Tag Archives: family businesses

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.

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.”

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.

05/14/16

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.

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.

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.

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.