problems before they build up. Between senior executives, the importance of maintaining constant communication cannot be stressed enough. Lack of strong partnership at the top can seriously hinder an organization’s ability to live its values and fulfill its mission.

Prioritizing relationships is another challenge for family businesses.

 This key point is easily overlooked because of the familiarity born into the family. When everyone grew up with everyone else it’s hard to see beyond personalities and personal histories. But for good or for ill, quality of relationships impacts the prosperity of both business and family.

Shared values lie at the very foundation of family enterprises.

The nature of the business and its mission may change with a changing external marketplace; values are the bedrock that underlies longevity. Again from Spencer Rascoff: “If you don’t have a shared language of values in an organization, it won’t work.”

The success of Facebook cannot be denied. Implementing its executives’ triad of ingredients for success—communication, relationship and values—can help family businesses achieve their own success, now and into the future.

[1] All quotes in this article from: Sheryl Sandberg Shares the Key to Creating Chemistry at the Top, accessible online at: https://www.linkedin.com/pulse/facebooks-sheryl-sandberg-shares-key-creating-top-spencer-rascoff

05/10/17

Innovation—The Surprise Factor

In The Economy of Cities, Jane Jacobs tells the story of 3M. The company started as a supplier of processed sand to metal manufacturers. As an offshoot of their core business, they decided to manufacture sandpaper. And they failed. The adhesive they developed just did not work to stick the sand o the paper. But they did not give up.

And surprise!—Their continued experiments with adhesives eventually led to the development of a whole line of tapes—including  that office staple, Scotch Tape—and much more.

A friend told me about a conversation with a master ceramic artist at this year’s Smithsonian Craft Fair. The artist said that often when he opens his kiln to remove the fired piece; it is not what he expected. He finds instead a beautiful surprise!

So innovation, with its inevitable process of trial and error, should not, and importantly, must not be feared. And it’s also no use to insist on finding what you initially are looking for. The secret: be open to surprise!!

04/29/17

Innovation—The Fail Factor

Nothing stays the same. Things find fresh avenues of growth and prosper or become stagnant and fail. This is certainly true of family-led enterprises. As a family business continues from generation to generation, significant social and economic changes can nullify what had been their core business. A culture of innovation is needed to ensure continued multigenerational success.

Two things are sure about innovation. One: It is necessary for long-term survival. Two: it is prone to initial failure.

Innovation undertaken when beset by hostility, by doubts; under pressure to succeed; under fear or failure, situates the whole process on unstable ground.

In Failing Forward: Turning Mistakes into Stepping Stones for Success, author John C. Maxwell writes: “To succeed you have to be open to problems. You have to be open to failure.” He presents examples throughout his book of many well-known people who failed—on average more than once—before succeeding.

As it goes in entrepreneurship, so it goes with innovation. The message: don’t be afraid.

04/14/17

Soft On People, Tough On Ideas

On March 31, 2017, in his New York Times Corner Office column, Adam Bryant published: Jessie Woolley-Wilson on Creating Benevolent Friction at Work, a condensed version of his interview with Jessie Woolley-Wilson, C.E.O. of Dream Box Learning, a provider of math-education software.

Through Bryant’s article, we learn about how language and cultural differences within her diverse family influenced Woolley-Wilson’s leadership style. Speaking about their frequent dinnertime arguments she says: “What I realized was that they were very engaged in discussions about the economy or about what was going on in different countries. I was witnessing the best part of “benevolent friction” — to be hard on ideas but soft on people — because there was a lot of love and hope about the future.”[1]

Woolley-Wilson sees “benevolent friction” as a positive thing within a work community: “if you don’t have pressure on the carbon, you never get to the diamond. You can still be very respectful, and assume everybody has a spark, but we have to subject our ideas to the toughest scrutiny because our work is important.”[2]

In a start-up company, she says: “you don’t know what tomorrow will bring, so you have to be constantly learning and be adaptive with your colleagues. You might think you have a role to play, but you have to listen and be responsive to your colleagues for the team to really win.”[3]

Friction is an inevitable part of all family businesses. And here too, it can change its negative aspect to a positive.

Like start-ups, family-businesses traverse uncharted territory. And Woolley-Wilson’s leadership style provides invaluable guidance. Perhaps more challenging to implement given the dynamics inherent in family businesses, embracing the friction between family members— and colleagues—with love and listening allows you to be hard on ideas and soft on people – thereby allowing them to become productive elements in the family enterprise.

 

[1] Bryant, A. (2017) Jessie Woolley-Wilson on Creating Benevolent Friction at Work. The New York Times. Available at: https://www.nytimes.com/2017/03/31/business/jessie-woolley-wilson-dreambox-learning.html?rref=collection%2Fcolumn%2Fcorner-office&action=click&contentCollection=business&region=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=collection&_r=0)

[2] Ibid.

[3] Ibid.

04/9/17

A Sense Of Gratitude By Any Means

One of my more important life exercises is a nightly examination of my day, starting with recognition of what I am grateful for–both large and small. So when “Want to Give Like a Rockefeller? Be Rich in Gratitude” appeared on April 1st in the New York Times Personal Business Column, it resonated personally.

The article is a brief history of the life, values and accomplishments of David Rockefeller, who died March 20, 2017 at the age of 101. It reads as a success story in the transmission of family values, high ideals and deeply felt attitudes: responsibility, humility, generosity, pride in the family legacy and one of the most important— a sense of gratitude.

“Among the values David passed down to his children was his profound gratitude,” said Lukas Haynes, executive director of the David Rockefeller Fund. “He expressed gratitude for what he inherited from his father and grandfather and his opportunity to carry it forward.”[1]

Of course few families have the wealth of the Rockefellers. But wealth is not a prerequisite for gratitude. For myself, I am grateful each day to be sharing of my unique abilities in ways that matters to others –and for the opportunities to carry this forward.

Defined as a “the quality of being thankful; readiness to show appreciation for and to return kindness.”[2] It is an attitude that can be cultivated. Recognizing and developing a sense of gratitude for what you have in your life day to day has been shown to have a positive impact on your relationships, your health and even on your brain. According to Dr. Emiliana Simon-Thomas, science director of the Greater Good Science Center:

“In studies, after eight weeks of practice, brain scans of individuals who practice gratitude have stronger brain structure for social cognition and empathy, as well as the part of the brain that processes reward.”[3]

Clearly their inherited sense of gratitude has been a significant factor in the success, longevity and vitality of the heirs of David Rockefeller, and therefore may be seen as an attitude worth emulating for family businesses along the way to their own future.

[1] https://www.nytimes.com/2017/03/31/your-money/david-rockefeller-philanthropy.html
[1] http://www.businessinsider.com/why-extremely-successful-people-swear-by-this-5-minute-daily-habit-2015-11
[1] Ibid.

04/1/17

Why You Want Gravity in Your Family Business

Many decades have passed since Isaac Newton set forth his law of universal gravitation that states, in part, that every mass attracts every other mass in the universe, and since Albert Einstein published his theory of general relativity revealing a view of gravity where mass influences the dynamic shape of space-time.

But gravity isn’t only about physics anymore–it’s a key element in the long-term success of family enterprises.

Perhaps first used by Claudio Fernández-Aráoz, Senior Adviser for the global executive search firm, Egon Zehnder, the term “family gravity” describes what makes successful family businesses different from non-family businesses. According to Fernández-Aráoz, while family firms need the same operational governance structures as non-family enterprises, they also must nurture what makes them special as family enterprises.

Different than leadership, to have “family gravity” means there is at least one and as many as three family members who are—like the sun at the center of our solar system—at the center of the family organization. “These people personify the corporate identity and align differing interests around clearly defined values and a common vision… And they have strong personalities that draw talented people into their orbits and keep them there.”1  This central group focuses on a long view of the future “on the next generation, not the next quarter.”2

Like the gravity of physics, this center of “family gravity” has properties that attract—in this case the ingredients for success—and the weight to influence shape and form—in this case the dynamics and legacy of the family and the business as they travel into their future.
 
For a conversation about the gravity in your family enterprise contact me by email at rickraymond@thefamilybusinessleader.com. To talk please call: 212-777-0083.

1 Fernández-Aráoz, C.F., Iqbal, S., Jörg Ritter, J. Leadership Lessons from Great Family Businesses. Harvard Business review. Available at https://hbr.org/2015/04/leadership-lessons-from-great-family-businesses

2 Ibid.

03/24/17

Accident and Intention

A young family business—first or second generation—in which the family’s next generation have begun to find their places, has reached a point where two possible paths to becoming a multi-generational enterprise emerge. The incumbent generation can either let things play out willy-nilly—without any plan as to what the business may look like in the future—and perhaps, quite by accident, become multigenerational. Or they can begin with intention.

Intention sets the stage and gets the wheels turning. The thinking starts with what’s possible for the family and the business under future generations.

Starting with intention the current leadership can set their sights on a long-term vision: wealth creation across generations, and a legacy. With this in mind they can then draw upon centuries of knowledge and documented experiences from those families that have created successful multigenerational family enterprises.

To pave a surer path to multi-generational success, start with intention.

03/18/17

Family Businesses Got Edge

A range of factors inherent to family businesses give them “the edge,” a natural set of competitive advantages over non-family business. Included among these:

  • Values embedded over generations
  • Generations of accumulated knowledge of their business and the industry in which the operate
  • Agility within rapidly changing markets derived from interaction of family, management, and ownership
  • Desire to protect the family name and reputation translating into high product/service quality and higher returns on investment
  • Next-generation ingenuity helping the family business maintain touch with emerging technology and the youth market
  • Concentrated ownership structure leading to higher overall corporate productivity
  • Longer-term commitments that stabilize investments in people and innovation

A first-generation family business that recognizes these advantages up front is better positioned to develop a far-seeing vision and empower the business’ growth into a multi-generational enterprise.

03/10/17

Impact Stewardship and Family Business

I recently saw Perpetual Revolution: The Image and Social Change at the International Center of Photography in New York City. Included among the works on exhibit, a riveting video entitled “3 Seconds.” https://www.youtube.com/watch?v=iQYiRwNd7ug

“3 Seconds” begins by stating the age of the earth—4.5 billion years; time since the appearance of our species, homo sapiens—140,000 years. Then, conceptually condensing the earth’s lifespan into the space of one day, 24 hours, the video goes on to reveal that on that scale mankind arrived on the scene in the last 3 seconds of the day—3 seconds before midnight. With excruciating clarity the video presents images of the impact mankind has had on our world’s environment in just those 3 seconds… and asks: “what of the 4th second?”

What will be the impact of our stewardship in the next second, and the next?

In the condensed timescale the video suggests, the entire history of family business—the oldest form of business—has taken place in the blink an eye. Where will it go from here?

Stewardship, a concept readily understood in environmental issues, is also one of my favorite family business concepts. Simply stated: “My role as head of the family business is to receive it from my predecessor, care for it, nourish and grow it, and pass it on to the next generation in better condition than when I received it.”

This is a valuable consideration, as most family business don’t survive past their 3rd generation. What does the future hold for the 4th generation in your family enterprise?

03/2/17

Success—An Inspired View

In her bestseller, Thrive: The Third Metric to Redefining Success and Creating a Life of Well-Being, Wisdom, and Wonder[1], Arianna Huffington makes an impassioned and compelling case for the need to redefine success in today’s world through well-being, wisdom, wonder and giving.

Is this family business?

 

[1] Thrive: The Third Metric to Redefining Success and Creating a Life of Well-Being, Wisdom, and Wonder, Ariana Huffington, 2014, 2015. Harmony Books, Crown Publishing Group/Penguin Random House, LLC, New York

02/25/17

Benchmarks for Family Enterprise Survival

In September, 2012, Dennis T. Jaffe, Ph.D., of Saybrook University and Jane Flanagan, of Family Office Exchange published Best Practices of Successful, Global, Multi-Generational Family Enterprises. Responding to the lack of solid research into strategies that support long-established family enterprises, they undertook an academic-level study with the goal of benchmarking best practices for multi-generational longevity.

Their research confirmed what has long been known among family-business advisors about best practices of family-enterprise governance, family relationships and development of next generation members:

Nurture the Family
Steward the Family Enterprises
Cultivate Human Capital for the Next Generation

Jaffe and Flanagan found that successful family enterprises strive for a balance among the three. If problems arise in any of these areas, the family does not see itself as successful.

In upcoming blog articles I will expand on each of these best practices areas, and finally discuss the importance of balance among them.

02/18/17

Star Trek Ideals and Family Business

It’s a well-known fact that since its first airing in 1966, the Star Trek series has inspired generations of young people to become scientists. YouTube abounds with videos of astrophysicists; theoretical physicists; astronomers; cosmologists; giving lectures, taking part in conferences, presenting their latest findings. And in video after video, the scientists invoke their debt to Star Trek.

Star Trek’s optimistic view of the future continues to bring young people into careers where they see themselves helping to make that future a reality. In a way, the Star Trek world might be seen as a global business owned and operated by and for the family of mankind, one with diversity, innovation, communication, cooperation and courage.

The Star Trek world has similarities to well-established multi-generational family businesses. It has a far-seeing vision. It has a mission, and it has uplifting values. It encourages innovation—often the very lifeline for survival. Among long-lived family businesses can be found perhaps, some of the ideals that Star Trek showcases; a zest for exploration, flexibility, loyalty, job placement by virtue of inborn talents and acquired skills, mutual respect, integrity in leadership.

Could this kind of view, and these types of ideals, inspire your family’s young people to seek their place and their careers within your family business? What kind future do they see? Is it one they can wish to help realize?

02/11/17

Saved The Business—The Only Problem Is…

We all know the story of the surgeon reporting the operation went well; the only problem—the patient died.

Some thirty years ago family businesses became a subject of investigations, and advisors rushed to help them. Their initial thinking: because it is inherent in the nature of family-owned enterprises that leadership is by family members, the businesses lacked the necessary acumen and skills to be successful. Consequently, they focused on establishing procedures, protocols and practices that helped the businesses prosper. The only problem—the family died.

Since then emphasis on helping family businesses has shifted focus—and importantly so—onto family needs and goals, with expertise coming from a wide range of areas including psychology, family counseling, family systems, estate planning, mediation, conflict management, career development, substance abuse, wealth management and leadership development.

My own experience though, in providing life support for early-generation family businesses and their families, has revealed that many need to learn the importance of professionalizing the business and understand how to implement professionalization if they want to be successful across generations.

Professionalization is the process of moving a business from an owner-centric to a management-centric entity—one in which the business operates from established processes rather than requiring its leadership to provide daily supervision. Achieving this goal allows leadership to focus on the necessary entrepreneurial roles of business development, client cultivation and long-term planning for both the family and the business.

02/3/17

Listening to Chopin

An entrepreneurial client recently mentioned one of his favorite Ted Talks: The Transformative Power of Classical Music, by presenter Ben Zander. By way of various piano renditions of a piece by Chopin, Zander illustrates several aspects of understanding classical music that I found extremely relevant to family business success. https://www.ted.com/talks/benjamin_zander_on_music_and_passion

Ben Zander is conductor and music director of the Boston Philharmonic Youth Orchestra. I had known him through his book, national best seller, The Art of Possibility: Transforming Professional and Personal Life. In it he describes his leadership style as a conductor as one of embracing possibilities. He has subsequently taught workshops on his approach to leadership in corporate settings.

Several ideas from his Ted Talk came through to me as having critical relevance to family business:

  • No one is tone deaf; rather, perhaps, they have not learned how to hear the music. The capacity of family members to be instrumental in business success may be overlooked even by themselves. Look for signs of it in their conduct of everyday life.
  • An important characteristic of a leader is not doubting for one moment the capacity of people to realize whatever it is that the leader is dreaming.
  • The job of a leader is to make the players powerful, and this awakens possibilities of creativity and expression. Making other family members powerful awakens possibilities in them that will benefit the family.
  • Placing similar emphasis on every note in your business will distract you from your view of the big picture.
  • Expecting a perfect performance does not allow for the creativity and spontaneity that produce a resilient and viable next generation.

All of these ideas point to ways of embracing possibilities within your family business. They speak of a leadership style of openness and confidence in the family, the business vision, and in success for generations to come.

01/27/17

Envisioning A Great Family Business

My blog this week is built around two quotes from Sam Johnson, the fourth-generation patriarch of the SC Johnson Company. The first:

“Each generation has the responsibility of bringing to the business their own vision for the future of the business.”[1]  

Recently my wife and I spent a weekend at the Mohonk Mountain House on the southern edge of the Catskills in upstate New York.

Built by twin brothers Albert and Alfred Smiley in the 1870’s as a small getaway for family and friends, Mohonk Mountain House continues today as an historic resort hotel owned and operated by the Smiley brothers’ descendants. Subsequent generations have added to both the house and to the adjoining Mohonk Preserve whose over 9300 acres of trails, woodlands and pastures are open to guests of the Mountain House and the public.

I marveled at the scope and durability of the Smiley brothers’ original vision. While the house has been updated with modern conveniences, the descendants of Albert and Alfred have not moved far from the original vision. It retains its 19th century character, and the values of stewardship, reflection, and renewal are all evident to visitors and guests.

Again from Sam Johnson:

“A great family business, no matter its size, has to be more than a financial investment. To survive long term, it must be a social positive for the employees, a benefit for the community, a passion for future generations of the family, and committed to earning the goodwill of the consumer every day.”[2]

This kind of success starts with a vision–like the Smiley brothers’–no matter how small or how large; with an intent no matter how viable; with a first step no matter how insignificant, embracing the wisdom of Sam Johnson.

[1] Ernesto Poza, Family Business, 3rd Edition. (Independence, KY: South-Western Cengage Learning. 2010, 2007), 100

[2] Ibid., 294

 

 

 

01/20/17

Transition, Transition—How Goes the Transition?

Family businesses offer a unique opportunity to examine what it takes to transition from the entrepreneurial mindset of the founder to that of an established and complex enterprise. The oldest form of business, family firms represent the majority of businesses worldwide. Given that they are ubiquitous, one might assume their best practices are well understood. Yet most fail by the third generation.

One reason for family-business failure may be embedded in their very beginnings. While the founding entrepreneur’s decision to start a business may be intentional, the transition to becoming a family business may be less intention than something that ‘just happens.’ The entrepreneur starts a business, gets married and at some point has children. The children may get taken to work by a parent struggling to balance life and work issues. At some point the children start helping out, providing inexpensive labor, and ‘willy-nilly,’ learning the workings of the business.

Over time one of the children assumes a greater role in the business, eventually beginning to make important decisions. Another child may enter the business simply because there is a job opportunity. A natural hierarchy develops as the business calls forth and accommodates the capacities of each of the siblings.

As the children’s capabilities increase, the entrepreneurial founder spends less and less time working the business, and one day decides it’s time to retire. The children inherit the business with the condition and promise that their parents will be taken care of. A simple, straightforward transition has taken place.

Typically these grown children of the founder will marry and have children who become the family’s third generation. And here lies a critical family-business turning point.

When the time comes for this third generation to inherit ownership and control of the business, their parents look back at the transition model that functioned when they inherited. And it is found wanting. By now things have become significantly more complex. Not just siblings anymore; cousins are now involved. A new model of inheritance, role distribution and governance must be found.

Understanding this inevitable pattern is the first step toward a successful transition from entrepreneurial to multi-generational-family-business success.

01/13/17

Pathways of Ownership Distribution

It’s not uncommon for a family to pass on ownership of their business equally among all their children. When this second generation passes on their shares these may again flow equally among their children—the family’s third generation. According to this approach, the two siblings in the second generation will each receive ownership of fifty percent of the business. Then, for example, if one of these siblings has two children, and the other has three children, the two children of the first sibling will each inherit twenty-five percent of the business, and the three children of the other sibling will each inherit sixteen percent of the business. In legal terms this distribution by equal shares is known as per stirpes.

Alternatively, each of the third-generation children might receive an equal percentage of the business; in law this is known as per-capita distribution. In the example above each of the five, third-generation offspring would inherit twenty percent of the business.

According to Susan R. Schoenfeld, CEO of Wealth Legacy Advisors, neither approach is inherently fair or unfair—each family should decide for itself.

01/6/17

Family-Business Structure—Three Circles

Establishment of smoothly working interrelationships among the business family, business ownership and business management is one of the challenges as well as strengths of a family business. In the first generation these groups invariably have all the same players. But as generations pass the picture can become significantly more complex. To help with visualizing the interdependence of the three overlapping groups, or subsystems, comprising the family-business system, Renato Tagiuri and John Davis developed an organizing framework in simple graphic terms (below).

Microsoft Word - Three Circle Graphic.docx

Their Three-Circle Model provides a basis for understanding the seven interest groups that emerge, each with its own legitimate perspectives, dynamics and goals. The long-term success of the business depends on their independent functioning, interdependent relationships and mutual support.

 

 

12/30/16

Familiness–At Work and At Rest

Familiness in family businesses: The nature or set of resources of the family in business contributing to its competitive edge including its culture, reputation, degree of confidence, level of communication, entrepreneurial spirit, management and decisions making capabilities, trust between individuals and interest groups, shared beliefs, commitment, flexibility, creativity and innovation. (Adapted from Family Business wiki, http://www.familybusinesswiki.org/Familiness)

Familiness and the winter holiday season: That time in which we pause from our business activities and the routines of our ordinary daily lives to be in community with friends and family, to eat a bit more and perhaps sleep a bit more, to recall the fantasies we learned as children, and to retell mysteries of Hanukkah and Christmas.

I hope that you found your winter holidays joyful restful and rejuvenating, and that you enjoy the very best of familiness in the year ahead.

12/25/16

The Longest Night

The Longest Night

The sun is disappearing… we must bring it back.

Throughout parts of the globe where the seasons change people have been observing the winter solstice for millennia—imploring the sunlight to return and celebrating its readiness to do so.

I find myself writing this blog on the evening of December 21st—the winter solstice—the longest night of the year. Images of families come to mind—the elders and the young ones.

On winter solstices past, members of the Iroquois Nations went to sleep early to invite “the dreaming” where visions would instruct their lives for the following year.Iroquois Nations

The darkness of this night, open to interpretation, inspired many different traditions and rituals. Ancient Mongolians entered a mystical tent that represented the world, where their shaman undertook a spiritual journey to the North Star to clean their souls of sins. In ancient Rome the people honored the God Saturn with the weeklong feast of Saturnalia. With the return of the light many cultures celebrated the rebirth of a God, and from these traditions the holiday of Christmas was derived.

Modern astronomy has revealed that the sun does not disappear…that the cycle of the seasons is due to the earth’s axial tilt. But the psychology and emotional impact associated with the winter solstice has not changed. We shrink from the darkness, the winter cold, and gather our families and communities to call back the light and warmth. 

As citizens of the earth, cycles and our responses to them are built into our DNA. Everything about our lives is cyclical, and that applies to family businesses no less than individuals. To them as well comes an inevitable time of change; a time that calls for the transition of leadership to the next generation, and the next. Here too, such a transition is open to interpretation. How will the family see this change? As an end, and frightening? As a beginning, and hopeful?

A family business, guided by the light and warmth of its incumbent leadership may struggle with their vision as that light wanes. And just as the sun when it dips below the horizon is not really gone, the wisdom and perspective of the founding generations continues to influence future ones.

Light endures.

12/10/16

Authentic Leadership–Suggested Holiday Reading

Over the past month I have found myself recommending Warren Bennis’ book, On Becoming a Leader, to a number of people. Bennis, who passed away in 2014, was a prolific writer on leadership and, according to management guru Peter Drucker, this is Bennis’ most important book. I find it intriguing that I am now recommending it so often.

As per Bennis, ingredients of leadership include vision, passion, integrity, self-knowledge, constant learning, curiosity… even daring. Bennis writes: “Good leaders engage the world. Bad leaders entrap it, or try.”1

One of Bennis’ most popular quotes illustrates his perspective on how leaders can be creative: “There are two ways of being creative. One can sing and dance. Or one can create an environment in which singers and dancers flourish.” Visit Freedom Inc. to hear Mr. Bennis expand on this quote in a video interview.

In the ideas he set forth in this book, originally published in 1989 now a classic, Bennis lays a foundation for authenticity and personal ethics in leadership.

Since a capacity to develop leadership qualities in all family members is characteristic of family businesses, I strongly suggest On Becoming a Leader as productive holiday reading for all. It’s on my list to re-read in 2017.

___________________________

1.Warren Bennis, Becoming a Leader (Basic Books, 2009), 38

12/3/16

Bequeathing Family History

Storytelling is basic to human society. Around the globe and throughout history storytelling has been used to communicate traditions, beliefs and values. Stories help to strengthen the form and order of the cultures and societies to which they belong. According to Judith Kolva Ph.D., professional personal historian and CEO of Legacies in Ink:”Our stories are the heartbeat of the human experience. They teach us who we were, who we are, and who we can be.”1

In her article: Story Power: Families’ hidden asset, posted on November 30th in The Practitioner, the online publication of The Family Firm Institute, Dr. Kolva cites sources that extend the importance of storytelling to longevity in family businesses. Her sources speak of the telling and retelling of a family’s most important stories as best-practices for successfully preserving wealth.

Despite the critical importance of making time at family gatherings to share their unique history, it seems few families do. They fail to understand that family stories are important assets; legacies that can help make them less vulnerable to the all-too-common ‘rags-to-riches-to-rags’ scenario within three generations. Or, they just cannot see how to get started.

Dr. Kolva describes the difficulties involved in initiating and continuing the storytelling process as “Someday List Syndrome.”2 In her article she offers many suggestions and strategies for overcoming these difficulties.

Why not visit the article page and pick some of these suggestions to try within your own family, https://ffipractitioner.org/2016/11/30/story-power-families-hidden-asset/.

__________________

1.Judith Kolva. “Story Power: Families’ hidden asset, ”The Practitioner, November 30, 2016. https://ffipractitioner.org/2016/11/30/story-power-families-hidden-asset/

2. Kolva.

11/26/16

Diversity and Success

I recently heard Jennifer Brown, author, Tedx-Talk speaker and entrepreneur, talk about the social and economic advantages associated with diversity. 

In her new book, Inclusion, Diversity, the New Workplace & the Will to Change, Jennifer calls upon people who can drive change to embrace diversity. She argues that when we build systems that embrace diversity in all its forms, we directly impact the bottom line; and that diversity is essential for the viability and sustainability of every organization.

She identifies a bias toward our own thinking and our propensity to go with sameness as challenges to diversity. Importantly, she recognizes that diversity issues cover much more than race and gender. They extend to areas of leadership, our relationships, and collective customs.

Her talk got me thinking about challenges to diversity in family enterprises as they transition from one generation to the next. The leadership style of the founders may be significantly different from that of the next generations, and a stubborn prejudice in favor of one style can be detrimental to the future success of the business and the family. It’s important that family-business leaders recognize that the marketplace and the social environment will continually evolve. Different conditions will inevitably call upon different natural abilities in next-generation family members.

The hard-driving dominance of a founder who grew the business making tough decisions may differ from the relationship-style of the next family leader–a style perhaps now needed to carry the business and the family through the next generation.

11/11/16

The Inside Three

As I sit down to write the blog for this week, the election is heavy on my mind. On the receiving end of change, I am flooded with emotions.

I keep returning in my thoughts to author Henri J.M. Nouwen’s The Return of the Prodigal Son: A Story of Homecoming. Inspiration for the book sprang from the feelings Nouwen experienced while studying Rembrandt’s painting of a scene from the parable. He saw parallels in his own life—the younger son’s departure and return, the father’s joyous restoration of his place, the elder son’s resentment and ultimately the father’s compassion.

Nouwen found each of these archetypes in himself and suggests they are in all of us, both male and female. The younger son’s need to prove to himself and others that he is worthy of love and acceptance—often searching where they cannot be found; the elder son’s resentment, absence of joy, and obsession about being loved, felt as: “when I hear others praised it is hard not to think of myself as less praiseworthy;” the father’s infinite compassion, unconditional love and everlasting forgiveness, all resonate within us.

As the author sees it, we must live these types to be complete, passing from one to the other; at times returning to experience again the psychology of the younger and elder sons as we grow. Many pass through all three stages, some more quickly than others. Some never complete the full journey.

It is, in Nouwen’s words, “through grief, forgiveness and generosity that we become the father.”

Certainly, for members of family businesses, it is by living this journey that we truly become leaders of ourselves, our families, and fathers of our family legacies.

If you would like to have a conversation about the journey of your family business contact me at rickraymond@thefamilybusinessleader.com. To talk please call: 212-777-0083.

11/5/16

Purpose and Love

Last week I heard author Patrice Tanaka, http://joyfulplanet.com/books/, speak about the role that having a purpose has had in her life, and the benefit and importance of knowing one’s purpose in achieving success and satisfaction in life and career.

She mentioned that significant research reveals that “purpose-driven” organizations outperform “profit-only-focused” organizations. Personally I had no doubts about this, and was thankful for the confirmation

During her talk an audience member commented that she saw the purpose of life was to love and be loved –love the work you do and be loved for what you do–who you are.

Immediately, thoughts of purpose and love within family businesses came to mind. I venture to say that it is impossible for a family business to sustain itself through multiple generations without both.

10/28/16

The Top Seven Things I Learned at Crain’s

Last week I attended the Crain’s New York Family Business Summit where I heard fathers, daughters, sons and siblings discuss the joys and challenges of working side by side. I listened to stories of how families managed to grow their businesses with each successive generation, and learned how family businesses are seen from the unique perspective of non-family CEOs. http://www.crainsnewyork.com/events-calendar/details/4/3417544

Here are my top seven takeaways

1. In a family business good communication is learned early within the family environment.

2. A family business can be like a tree with many branches growing in a variety of directions, but all branches have the same root.

3. When instilling motivation in a 400-person organization, know that some people will ‘get it’ and others won’t. Focus on the ones who do. Money helps too.

4. Multi-generational family enterprises who own their real estate can better control their destiny.

5. Ten years ahead is not too early to start planning for the transfer of leadership from a non-family CEO to a family member.

6. Coming on board early and learning the business from the bottom up proves invaluable for someone who subsequently takes on the role of CEO.

7. Family firms should seek a president who has an all-encompassing perspective on the business, as well as presidential and leadership qualities. If these qualities are not found within the family, go outside to hire the next-generation leadership. A subsequent leader might be a family member.

10/21/16

That Which Endures

I recently received a review copy of Geoff Colvin’s new book, Humans Are Underrated: What High Achievers Know That Brilliant Machines Never Will.[1] In it he asks which human skills will be highly valued tomorrow, given the growth of ever more awesomely able technology.

Calvin observes that the skills valued by the economy are changing. He explains that mastering technical skills that have been in demand in the past, no longer makes us different. In her review of the book, Pulitzer-prize-winning historian Doris Kearns Goodwin writes that the skills that differentiate us are: “Instead, empathy, creativity, humor, relationship building, and expressing ourselves with the greater power than logic can ever achieve.”

I can’t help think of these as inherent qualities of successful multi-generational enterprises.

I like Colvin, not for dispelling the unspoken fear of being replaced by a machine, which does certainly appear from time to time—not so much for me as for my children—but for emphasizing the value and importance of inherent talents and personal qualities over and above skills that can be mechanized.

It is, then, the vital human touch that will carry our businesses; our economy; into the future.

______________

1 Colvin, Geoff. Humans Are Underrated: What High Achievers Know That Brilliant Machines Never Will. New York: Portfolio/Penguin, 2016.

10/14/16

Dreaming, Intention and Process

If your dream is to see your children carry on the family business, you must both look at every day with that intention, and enjoy it as a process. And, as Seth Godin writes in a recent blog: “…the end result is always at the end of an arc, always the result of many steps, of earning trust, of building a connection.” http://sethgodin.typepad.com/seths_blog/2016/10/now-is-never.html

10/9/16

Letting the Children Go

To all families there comes the time of letting the children go. Sooner or later, they leave home and move out into the world. 

But for parents, truly letting children go is often much more complex than that. It requires the emotional cutting of ties with expectations; hopes; dreams—about what our children should do with their lives; who we think our children are; our views of their abilities; personality; gifts; ambitions.

For business families especially, expectations confront realities with regard to the roles the children could, should, will, will not play in the family business. How are the children disappointing, perplexing, annoying?

By tying themselves to agendas for their children’s future, parents impinge on their own inner peace. It’s really hard to see and be truthful about these inner agendas, and harder still to let them go—but this way lies freedom.

The children are set free to follow their own paths—to continue in our footsteps; to surpass us, to do less, to succeed, or fail. And parents are set free as well, to explore the challenges and rewards their own future holds.

09/30/16

Decisions—Instruments of Movement

When struggling with a theme for this blog, I often seek inspiration from Seth Godin, well-known author, entrepreneur and marketer. In a recent blog entitled The ripples, Godin opens with: “Every decision we make changes things.” http://sethgodin.typepad.com/seths_blog/2016/09/the-ripples.html

It follows therefore that every business decision we make changes the business. It can be large–move the business from Brooklyn to Florida–or it can be small–meet a casual contact for coffee at Starbucks. The apparent size of the decision does not foretell the size of the consequences.

Some decisions are made for the short-term, some for the long-term. But decisions are instruments of movement… and what is seen initially as a short-term decision can start a series of dynamic changes that continue far into the future.

At the end of the same article, Godin asks: “How did you get to where you are? Who is going to go even further because of you?”

It may be useful in the conduct of our day to day business to keep this in mind. What decision that you made today, however small and ordinary, may bring your business and your family further than you can imagine? For generations.

09/24/16

Women—A Powerful Presence in Family Business

Some of the world’s oldest businesses are family businesses, and women have perennially played significant roles in them. From generation to generation women have served in one or more of these high-level capacities:

  • Business partner, playing a functional or organizational role
  • Senior advisor and business confidante to the CEO
  • The keeper of family values and chief advisor to the family’s upcoming generations.

Today women have become visible as prominent business leaders worldwide.

At the 4th Annual Global Family Business Event, coming up on September 29th, the keynote speaker will be Harshbeena Zaveri, leader of the engineering firm NRB Bearings and one of India’s most powerful business women.

https://www.eventbrite.com/e/global-family-business-event-leading-an-international-family-firm-tickets-26881440111.

*Previous speakers at this event have included:

Lena Jungell, granddaughter of Fazer Group founder Karl Jungell. Starting in 1891 as a small cafe in Helsinki, the Fazer family now owns an international bakery and confectionary company.

Ana Urea, one of the owners of The Privax Group, a conglomerate of predominantly fashion-related family businesses, now involving its second and third generations. The Privax Group is the current industry leader throughout Canada and Latin America.

Raya Strauss Ben-Dror, and her daughter, Nava Michael-Tsabari of The Strauss Group. Starting in 1938 with two cows, the company sold dairy products. The Straus Group is now a multinational family business and Israel’s largest food and beverage company.

*See past events at http://blogs.baruch.cuny.edu/fieldcenter/global-family-business-event-3/

09/9/16

Momentum–Let it Ride!

The NY Times’ Corner Office, by Adam Bryant is one of my favorite business columns. In it he reports on his interviews with business leaders. On Sunday, September 2, he turned his spotlight on Ben Chestnut, CEO of MailChimp.

When Bryant asked him to name some of his leadership lessons, Chestnut’s answered: “Never sacrifice momentum. I might know a better path, but if we’ve got a lot of momentum, if everyone’s united and they’re marching together and the path is O.K., just go with the flow. I may eventually nudge them down a new path, but never stop the troops midmarch.”

This lesson came to mind while I was working with a client who was trying to decide on one of several possible paths. The choice became obvious upon considering where there was the greatest momentum, and thereby the possibility of a quicker return.

Recognizing a path with momentum can be tricky, but it can make all the difference in your business’ success.

08/25/16

Hot Tips in a Small Red Package

In October of 2008, consultant David Bork published a small book filled with common sense advice and tips for business families, and family businesses. The Little Red Book of Family Business is full of pragmatic perceptions and useful practices covering issues from attitudes to wills.

On decision making Bork writes:

Families often fall into the trap of having everyone in the family involved in making all decisions. This family pattern of involving everyone is symptomatic of a business that does not have clarity of roles, responsibility and accountability for different things.[1]

On practices and policies:

In family businesses, one can craft an elegant business solution, but the keys to implementation are always locked up in the family psychology. If you pay attention to the elegant solution and the family psychology, you will be more successful in your implementation rate, and your satisfaction quotient and will be much higher.[2]

[1] David Bork, The Little Red Book of Family Business. (Sampson Press: Coda Corporation, 2008), 46.

[2] Bork, 65.

08/16/16

Facing Conflict in The Family Business

All family businesses—and all families—at one time or another face conflict. And it can be extreme. Understanding what triggers conflict and how it develops is useful. Understanding how to manage it is even more important—serious advice offered by family-business consultants Doug Baumoel and Blair Trippe in their new book “Deconstructing Conflict: Understanding Family Business, Shared Wealth and Power.”

In the course of their analysis of conflict in family business, Baumoel and Trippe argue that conflict plays a valuable role in our development; that only through being challenged by conflict do we learn, grow, and advance as individuals, families, companies, and as a society. Further, they submit that it is possible to learn how to manage family business conflict in ways that ensure the success of families and their businesses for generations to come.

Left unaddressed, they warn us, conflict leads to erosion of relationships and waste of valuable resources and opportunities.

The authors have developed an equation by which they can help a family enterprise understand why they are stuck or in conflict and what approaches are needed to move the system forward.

I heard Doug and Blair speak about their ‘conflict equation’ this past April at the annual conference of Attorneys for Family Held Enterprises. From their presentation, I took away effective language for discussing conflict, and a viable process for transforming the consequences of conflict from upheaval to growth.

08/10/16

Stewardship

One of my favorite perspectives on family business is that of stewardship, which is an attitude of seeing our responsibility in taking over the family business from our predecessors as a mandate to grow and improve it, and to pass it on to the next generation in better shape and with greater possibilities than it had when we received it.

08/4/16

A Father’s Legacy

Several years ago my daughter gave me for Father’s Day a journal entitled A Father’s Legacy—Your Life Story in Your Own Words.

Each page has a question with space to write on themes from a lifetime of experiences—childhood, family life, education, career, love and marriage, parenting. It asks for recollections of time spent with school friends, of summer holidays, the sports I played, my favorite memory of my mother, what I remember about my first date (being nervous, and asking my mother if I could use her car the day after passing my driver’s exam—she said yes), of my greatest joy in being a father—to name a few.

I have been adding to the journal, a little at a time, with increasing appreciation of the thought behind the gift. It is more than a way of passing stories along. It is a way of memorializing the values that built the stories—values that build families.

I know these memories will be cherished, as I cherish the memories of my parents. The success of a family business is in the family. The joy is in the family. Without that, what is there?

07/28/16

Creating Lasting Value

LinkedIn affords business people the opportunity to learn from many important thought leaders through their posts. Among others, I follow the posts of Gerald Hassel, Chairman and CEO of BNY Mellon.

Hassell has published several posts on Alexander Hamilton, one of our nation’s founding fathers. He is interested in Alexander Hamilton not only because he founded the Bank of New York, of which Hassell is now chairman, and not because of the award-winning musical Hamilton, now playing on Broadway. He writes about Alexander Hamilton because he believes that Hamilton’s virtues hold lessons for today’s leaders.

In his LinkedIn post published June 9, 2106: “What Have You Done Today that Will Endure?” Hassell noted Hamilton’s ability to create institutions of lasting value, in contrast to the current trends of our increasingly disposable culture.

This immediately struck me as illustrating a mindset of long-term thinking that I have written about with regard to building multi-generational family businesses. In “Grow People” I quoted a Chinese proverb that formulates a strategy for 100 years of prosperity. In “Beneath the Surface of the Ground” I wrote about a Native American culture whose chiefs were mandated to make every decision with the seventh subsequent generation in mind.

The crucial question to ask is “what are we doing today that will create an enduring legacy and heritage for our family enterprise?”

07/23/16

Is Philanthropy Right for Your Family Business?

The meaning of the word philanthropy is “love of humanity.” Much more than just the giving of money, philanthropy embraces ever voluntary act of giving to others.

The form that philanthropy takes is as varied as the philanthropists themselves. For example, consider David Bohnett whose foundation supports a wide range of social issues; American rock star Jon Bon Jovi whose organization focuses on the issues of hunger and homelessness in the United States; Arpad Busson, founder of Absolute Return for Kids Academy.

Philanthropy can be misunderstood as being the province of very wealthy individuals or of large corporations. But many family-owned businesses are in a position to help others. The opportunity exists to make philanthropy a part of the firm’s culture.

Bruce DeBoskey, founder of The DeBoskey Group, a Denver based philanthropic strategy firm, advises that to achieve meaningful results, philanthropists should focus on a few select causes, rather than spreading their giving in smaller amounts over a wide area. Following this advice, family-owned firms can manage an impactful giving plan without placing undue stress on their resources. http://www.denverpost.com/2016/07/10/on-philanthropy-six-years-six-important-lessons-about-philanthropy/

The altruism of philanthropy affects and helps the lives of millions. But, as DeBoskey points out, giving benefits the donor as well. The work of helping others brings families together around shared values. It builds relationships with your community, supports and strengthens your brand, boosts your bottom line and promotes employee engagement.

Philanthropic businesses enjoy improved employee recruitment and productivity, greater customer loyalty and enhanced profitability. Within family businesses, community-centered activities engage upcoming generations whose different viewpoints and fresh ideas can prove invaluable to future successes.

07/15/16

Checking The Corner-Office Timeclock

On March 5,, 2014, the Wall Street Journal published findings of a study by professors at Harvard Business School, the London School of Economics and Columbia University’s business school in which they examined differences between family and non-family businesses. The Journal article focuses on the work schedules of CEOs in the two types of firms. Do CEOs of Family-Owned Businesses Work Less?

The data indicates that heads of family businesses work less hard than heads of non-family enterprises. They suggest that the incentives and risks that motivate professional CEOs to burn the midnight oil just might not be a factor for CEOs of family-owned firms.

Results showed differences between first and second-generation family-business leaders. First generation CEOs were found to work harder than their second-generation counterparts. In my own experience, this conclusion cannot be set in stone. I personally have seen instances of both a lack of motivation and a strong work-ethic and drive in second generation leaders.

The research suggested that family business CEOs may be spending their time differently. Instead of clocking long hours in the “corner office,” they may be focusing on balancing work-family responsibilities. Family CEOs might be adding value to their firms in ways not captured by the hours they are formally working, such as participating social activities that indirectly benefit the business.

According to the Journal article the jury is still out as to whether family-owned businesses with inside CEOs perform better or worse than non-family firms with outside CEOs.

07/7/16

The Advisory-Board Confusion

“Our advisory board includes my dad and me, my uncle who is retired from the business, and our non-family Chief Financial Officer. He’s on the board because he’s unbiased, and will make decisions based on what the business needs. Otherwise, my dad and I make decision on what’s best for everyone…”

The above statement made by a second-generation family-business leader shows confusion as to what advisory boards are; how they function, and how they differ from executive boards.

A family-business executive board is a governing body. It may include family members in leadership positions as well as key non-family staff who have decision-making power. All are on the company payroll. They have a vested interest in the welfare of the business, and in the case of family members, in the welfare of the family too.

Often the first foray into a board for family enterprises, an advisory board is comprised, predominately, of individuals who are outsiders with no vested interest in the business. They have no say in deciding how the business or the family will move to meet challenges. Their job is to advise on family-business best practices and provide an impartial view of the business’ interests and how to further them.

This trusted group of mentors is handpicked to provide supplemental industry knowledge, operational know-how, financial savvy and other areas of professional expertise. With the objectivity that comes from non-attachment to the family or the business, they are in position to make clear observations and suggest strategies that are free from the morass of family dynamics and nepotism.

06/17/16

Beneath the Surface of the Ground

In my last post I cited a Chinese proverb about creating long-term prosperity. Today I refer my readers to the thinking of a Native American culture–the Five Nations of the Iroquois.[1]

In American Indian Environments: Ecological Issues in Native American History, Chief Oren Lyons of the Onondaga Nation writes: “We are looking ahead, as is one of the first mandates given us as chiefs, to make sure and to make every decision that we make relate to the welfare and well-being of the seventh generation to come. …“[2]

Can there be any thinking more relevant than this to family businesses? Without upcoming generations, does the term “family business” even apply? And therefore, is thinking about the well-being of generations to come not every bit of a mandate for today’s incumbent leadership as it is for the chiefs of the Iroquois?

This is by no means an easy task. Today’s leaders are challenged by the intense pressure to produce short-term success; to please shareholders; to produce wealth now; to feed the spending frenzy of a voracious consumer society. 

Short-term thinking produces short-term results. Most contemporary family businesses do not last beyond their third generation. But there are family businesses alive and well today that have prospered for 100 years and more; whose very existence proves that paths to such longevity are open; can be found; can be learned.

Seventh-generation thinking is finding its way into our collective consciousness; changing our current worldview. Perhaps learning more about how this works will help business families to build a mindset, actions and behaviors based on their impact on the seventh generation to come: “even those whose faces are yet beneath the surface of the ground…”[3]

[1] https://en.wikipedia.org/wiki/Seven_generation_sustainability

[2] An Iroquois Perspective. Pp. 173, 174 in American Indian Environments: Ecological Issues in Native American History. Vecsey C, Venables RW (Editors). Syracuse University Press, New York.

[3] “The Constitution of the Iroquois Nations: The Great Binding Law.”

06/11/16

Grow People

Chinese proverbs are sources of immense wisdom coming down to us through the ages. Ancient they may be, yet they are solidly relevant to our contemporary world. Here is one whose message is directly applicable to long-term success in family business.

“If you want one year of prosperity, grow grain. If you want ten years of prosperity, grow trees. If you want one hundred years of prosperity, grow people.”

http://www.quotes.net/quote/9102

For multi-generational success, “100-year prosperity,” start by preparing your family’s next generation. Introduce your children to the business early. Have them take on minor roles while in school. Include them in meetings where both family and business are discussed. Discuss family and business values with them. Help them learn what the role of a leader entails. Help them craft a vision for the family and the business under their leadership.

Pay attention to the talent in your upcoming generations. See where their gifts can be applied in the family and in the business. Are there born leaders? Are there natural innovators among them; natural communicators; networkers; entrepreneurs?

It’s your job to uncover and nourish next-generation resources,to support the development of their talents and encourage their chosen trajectories.

With the next generation thus grown, the business will not suffer a vacuum; when incumbents retire, when fresh ideas are needed, when upcoming technology calls for new knowledge. And when it’s time to step into responsible roles, they will serve the family and the business well and far into the future.

06/2/16

The Three Faces of Innovation in Family Business

The presence of entrepreneurial spirit coupled with a culture of Innovation within your family firm is possibly the strongest predictor of long-term success.

It’s important to understand that innovation is not confined to the development of new products and services, although this is indispensable. The vital part that innovation plays in business processes and organizational procedures is often overlooked.

Process innovation, sensitive to new technologies, consumer practices–a plethora of changing marketplace conditions –enables your business to make responsive changes in the ways that products or services are produced and delivered. Organizational innovation involves changes in management, workflow, and operations. These are often sensitive to generational outlook and leadership styles, as well as advances in office and plant technology.

05/28/16

Innovation—Is it Really a Choice?

Last week I wrote about the critical necessity of innovation for multigenerational success in family businesses. Continuing on with this theme, here are some of the advantages enjoyed by businesses that have a culture of innovation, and some of the obstacles that block the way to this goal.

Advantages: Dexterity, flexibility and speed that comes from:

  • Deep industry and business knowledge enabling leadership to seize opportunities on the fly
  • Long-standing ties with business service professionals–bankers, accountants, attorneys–who can help with and support innovation efforts
  • Shared values, vision, and definition of success among shareholders creating swift-moving consensus.

Obstacles: Resistance to change, risk aversion, lack of focus, indecision that comes from:

  • Attachment of the family to current business structures and products
  • Tension between the older, incumbent, generation and rising-generation family members
  • Difficulties in juggling attention to the core business and attention to research, development and implementation of innovative ideas, products and services
  • The need to keep shareholders happy by continuing to provide accustomed dividends, while redirecting funds for innovation.

In his 2014 book, Innovation in the Family Business, Succeeding Through Generations, Joe Schmeider of the Family Business Consulting Group puts it succinctly: “in the most basic terms innovation is change as well as a factor associated with multigenerational family business prosperity and longevity.”

For the sake of the business, obstacles to establishing a culture of innovation must be faced and overcome.

05/20/16

‘Applied Innovation’—Defined For The Family Business

Innovation:

: a new idea, device, or method

: the act or process of introducing new ideas, devices, or methods

Source: Merriam-Webster’s Learner’s Dictionary

 Applied Innovation:

: the process of constant improvement and creative change

: a requirement for the continued success of multi-generational family enterprises

Like any other business, family businesses benefit from, if not require, a culture of innovation—a culture that supports constant improvements to its products, services, processes, governance, and planning.

While the dynamics within family businesses often present obstacles to innovation, a clear view of the competitive advantages of an innovative culture can overcome them.

Next week I’ll write about these obstacles and about some of the advantages enjoyed by family businesses that support a culture of innovation.

05/14/16

It Is About Family

In a recent blog entry I reported my experiences at the annual conference of Attorneys for Family Held Businesses (AFHE). Through its membership of multidisciplinary family-business advisors, AFHE promotes the well being and sustainability of business families, and recognizes that family businesses can only be as healthy as the families themselves.

This theme echoed resoundingly within me the following week while I was participating in a program with Defy Ventures http://defyventures.org. Defy helps individuals with criminal histories develop entrepreneurship skills and establish sustainable lives after incarceration.

I was part of a group of seventeen volunteers who went to meet thirty-five inmates in a Federal prison. All of the inmates had been part of Defy’s Entrepreneurs in Training (EIT) in-prison program. We volunteers were there to offer them exposure to successful business people and business advisors, to help them develop social and business skills, to prepare a resume and learn the processes of business formation.

The emotions I experienced during the five hours we spent with the prisoners were intense. I was overwhelmed with the gratitude of the EIT participants. We began with an exercise designed to help us experience empathy for one another and to build community. It was here that the significance of family and a new perspective on AFHE’s mandate for helping business families came to light.

Facing each other–volunteers on one side and EITs on the other side of a taped line–we responded to a series of questions: “Who has ever been arrested ?”. All of the inmates stepped to the line, as did number of volunteers. Empathy crossed the line in both directions. “Who has done something illegal but not been arrested?” More volunteers walked up. “Who graduated from high school?” “Who has a college degree?” No inmate stepped to the line in answer to this. “Who was arrested as a teenager?” “Who experienced abuse as a child?” “Who does not know his biological father?” “Who spent time in foster homes?” “Who has a parent who used illegal drugs in their presence?”

Overwhelmingly it was the presence or lack of a healthy family that most separated the volunteers from the EITs. The absence of healthy family relationships was revealed as a formidable factor in devastating the lives of the inmates. Similarly, the presence or lack of well being of the family can influence their businesses’ failure or success.

05/4/16

Fifth Generation and Almost Out

Family enterprises that have continued into their 5th generation often have processes in place that helped them overcome the challenges they encountered through the years. They have a vision for the future. They have a declaration of shared values. They have governance structures, such as a family council, an external advisory board. They have a forum for family members to discuss the family in the context of the business. They have gained foresight and have learned how to address situations where family members undergo a loss of capacity. They have a funded growth plan. They have an established mindset that accepts the need to turn leadership responsibilities over to the rising generation; and the incumbent leadership has their retirement plans in place.

Often–but not always.

Here’s the story of Yuengling Brewery, an “almost casualty” rescued by a fifth-generation prodigal son.

http://www.inc.com/dick-yuengling/how-a-father-son-rift-almost-destroyed-yuengling-brewery.html

04/29/16

Reality Is Bigger

Last week I attended the annual conference of Attorneys for Family Held Enterprises (AFHE). While there, I had the opportunity to hear speakers from a range of professional disciplines: family business advisors, financial planners, psychologists and attorneys.

I was particularly impressed by the clarity of the presentation entitled ‘Engaged Ownership. More Effective Governance for Multi-Generational Family Businesses’ given by Amelia Renkert-Thomas, former CEO of Ironrock Inc., her family’s 5th generation manufacturing business and founding partner of Renkert Thomas Consulting LLC.

In her presentation Ms. Renkert outlines commonly held assumptions about family business and counters them with realities. Here are selected bullet points taken from her slides:

Assumptions

  • Making money is the primary objective
  • Succession is about who will run the company
  • Shareholders are primarily interested in dividends
  • Continuity is the preferred outcome

Reality

  • There is more at stake than money
  • Succession is about preparing for multiple roles
  • Shareholders are primarily interested in shared purpose and vision
  • Continuity of core capital, not necessarily the business

All of these points are ‘tip-of-the-iceberg’ statements, the results of study, thought and experience. They invite investigation, discussion and action. What are your thoughts?

04/23/16

The Word From D.C.–It Takes a Team

I am writing this blog piece while attending the annual conference of Attorneys for Family Held Enterprises (AFHE) in Washington D.C. Each year’s conference brings together a multidisciplinary group of family business advisors, financial planners, psychologists and attorneys–representatives of AFHE’s wide membership base.

One of the organization’s underlying missions is to promote the well being and sustainability of business families. AFHE understands that family businesses are complex because families are complex; that seeing their challenges as business issues alone and addressing them from the perspective of any single professional discipline will fall egregiously short of achieving this aim. The best success comes from the collaborative efforts of experts.

04/14/16

More Than ‘Do No Harm’

I saw my internist recently, and we started to talk about a book written by neurosurgeon Henry Marsh, entitled “Do No Harm: Stories of Life, Death, and Brain Surgery.” In it the author gives a viscerally disturbing account of what can go wrong in surgery and with the brain itself. He speaks about risk, he speaks about his growing experience and skill and he speaks about caring.

During this conversation my mind jumped, by association, to a principle of family business called stewardship.[1]

As a steward of my family business my leadership role is to receive the business from my predecessors, grow the business, the family wealth, the family itself, and then pass this multifaceted inheritance on to the next generation in better shape than it was in when I received it. More than do no harm, stewardship of a family business aims at building health and vigor and creating an ever greater family legacy.

The challenges of stewardship change as the business develops. The responsibilities of sole proprietorship differ from those carried by the head of a business with family members working in management or as employees. It changes when the founder’s children are born, and changes too when brothers, sisters and cousins become part of the picture.

At The Family Business Leader™ we help you meet the varied challenges of family-business stewardship and bequeath a healthy and vigorous inheritance to your family’s next generation… and the next.

[1] According to The Family Business Leader™: “Stewardship is defined as “a perspective that founding family members view the firm as an extension of themselves and therefore view the continuing health of the enterprise as connected with their own personal well-being.” http://www.familybusinesswiki.org/Stewardship

04/6/16

Precarious Placement

Positioning the second generation as managers, responsible for overseeing the processes and systems established by the founder is a not-uncommon practice in family business; but this custom sets up a potential problem. The second generation never develops the entrepreneurial skills necessary to take the business into the future during the time of their leadership.

04/2/16

Pulled Into the Future

The leadership, vision and entrepreneurial talent of the founding generation of a family business may be very different than that needed in subsequent generations; and installing a successor who is a copy of the founder may result in the failure of the business to change with an evolving market environment or the growing needs of a larger business.

For example, the business may now have more need of leaders who develop collaborative relationships than those who get things done by themselves, or of strategists who find new opportunities as the size of the family grows.

“Respect the past while keeping an eye on the future.” This important family-business axiom, together with a phrase I read twenty years ago in “Breaking Point and Beyond: Mastering the Future Today by George Land and Beth Jarman—“allow yourself to be pulled by the future”–are potent strategies for expansion and growth.

03/26/16

The Networked Age–What Can LinkedIn Leaders Learn from Family Businesses?

I recently heard Jeremy Stover, LinkedIn’s head of leadership management and executive development, speak as part of a panel discussing the state of executive coaching. I asked him about the success of leadership coaching within LinkedIn, and he directed me to an article he wrote in December of 2105 entitled “Social Leadership in the Networked Age.”

In it Stover wrote that when LinkedIn leaders were asked about business challenges and opportunities they see, a theme became clear: “the phenomenal pace and relentless rate of change.” In his view a new type of leadership development is required at both the organizational and the individual levels to address these challenges.

“The Networked Age is here…” Stover declares. And it calls for leadership skills that go beyond those of emotional intelligence, authenticity, executive presence. clarity of vision and communication. While these will always be essential, they stop short of what is needed now–leaders who have a network perspective and understand the dynamic web of connections that impact their work, their leadership, and the leadership culture of their organization.

I agree with him, and I chose the title of this blog post because I believe successful family enterprises have recognized and made use of complex and long-standing networks connecting family- and non-family stakeholders across many generations.

03/18/16

Giving Your Best

“My grandfather said to me, ‘Give the world the best you have, and the best will come back to you.’[1]

Upon reading this, a particular family-business story came to mind: A friend of mine, the youngest sibling in a second-generation family business was frustrated by his father’s strong-minded control and by his older siblings’ apparent apathy. He saw that rather than giving their best, his siblings were showing up for work daily but purposefully only “treading water” until they were able to take control of the business.

My friend had left the business once and was about to again because he was unable to give his best within the confines of the family situation.

This complex situation might well benefit from counseling. But my purpose in writing this blog entry is solely to draw awareness to the lost potential for multi-generational family legacies when family members are not raised in a culture of giving their best in whatever role life asks of them.

________________

[1] Simmons, Annette, The Story Factor, Secrets of Influence from the Art of Storytelling, p. 9, Annette Simmons. Basic Books. 2001.

 

 

03/11/16

The Familiness of Your Family Business

John, CEO of the firm, tells Robert that they are letting him go because he was coming up short on the competencies needed for his job.

John turns away and then back to face Robert. He says: “Son, I heard you lost your job. How can I help?”

Familiness in a family business is that unique set of resources which arise from the interactions among the family system as a whole, the individual family members and within the business itself. It describes a behavior that supports the family as a whole, the individual members and the business. Where it exists, it constitutes a competitive advantage.

In this story the strength of the family commitment is evident. John recognized and Robert understood that what was good for the business was good for the family, and equally what was good for the family was good for the business.

Familiness embodies the family culture, the reputation of the company, confidence and communication among family members, entrepreneurial spirit, management of non-family employees, and trust. It is what we compliment as the hallmark of a model family business enterprise.

03/5/16

A Family Community

In January 2016 Dennis T. Jaffe, Ph.D. published a book entitled RELEASING THE POTENTIAL OF THE RISING GENERATION: How Long-Lasting Family Enterprises Prepare Their Successors. In it he discusses attitudes and actions that together comprise the success of multi-generational family businesses. 

Jaffe’s book makes a strong case for the idea that family business success is less about building the business and more about how the family goes about creating a family community focused on educating and mentoring the next generation and developing next-generation careers.

02/26/16

Working With Siblings

In a recent blog entry, Seth Godin wrote about options for finding, leading and motivating employees in a small business (he used the term “tiny business”). He characterizes three different management styles, what types of employees work best in each, how they work together, how they relate to being led: “a team of equals, “fellow travelers,” industrialized employees.” He sets forth both advantages and pitfalls inherent in each option.

http://sethgodin.typepad.com/seths_blog/2016/02/managing-the-very-small-business.html

These same types–equals, fellow travelers, employees–will exist in family businesses staffed by siblings and/or cousins whether in leadership or subordinate roles. Understanding the distinctions, their pros and cons will go a long way in strengthening family relationships and the business itself.

Are siblings in your business equals, fellow travelers or employees?

02/19/16

Accepting Anxiety

Last week I wrote about how to keep moving forward in times when we are feeling overwhelmed by challenges in our businesses. My posting today is on a similar theme—managing our anxiety.

Some business owners thrive on anxiety. They require the frenetic energy it delivers in order to do business. Others suffer severely under the weight of its emotional intensity. Neither extreme is desirable.

The ability to manage anxiety in a balanced way is a requirement for success whether yours is a family or non-family enterprise. Reprising last week’s water metaphor—with each set of rapids we navigate we get stronger. The struggles we encounter as business owners are a source of personal and professional growth.

A prerequisite to managing our anxiety is our acceptance of it.

I recently had a conversation with a young second-generation business owner about her process of managing anxiety as she grew the family business. In her view, seeing her challenges as a vital part of her personal and professional growth was an important first step.

To control the anxieties assaulting her, she learned to diminish their overwhelming character through acceptance of her feelings, instead of exhausting her inner resources in struggling against them.

 

02/11/16

Downstream

This past week a number of my clients expressed feeling overwhelmed by unexpected challenges they are facing in their businesses.

Speaking metaphorically, I suggested to one client that he keep the nose of his kayak pointing downstream—that he turn his attention to steering day-to-day business operations. A crisis is not the time for big-picture planning. What is necessary is to focus on paddling past the next group of rocks—not to ponder which may be the best rocks. A few days later he wrote to tell me this phrase kept him moving forward, taking on each new challenge as it came to him.

Our faith in our business and in ourselves increases with each stroke of the paddle. Through flat water, white water, quiet pools, raging rapids, by keeping our kayaks pointed downstream we can successfully navigate the ever-changing currents of business.

02/4/16

But What Will I Tell My Grandchildren?

Seth Godin recently wrote a post with a seven-word title: “But what will I tell the others?” He calls these out as: “Seven urgent words that are rarely uttered.” “The profound question…”

These are, he says: “The words we imagine we’ll tell the boss, the neighbors, our spouse after we make a change or take an action… this drives the choices that constitute our culture, it’s the secret thread that runs through just about everything we do.”

Upon reading this post, I saw its significance to members of family businesses. From their point of view the question that immediately came to mind was: What will we tell our grandchildren about decisions we make regarding our family business? What will we say to them about decisions that will drive the family culture of future generations?

You may see your role in your family business as existing only for the duration of your leadership. Alternatively, you may see your role as growing the wealth of both the business and the family, and passing them on.

You may work to make your business successful for today. Or you may take up the challenge of ensuring a strong foundation that will support the business for leaders of future generations.

You may envision yourself creating a culture and a legacy; inspiring future generations to reflect back with pride on your leadership and your words.

01/29/16

Assessing Emotional Intelligence – The Results Are In

For the past two weeks I have been writing about emotional intelligence and its role in family business. From the many responses I have received, it is clear that this topic has struck a chord with readers.

This week I want to briefly show the value of applying emotional intelligence assessment within a family business. The case is presented by author Ernesto Poza in the 4th Edition of “Family Business,” published by South Western Cengage Learning. I use this text in my Family Business Management class in the Zicklin School of Business at Baruch College, City University of New York.

Poza writes about a family with challenging dynamics. They wished to create an environment of engaged conversation while ensuring all stakeholders were sufficiently respected. Following an assessment of the family’s facility for emotional intelligence they developed a Family Rules of Conduct. The rules they agreed to were:

  1. Focus on the future, not the past.
  2. Be a good listener.
  3. Put yourself in the other’s shoes.
  4. Stay focused on principles, not personalities.
  5. Make “I” not “You” statements.
  6. Say “Got it” whenever speech-making blocks progress.
  7. Disagreements are okay, as long as we are committed to arriving at an improved final decision.

What do these rules tell you about the family’s overall level of emotional intelligence?

Do you think the application of emotional-intelligence assessment tools was useful in this case?

01/22/16

Emotional Intelligence – Do We Have Two Minds?

Last week I wrote about why family businesses are particularly susceptible to the impact of emotional triggers. I observed that, well-directed, emotions can be useful. Successful business families blend cognitive perspectives–thinking, understanding, learning, remembering–with the energy of emotions. At the intersection where these “two minds” meet, the capacity for cooperation, innovation, growth and longevity is born.

The term ’emotional intelligence’ (EI), became popularized in the book by that title by psychologist Daniel Goleman. Also called ’emotional quotient’ (EQ), the idea can be stated as consisting of four capability factors present in differing degrees in each individual:

  1. The ability to recognize one’s own emotions;
  2. To recognize the emotions of others;
  3. To discriminate between different emotions and label them appropriately;
  4. To use emotional information to guide thinking and behavior.

https://en.wikipedia.org/wiki/Emotional_intelligence

There are tools for assessing emotional intelligence factors such as empathy, relationship skills, family relations, social dynamics at work, job performance, leadership and more. With these tools you can identify your own and your team members’ emotional intelligence quotients. While individuals are often found to be stronger in some areas and weaker in others, the good news is that EQ levels can be increased.

Next week I will present how a family integrated principles of emotional intelligence into their family-business model.

01/17/16

You Are So Emotional!

Yes, I am emotional. l am your sister, brother, son, daughter, mother, father, another family member. We not only work together, we grew up in the same family. We share common experiences and emotional history–ingrained touch points that can trigger easily. Because of this familiarity, emotions can spill over into a family business much more often than would be acceptable in a non-family business.

In themselves emotions are not bad; they are valuable. Their energy drives the human psyche; they serve as social signals. When funneled properly emotional energy can be used to achieve significant positive outcomes. Unbridled, emotions can cause untold devastation.

Denying one’s emotions or discrediting those of others is destructive. It is important to cultivate an emotional intelligence to recognize our own and other people’s emotions; to discriminate between different feelings and label them appropriately. We are then better equipped to manage our thinking and behavior to maintain harmony in our families and success in our family enterprises, especially during times of increased stress.

Emotional intelligence is so vital to the success of family businesses that as part of my Family Business Management class at Baruch College, City University of New York, I have students assess their own level of emotional intelligence, and – since we can increase our capacity for emotional intelligence – develop a plan for doing so for themselves.

01/9/16

Family-First or Business-First Revisited

In an earlier blog posting I wrote about distinctions between a family-first and a business-first business. Family-first promises employment to family members based on the family relationship. Business-first promises employment based on the needs of the business and capabilities of the individual; family relationship is secondary.

The question is asked whether family businesses are more sustainable when their focus for growth is placed on the business or on the family. While acknowledging that the health of both are important to multi-generational success, research on family businesses suggests that shifting focus for growth to the family level results in greater entrepreneurial activity and trans-generational value creation.

Said in another way, a family-business is a family focused around a business. There is potential for greater long-term value creation in a business-family that represents a number of businesses centered around a family entity.

01/3/16

Your Job Is To Prepare The Next Generation

In his influential work, The E-Myth Revisited, addressing small business owners, author Michael E. Gerber stated: “Simply put, your job is to prepare yourself and your business for growth.”

Addressed to the head of a family business this admonition applies in modified form: Simply put, your job is to prepare the next generation for multigenerational growth.

Wishing you happiness, health and prosperity in 2016.

12/24/15

A Family-Business New-Year’s Resolution

In the blink of an eye another year has passed, and resolutions for 2016 may be creeping into our thinking.

The closing of the year bestows a blessing; it encourages reflection–pressing us to review our individual accomplishments, our persistent challenges, what we are grateful for, what more we hope to accomplish, and who we would like to become as a person. Equally it affords an opportunity to reflect on the future of our family business and its significance to our families and ourselves.

Here are some practices inherent to successful multigenerational family businesses that you might resolve to begin in 2016:

  1. Devote time to better communication within the family
  2. Commit to professionalizing your business – working on it rather than just in it
  3. Establish a family council
  4. Develop a family hiring and employment policy
  5. Begin the discussion of succession
  6. Hire outside expertise
  7. Create a strategic plan

Wishing You a Happy and Prosperous New Year!

12/13/15

The Last-Minute Succession

In his recent blog, entitled “the last minute,” Seth Godin writes “I’m not good at the last minute. It’s really fraught with risk and extra expense. I’m much better doing things the first minute instead.” http://sethgodin.typepad.com/seths_blog/2015/12/the-last-minute.html

For a family business, ‘last-minute succession planning’ is similarly afflicted and is, sadly, too often what takes place. Successful succession involves much more than the final transaction that formally transfers ownership. ‘First-minute’ succession planning is a process of ongoing conversations among family members regarding the values and vision the business will carry into the future. These talks function to define the business’ culture, create governing policies, teach wealth management skills, identify and develop next-generation talent and leadership.

To see my video blog on this topic, CLICK HERE.

12/4/15

The Best ‘Family-Business’ Leaders are Constant Learners

In their article The Best Leaders Are Constant Learners, published in Harvard Business Review  Kenneth Mikkelsen and Harold Jarche write that today’s business leaders must make meaning of a playing field that is constantly changing shape.

A valuable axiom for creating successful family businesses is that next-generation leaders need to keep their eyes on the future, while respecting the past. The challenge is perhaps never more trying than for those family businesses where past business practices have been successful and family traditions are strong.

“Sustainable competitive advantage,” Mikkelsen and Jarche write, “now depends on having people that know how to build relationships, seek information, make sense of observations and share ideas through an intelligent use of new technologies.”

In family businesses today, active application of this strategy is incumbent on the both the younger and the senior generations in order to maintain multi-generational success. And it works best when all generations are helping the others meet the challenge.

11/21/15

The Not-Ideal Path

Seth Godin recently wrote a blog post titled Natural Light. http://sethgodin.typepad.com/seths_blog/2015/11/natural-light.html.

In it he describes two ways of making things. One way is to tightly control conditions. To ensure consistently of outcome, pre-process the inputs so that all raw materials are precisely the same every time.

The other way Godin calls “the path of natural light.” Take what you get. “Embrace the idea that the conditions will never be ideal, which of course makes them always ideal because the thing about natural light is that whatever it is, is.”

My experience is that raising children and integrating them into your family business is more often successful when the path taken is the way of natural light. The differences that exist between and among you, your children and other family members are part of what makes a family business succeed.

To achieve this outcome requires participation in creating a vision for the future of the family and the business under the leadership of the next generation—and willingly relinquishing control of the results.

11/14/15

Developmental Stages of Multi-Generational Family Businesses

A few weeks ago I had the pleasure of hearing Lena Jungell, a fourth-generation member of The Fazer Group, speak at the Fall 2015, Global Family Business Event hosted by the Baruch College, Lawrence N. Field Center for Entrepreneurship.

In her talk, Ms. Jungell presented elements essential for the growth and sustainability of a multi-generational family business. In my last two newsletters I touched on three of these: Vision, Values and Mission.

Ms. Jungell presented a fourth critical element–outlining the developmental stages of her family and its business across generations:

  • First generation: Built the business
  • Second Generation: Lived with and worked in the business
  • Third Generation: Worked in the business and established business-governance structures
  • Fourth Generation: Developed family-governance structures
  • Fifth Generation: Learned the business- and family-governance structures
  • Sixth Generation: Is already participating in the business while the fifth generation governs.

This pattern is fairly typical of family-business succession. I believe it is representative of a business that successfully evolves into a multi-generational enterprise without an initial intention to do so. Recognizing the pattern can facilitate the growth of any business family interested in multi-generational success.

11/7/15

Values, Vision, Mission: The Bedrock of Family Businesses – A Real-Life illustration

Last week I wrote about having attended the Fall 2015, Global Family Business Event hosted by the Lawrence N. Field Center for Entrepreneurship at Baruch College, where I heard a talk by Lena Jungell, a fourth-generation member of The Fazer Group.

An international, family-owned-and-run firm based in Finland, The Fazer Group proudly produces top-of-the-line bakery, confectionery and biscuit products as well as food and café services

Lena spoke about one of the essential components of family-business success and longevity, “The Development of an Owners’ Vision” Today I will write about two other equally important components–values and mission.

Microsoft Word - Document2To clarify what I mean by these three terms: Your vision is something you can see as a result of your efforts. Your mission identifies the action of achieving the vision. Values are those qualities, behaviors and points of view that a family holds to and deems important for the guidance of its members and its business.

In working to fulfill its mission —To Create Taste Sensations–guided by its vision–responsible business growth with a strong focus on long-term development–the Fazer Group stands firm on the bedrock of its values: Passion for the Customer; Quality Excellence, and Team Spirit. http://www.fazergroup.com/about-us/we-create-taste-sensations/

These values are the basis of all of their corporate strategy processes, ethical principles, responsible environmental standards, management systems and more. http://www.fazergroup.com/responsibility/our-responsibility/

This solid footing along with open articulation of their values is, no doubt, integral to the Fazer Group’s success as a thriving and growing sixth-generation family business looking into a prosperous future. As such, The Fazer Groups is a real-life illustration that demonstrates the long-term possibilities inherent in family businesses.

Next week I’ll write about the evolution of the Fazer-Group from its first generation into its sixth, and explore its business- and family-governance structures.

10/31/15

An Owners’ Vision

On October 22, I attended the Fall 2015, Global Family Business Event hosted by the Lawrence N. Field Center for Entrepreneurship at Baruch College, City University of New York. The keynote speaker was Lena Jungell, a fourth-generation member of “The Frazer Group.”She shared with us the story of her family’s business.http://www.fazer.com/our-brands/karl-fazer/finlands-most-valued-brand/.

Her talk, “The Development of an Owners’ Vision” presented a valuable model of the potential possible in family businesses. The Frazer Group has grown into an international company, now supported by and supporting six generations. One significant take-away from the talk was a picture of the strength the family derives from their collective values and the clarity of the firm’s vision—“to create taste sensations”. It’s simple, easily understood, and looks outward toward their customers and community.

Ms. Jungell added that the family-business’ vision has evolved over time through ongoing input from the owners, family members, society, and their environment. This reminds me of the statement made by Sam Johnson, former CEO of The Sam Johnson Company; that every generation has the responsibility to determine a vision for the firm under their leadership.

Next week I will write about family’s values as foundation of the owners’ vision.

10/22/15

Differences and Consensus

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 how his views changed with experience. In last week’s blog I wrote about Smith’s understanding that “it’s all about people.”

 And of course, with people there will be inevitable differences of opinion. Smith says that this is healthy. These differences should exist. But ideally, he aims at consensus. “I’m a great believer in getting consensus,” he says. But he knows that consensus cannot always be reached, so “you’ve got to say, O.K., that’s good enough.”

What’s critical he says, is that once agreement has been reached the leadership team must be synchronized and the agreement is communicated down the ranks of the organization so that all are moving in the same direction.

One of my first clients started our engagement by stating: “My dad has fired me twice.”

The point of contention was over my client’s approach for implementing a strategy. His father would neither acknowledge nor respect his son’s difference of opinion saying: “any way you do it is ok, as long as it’s my way.” Clearly there was no working toward a consensus.

Perhaps for the health of the organization it might have been easier, in the short run, for the father to fire his son, thus avoiding having the operation of the business skewed by trying to follow two conflicting directions. But for multi-generational longevity, an opening must exist, for at least a partial consensus.

To ensure multi-generational success, members of the next-generation need to be granted a degree of autonomy, allowing them to acquire leadership skills and giving them the invaluable opportunity to learn from their own mistakes.

Handling this transition is one of the most difficult challenges facing family businesses.

10/15/15

It’s All About People

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 how his views changed with experience. In last week’s blog I wrote about how Smith’s management philosophy of creating an environment that people could be successful in is important to the success of family businesses.

This week’s blog: “It’s all about people.” This is another important management principle, one that Smith says he learned early in his career, but that took time for him to truly grasp. “…if you get that right,” he says, “the other stuff will get addressed.”

In family businesses the people are all stakeholders–leaders, family members, team members, staff. The “other stuff:” smoothly running business operations, processes and procedures depends on careful attention to building and maintaining a culture of mutual trust and respect.

For me this means putting relationships first and business transactions second. It’s a philosophy for building a family-business legacy.

If you have thoughts or questions about building relationships of trust and respect within your family and family business, contact me through my website.

This is the second of three important management principles I pinpointed while reading Adam Bryant‘s interview with Gary B. Smith. I’ll share my thoughts on the third: “Differences and Consensus” in next week’s blog post.

10/10/15

Nurturing Next-Generational Success

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.

10/1/15

Moving the Center

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.

09/26/15

Fear or Dreams

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.

 

09/19/15

We Are An Eight-Track Tape Deck…

…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.

09/12/15

For Older Family Business Leaders Goals Turn Inward

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.

 

08/27/15

Teaching Trust

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.

 

08/21/15

What Do Google, Apple and Successful Family Businesses Have in Common?

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/

08/14/15

How Did Grandpa Start the Business?

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.

 

08/8/15

“A Crisis Is a Terrible Thing to Waste”

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.

07/31/15

Washing the Hands of Your Father

 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.

Microsoft Word - Document1A 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.

 

 

07/25/15

West Point Leadership and Family Businesses

In his article The Re-Education of Jim Collins published in Inc. Magazine, Bo Burlingham of Editor at Large, Inc., writes about the lessons that Jim Collins, business guru and author of such business classics as Good to Great and Built to Last, learned during his two-year appointment to West Point’s Chair for the Study of Leadership. He came away with a new understanding of leadership based on a 3-point model he observed in the West-Point culture

Collins describes the attitudes among the West-Point cadets as points of a triangle: Service– Growth–Success. To my mind, these attitudes apply as much to family businesses as they do to the careers of the cadets.

Expanding on the triangle, Collins sets forth three bullet points pertaining to building a culture of engaged leaders and a great place to work. When applied to family businesses these can be paraphrased as three questions:

  • Service–What cause or purpose are we passionately dedicated to, and that we are willing to sacrifice for?
  • Challenge and growth–What huge and audacious challenges do we as a family have that will push us and make us grow?
  • Communal success–What can we do to reinforce the idea that we succeed only by helping others?
07/18/15

Struggle and Strength

Ongoing Discussion at the Family Business Mastermind

The Family Business Mastermind is a peer-to-peer learning group. Participants meet monthly at the Lawrence N. Field Center for Entrepreneurship at Baruch College of the City University of New York to discuss the pressures, challenges and concerns of being part of a family business.

http://www.meetup.com/Family-Business-Mastermind-at-Baruch-College-Manhattan/

At July’s Mastermind meeting, there was discussion initiated by second and third- generation family-business members. They were seeking to define their roles within the context of the three major family business subsystems: family members, business management and ownership.

They expressed their frustration with being ignored when seeking to initiate innovations they believe to be critical to business growth. They shared a sense of “being right” about what their business needs; what they need for themselves in order to work in the family business, and what needs to be done differently to grow the business.

Ernesto J. Poza, author of Family Business, states that each generation needs to “respect the past, while keeping an eye on the future.” The Mastermind participants all expressed respect for what their parents had accomplished. They were struggling though, with how to evolve into their own leadership, perhaps like a caterpillar struggling to escape its cocoon. The takeaway here is that without the struggle the emerging moth will not have the strength to fly.

This is a conversation to be continued, as leadership needs time to develop. It is ultimately a conversation not about who or what, but about family values, future possibilities and opportunities.

07/11/15

The Unreasonable First Generation

Seth Godin recently wrote a blog post on a characteristic bias of human nature regarding the perception of “reasonableness.” http://sethgodin.typepad.com/seths_blog/2015/07/unreasonable.html. He pointed out that in relationships, we consistently perceive and “act as though” it’s the other person, and not ourselves, who is being unreasonable.

This situation is not infrequently seen in the interactions between members of first and second generations in family businesses. The son describes, often from a place of frustration, that the father is being unreasonable, in one way or another, in restricting his being promoted to decision-making status in the business. Their ensuing stories may be buttressed on the father’s side by perceptions of being railroaded, and on the son’s side by the feeling that his father lacks belief in his abilities.

Perceptual disconnects like these are based upon years of family interaction, ripe with ingrained habits and complex attitudes invisible within the family itself. A professional family-business advisor can reveal the complexities and misperceptions, align expectations and help develop positive governance structures within the family business.

07/4/15

Talent and Commitment

If I were asked to recommend top-of-mind best strategies for multi-generational success in a family business, I would advocate fostering the development of next generation-talent and leadership, and instilling a values-based commitment to being a multi-generational family business.

 

06/28/15

Family Policies

I was speaking with a long-time acquaintance with whom I went to high school. He is a third-generation member of a family business. He mentioned that his family has an ongoing policy, starting when the family’s children become teenagers. If any of them ‘think’ they want to go into the family business, they are expected to attend the annual family-business meeting.

The teenagers sit on the side of the room. They see who are the current and future leaders. They become familiar with the family’s vision for the business. They absorb the family’s values and begin learning what is expected from family members active in the business.

Writing on family-business policies, Craig Aronoff[1] describes them as the guides for decision making and defining relationships between the family and the business. Good policies help families build skills, gain confidence, and increase their ability to face issues together. The policies should emerge from the bedrock of the family’s values, beliefs, philosophies, and principles.

Most family businesses do not survive past their third generation. The policy put in place by my high-school friend’s family has not only helped bring them securely into the third generation, but it looks good to take them into the fourth and beyond; a real-life illustration of the merits of solid family-business policies.

[1] Craig Aronoff, Joseph Astrachan, & John War. Developing Family Business Policies. Family Business Consulting Group.