Tag Archives: family-business transition

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.

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.

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.

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*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

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.

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.