Seth Godin recently wrote a post entitled, “Most Likely to Succeed,” and then stated that “what we are most likely to do is up to us, or otherwise most likely be invisible.” Is your family business most likely to:

• Create increasing wealth with each generation
• Evolve as the market place demands
• Have a culture of innovation that allows new family business enterprises past the original business model
• Support children in their unique skills and career desires whether they go into the family business or not.
• Pass on leadership based on skills and business needs, rather than age or gender
• Avoid the use of experts and advisory boards
• Be a center of influence
• Be recognized for the positive qualities attributed to family businesses
• Create a network of intergenerational family members supporting each other while building a legacy across multiple business enterprises
• Become invisible after 3 generations

Trying to run your business and at the same time handle the structures and systems to make it grow? When you are just beginning you may not have the resources to hire expertise, but when you reach a certain size you can’t afford to do the work of your business effectively and get continued profitable growth. There’s a tipping point where what got you here will no longer get you there. You run out of energy, bandwidth and know-how. The smart money knows they cannot do it alone and seeks complementary outside skills before the crisis develops.

I often hear of an established firm that wants to grow without utilizing outside expertise. If that is the advice you are getting no wonder you are wary of outside consultants.

Earlier this month I led a panel discussion for the NYC Family Business /Family Firm Institute Study Group. The focus of the panel was on the experiences of women and daughters in family businesses.

The three women panelists are currently working in their families’ businesses. One is “first generation” (the founding generation) and two are daughters of the founders (“second generation”). Prior to the panel discussion all participants were sent an article that summarized research on women and daughters in family businesses. It contained significant data identifying challenges these women face.  For example, lack of visibility–their opinions are not asked for, when offered they are not heard, they are excluded from meetings. The article describes the incidence of women being pushed into stereotypical gender roles such as secretarial, administrative and other types of support staff rather than leadership positions, and the prevalence of “oldest-son syndrome” as a basis for succession.

However in equal measure the article included case studies of women having positive career experiences. These women were given a great deal of responsibility and respect.

All the panelist expressed having enjoyed positive aspects of working within their families’ businesses. In the discussion that followed they spoke about the background and underlying circumstances that were instrumental in bringing this about. They spoke about the support of both male and female role models—of mothers who were competent on their own and of fathers who confidently sought out and accepted input from their wives and their children with regard to running the business.

One panelist spoke of her experience growing up and participating in the family business. She recalled going on a buying trip with her dad when she was 12 years old, and his seeking her opinion on wholesale purchases. She added that this experience and training began the development of her leadership role.

When asked how they handle the perception that they have their jobs because they are “daddy’s little girl,” one of the panelists responded that she expects this stereotypical view may always be there, but what is most important is how she thinks of herself and the energy that she gives off.

Asked about how they see their own roles in the family business—as having a job, as growing the business or as experiencing a co-evolutionary process wherein they personally and the business are evolving together (three perspectives identified by the author of the article), the panelists resoundingly stated the importance of ongoing, co-evolutionary growth as individuals and leaders.

A word that is new to me was brought up in the course of the discussion—”heteronormativity.” This term refers to “the belief that people fall into distinct and complementary genders (man and woman) with natural roles in life.” ¹ It was suggested that there is less and less of heteronormativity in our society. There was a consensus, however, that women are better than men at multi-tasking. This is due, perhaps, to men traditionally having needed to focus on hunter/gatherer roles while women traditionally managed many roles simultaneously.

The panelists were asked if they thought that businesses will benefit from incorporating the natural abilities of women in leadership roles. Would businesses that have women in leadership roles enjoy a competitive advantage because of the particular strengths women bring to the table, notably flexibility and capacity for understanding and handling complex relationships.

The consensus of opinion among the panelists was “yes.” One participant commented that with leadership by women like these panelists, the future looks good.

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¹ http://en.wikipedia.org/wiki/Heteronormativity

While there are exceptions to the frequent-enough-to-be-prevailing practice of overlooking daughters in family businesses, women have traditionally had to overcome significant obstacles to achieve leadership positions . It’s not uncommon for an older and even more qualified daughter to be passed over for a younger male sibling. In some cultures daughters do not participate in the family’s transfer of wealth across generations, and it’s often expected that the daughter to be taken care of by her husband.

On the plus side, daughters are often seen as more cooperative in their relationship with their father than sons who can have more competitive dispositions. And where there are good relationships between fathers and daughters in a family business, the mother may experience a loss of her daughter to the husband, as the father’s and daughter’s conversations about business get carried into the home.

It’s been voiced that women do not have the dexterity to manage the complexities of business. We can see the myth in this, however, as we recognize that women are frequently shouldering and balancing responsibilities for childcare and domestic chores while providing emotional and financial support single-handedly. Anne Francis wrote in her seminal work, The Daughter Also Rises, “women often find a direct correlation between domestic life and the situations they face in business – if you can figure out whether the four year old or the six year old gets the last piece of candy, you can negotiate any contract in the world.”

I am of the persuasion that we will all benefit by stepping back from stereotypes and looking at the strengths, which women can bring to relationships in business – as all business is dependent on relationships.

In my Family Business Management class at Baruch we are now in the process of scheduling a family meeting. One of the most important practices of any successful multi-generational family enterprise, family meetings are a form of governance. They are forums for the discussion and establishment of critical procedures and policies for managing organizational processes and relationships.

Whether a family enterprise is in its second or fifth or thirtieth generation, family members must come together to discuss the unique needs and challenges that face individuals within each of the three family business subsystems, i.e. the family, the business, and the ownership of the business.

These meetings are all about the family talking about the family in the context of the business, but not about the business per se. The conversations may include working out policies for bringing the next generation into the business. For example, the policy might require that next generation members work somewhere else after completing school, and prove themselves there before returning to the family business. Other conversations may be about the children’s career interests or how the demands of the business impact upon the family.

Our class will be holding a “family meeting” based on a case study of a second- generation CEO announcing his intention to retire. There has been no prior succession planning. At stake are the future of the company, the equity of the family members who have ownership in the business, and continued harmony within the family itself. Armed with a better understanding of best management practices than most family businesses have, students take on the roles of the family members in the case.

The founder of the business being discussed passed leadership to his oldest son who is now planning to retire. Ownership of the business went equally to the founder’s five children. The second oldest son of the founder is the only other second-generation sibling working in the business. Both have a third-generation son working in the business.

The roles the students will enact include all five current second-generation family members, the third generation cousins, including two contenders for CEO. There are also a fourth-generation cousins who look forward to their own leadership roles in the future, as well as the intrigue of a disenfranchised equity owner.

The outcome sought from the role play is a strategy and process for selecting the next CEO. Inherent in this is the question of who will lead the family in the next generation, and how equity will be handled as the family grows.

During the role play, students will learn to navigate the emotional challenges of leadership, family and self-interest to arrive at a solution that supports multigenerational success.

I recently had the good fortune to hear Dennis Jaffe and James Grubman, internationally known experts on family enterprises and wealth preservation, speak at an event in New York City. Participating on the panel as well was Abby Raphel, co-founder of The Redwood Initiative, an organization focused on family sustainability through wealth education.

Dr. Jaffe recently authored a research paper entitled Building a Hundred Year Family Enterprise. Too often family businesses stories are about those that don’t make it. There is more benefit though, in studying successful family enterprises. Jaffe uses the term ‘Generative Family’ to describe successful businesses that have sustained a family enterprise across generations. In his research he found seven qualities that characterize generative “enterprising” families that can trace their unity, shared core purpose and family capital over a century.

Dr. Jaffe has agreed to generously share his research paper. The seven qualities of a 100-Year Family Enterprise are listed on page 3. If you would like to receive a PDF of the paper, please send me your request by email to: info@thefamilybusinessleader.com.

There exists today a common view that the majority of family businesses do not survive beyond the third generation. But there are family firms thriving worldwide whose legacies date back for centuries. Some families are in the same business, working at the same location where they originated generations before–their products are modern classics. Others have evolved through the years, changing their venue, products and services with the times. Some remain relatively small in scope, others have seen major growth through mergers and diversification. Operating locally, or as players in the global marketplace, these businesses are the stuff of history. Real-life time machines, they have brought the past into the present, and they are building the future.

Professor William T. O’Hara, author of Centuries of Success and President Emeritus of Bryant College in Rhode Island, along with his associate Peter Mandel have recently combined and updated their two previously published lists: “America’s Oldest Family Companies” and “The World’s Oldest Foreign Family Companies.” The resulting list compiles the 100 oldest continuously family-owned firms, dating back as far as the year 578.

Their research adds a undertone to history as we generally learn it. Our view is usually focused on the big events, the golden age of Greece, the rise and fall of the Roman empire, the Middle Ages in Europe, the Renaissance, the Industrial Revolution. But a subtle thread runs through it all–family businesses begun centuries ago, family-held for as many as 46 generations. These companies have outlasted nations and governments, kings and queens and mighty corporations.

The list identifies businesses that are at least 225 years old. They are working today in France, Italy, Ireland, Germany, the UK, Spain, Portugal, Switzerland, Sweden, Norway, Japan, Austria, South Africa, Mexico, Chile, in the Netherlands and in the United States.

There are builders, innkeepers, paper manufacturers, goldsmiths, vintners, shipbuilders and designers of ceramics. There are glassmakers, perfumers, bankers, bell makers, confectioners, jewelers, textile manufactures, farmers and weavers. There are distilleries, iron mongers, funeral directors, publishers and breweries. One company has been making cymbals for centuries. One makes some of the best hoists in the world. The oldest of them all is Kongo Gumi which began building Buddhist Temples in Japan more than 1,400 years ago.

Among these 100 are a few whose names resonate in our modern sensibilities as familiar as those of old friends: Waterford Wedgwood makers of crystal, china, ceramics and cookware. Kikkoman, whose soy sauce products are seen on thousands of supermarket shelves. Faber-Castell whose quality pens and pencils are indispensible for artists worldwide. And although their family name may not be a household word, their product certainly is–Farina Gegenüber, creators of Eau de Cologne.

The list is evidence that family firms have the capacity to live and grow for centuries. Through enterprise and innovation their longevity has virtually created our modern world. Given their global reach and influence their continuation may even be considered universally essential.

One of the first assignments I give to students in my Family Business class at Baruch is to write about their family history.

Today Social Scientists are finding that throughout our lives we are impacted by the experiences, behaviors, thoughts and actions of our three preceding generations.

Exploring this discovery for myself, I took some time to look three generations back into my own family’s history. I grew up in a family construction business, started by my grandfather, developed by my father, and grown by my older brother. He was the oldest sibling. He loved the business, took it over and continues to be successful in running it. I am the second son. I liked the business, worked in it while in school, but lacked the passion for it that my brother has. However I did go into business for myself and so did my two other siblings.

Looking even further back into our family legacy a noteworthy surprise awaited. I recently learned that my great-grandfather was an architect and builder in Italy. So through looking at four generations of my family’s history, a significant pattern has emerged. I now see this entrepreneurial spirit that characterizes my own generation as a product of our ancestry, learned in part from the conversation and stories heard at our dining room table each night.

Teaching at Baruch College of The City University of New York is part of my entrepreneurial activities. Baruch is one of the most ethnically diverse schools in the United States and my students come from around the world. The histories they write are they filled with dedication, perseverance, strong family values and even stories of escaping from grave danger in the course of emigrating to the United States. I remind them that such legacies are part of their families’ foundation and will to succeed.

I have found that completing this assignment unearths rich source materials that often lead to extraordinary insights. Among these are legends that shine light on what their families symbolize to them. These stories contain clues that reveal to today’s generation those values that were held by earlier generations. They inform and inspire. They act as a source of pride for the families and for their businesses that transmits itself as well to non-family employees. Equally important they can be diagnostic, providing clarity as to the condition of their business, its experiences and its family dynamics that may either strengthen or jeopardize the family and the business.

In this way students learn that where they come from strongly impacts where they are going. The knowledge gained from this assignment ideally serves as a guide to taking the right steps along the road.

I teach a course on Family Business Management in the Business School at Baruch College, City University of New York, and last night was my first class for the spring semester. It’s a required class for entrepreneurship majors, and I always start by asking my students why they think that is so.

As always at Baruch, it’s a mixed group of students who generally are five years older than their peers at many other schools. They are hard working, down-to-earth and ambitious.

In the first class I ask the students to introduce themselves. Sitting in a semi-circle, each talks about how far along they are in school (most are in their senior year), what they do outside of school (e.g. work), and their plans on graduation (some know for sure, others not.). Some are married with children. Some are from family businesses and intend to return to the family business full-time. Others have mixed feelings about returning to the family business. Most are energized by the idea of entrepreneurship. Nearly all plan on having their own business. Most will likely have children who might work in the business on a full or part-time basis and even take over the business.

Discussion in a semi-circle is designed to facilitate communication and learning in the classroom, and importantly, help the students begin a lifelong pattern of communication. Now the reason why this class is a required part of the curriculum becomes clear, since the success of family businesses rests upon good communication and family dynamics.

Next time I’ll write about the first assignment in which students will expand this communication to their personal family history, as a precursor to the family business legacy they will be creating.