Tag Archives: family business values

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

 

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.

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.”

05/26/17

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

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.

03/18/17

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.

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?

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

 

 

 

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