Toward Entering The Family Business

I recently did a presentation on the principles of family-business-best-management practices to an industry group of 2nd and 3rd -generation leaders. One participant commented that she loves the family business and that it would be unfathomable for her not to be part of it.

Her statement reflects some of the important qualities of next-generation leadership in successful family businesses. Those of us who work as advisors to family businesses recognize several characteristic attitudes held by next-generation leaders:

  • I know and love the business
  • Working in the family business is considered my best option
  • I have no other option
  • I am expected to work the family business

Each of these attitudes has consequences for the individual, the current head of the family, and the future of the family business. Knowing and loving the business promotes multi-generational sustainability more than the others.


Give Failure A Chance

In my last newsletter I referenced a Wall Street Journal article* that highlighted two issues not uncommon in family businesses: the value of experience and the rewards of failure. I addressed the first in that newsletter, pointing out the advantages of having next-generation family members gain experience by working outside the family business. In this writing I address the second issue: failure. The article connects failure and experience, saying that that the main reason veteran leaders (those I interpret as having experience) rarely fail dramatically is that they’ve failed before.

The value of learning from failure is incontrovertible. An internet search on “learning from failure” yields upwards of 500,000,000 results in a split second. Not all contain reasons and/or solutions that apply to family enterprises. Not all approaches to learning from and mitigating failure in family businesses apply to non-family businesses.

In family businesses, which may be risk averse, fear of failure can be a significant point of contention. They are often inured to tried-and-true methods of operation. So it’s not uncommon for a next-generation family member to hear from their elders:“ “Do as I told you. When you ‘re in charge you can do it your way.”

The psychological source of contention might be adolescent rebellion being acted out in the business. It might involve a parent not recognizing that the child has grown up. The child also might not realize they now need to build an adult relationship with their parent. It can also be an expression of a parent’s uncertainty of their continued relevancy. Or it may simply be that a first-generation parent has forgotten how they learned from their own mistakes.

Whatever the source it’s important to uncover and deal with it. If not, the future of the family and the business can be compromised; opportunities lost.

Giving a rising-generation family member authority to implement and run small or dear-to-the-heart innovative initiatives—risking their possible failure—allows growth and instills accountability. If they do fail—even dramatically—they will learn what doesn’t work; what not to do again. It’s a first step to becoming a veteran leader; a gain for the young person and the family as a whole.

* https://www.wsj.com/articles/the-truth-about-failing-spectacularly-11550293225?mod=hp_lead_pos9