Tag Archives: family business succession

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.

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.

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?

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.