03/24/17

Accident and Intention

A young family business—first or second generation—in which the family’s next generation have begun to find their places, has reached a point where two possible paths to becoming a multi-generational enterprise emerge. The incumbent generation can either let things play out willy-nilly—without any plan as to what the business may look like in the future—and perhaps, quite by accident, become multigenerational. Or they can begin with intention.

Intention sets the stage and gets the wheels turning. The thinking starts with what’s possible for the family and the business under future generations.

Starting with intention the current leadership can set their sights on a long-term vision: wealth creation across generations, and a legacy. With this in mind they can then draw upon centuries of knowledge and documented experiences from those families that have created successful multigenerational family enterprises.

To pave a surer path to multi-generational success, start with intention.

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.

03/10/17

Impact Stewardship and Family Business

I recently saw Perpetual Revolution: The Image and Social Change at the International Center of Photography in New York City. Included among the works on exhibit, a riveting video entitled “3 Seconds.” https://www.youtube.com/watch?v=iQYiRwNd7ug

“3 Seconds” begins by stating the age of the earth—4.5 billion years; time since the appearance of our species, homo sapiens—140,000 years. Then, conceptually condensing the earth’s lifespan into the space of one day, 24 hours, the video goes on to reveal that on that scale mankind arrived on the scene in the last 3 seconds of the day—3 seconds before midnight. With excruciating clarity the video presents images of the impact mankind has had on our world’s environment in just those 3 seconds… and asks: “what of the 4th second?”

What will be the impact of our stewardship in the next second, and the next?

In the condensed timescale the video suggests, the entire history of family business—the oldest form of business—has taken place in the blink an eye. Where will it go from here?

Stewardship, a concept readily understood in environmental issues, is also one of my favorite family business concepts. Simply stated: “My role as head of the family business is to receive it from my predecessor, care for it, nourish and grow it, and pass it on to the next generation in better condition than when I received it.”

This is a valuable consideration, as most family business don’t survive past their 3rd generation. What does the future hold for the 4th generation in your family enterprise?

03/2/17

Success—An Inspired View

In her bestseller, Thrive: The Third Metric to Redefining Success and Creating a Life of Well-Being, Wisdom, and Wonder[1], Arianna Huffington makes an impassioned and compelling case for the need to redefine success in today’s world through well-being, wisdom, wonder and giving.

Is this family business?

 

[1] Thrive: The Third Metric to Redefining Success and Creating a Life of Well-Being, Wisdom, and Wonder, Ariana Huffington, 2014, 2015. Harmony Books, Crown Publishing Group/Penguin Random House, LLC, New York

02/25/17

Benchmarks for Family Enterprise Survival

In September, 2012, Dennis T. Jaffe, Ph.D., of Saybrook University and Jane Flanagan, of Family Office Exchange published Best Practices of Successful, Global, Multi-Generational Family Enterprises. Responding to the lack of solid research into strategies that support long-established family enterprises, they undertook an academic-level study with the goal of benchmarking best practices for multi-generational longevity.

Their research confirmed what has long been known among family-business advisors about best practices of family-enterprise governance, family relationships and development of next generation members:

Nurture the Family
Steward the Family Enterprises
Cultivate Human Capital for the Next Generation

Jaffe and Flanagan found that successful family enterprises strive for a balance among the three. If problems arise in any of these areas, the family does not see itself as successful.

In upcoming blog articles I will expand on each of these best practices areas, and finally discuss the importance of balance among them.

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?

02/11/17

Saved The Business—The Only Problem Is…

We all know the story of the surgeon reporting the operation went well; the only problem—the patient died.

Some thirty years ago family businesses became a subject of investigations, and advisors rushed to help them. Their initial thinking: because it is inherent in the nature of family-owned enterprises that leadership is by family members, the businesses lacked the necessary acumen and skills to be successful. Consequently, they focused on establishing procedures, protocols and practices that helped the businesses prosper. The only problem—the family died.

Since then emphasis on helping family businesses has shifted focus—and importantly so—onto family needs and goals, with expertise coming from a wide range of areas including psychology, family counseling, family systems, estate planning, mediation, conflict management, career development, substance abuse, wealth management and leadership development.

My own experience though, in providing life support for early-generation family businesses and their families, has revealed that many need to learn the importance of professionalizing the business and understand how to implement professionalization if they want to be successful across generations.

Professionalization is the process of moving a business from an owner-centric to a management-centric entity—one in which the business operates from established processes rather than requiring its leadership to provide daily supervision. Achieving this goal allows leadership to focus on the necessary entrepreneurial roles of business development, client cultivation and long-term planning for both the family and the business.

02/3/17

Listening to Chopin

An entrepreneurial client recently mentioned one of his favorite Ted Talks: The Transformative Power of Classical Music, by presenter Ben Zander. By way of various piano renditions of a piece by Chopin, Zander illustrates several aspects of understanding classical music that I found extremely relevant to family business success. https://www.ted.com/talks/benjamin_zander_on_music_and_passion

Ben Zander is conductor and music director of the Boston Philharmonic Youth Orchestra. I had known him through his book, national best seller, The Art of Possibility: Transforming Professional and Personal Life. In it he describes his leadership style as a conductor as one of embracing possibilities. He has subsequently taught workshops on his approach to leadership in corporate settings.

Several ideas from his Ted Talk came through to me as having critical relevance to family business:

  • No one is tone deaf; rather, perhaps, they have not learned how to hear the music. The capacity of family members to be instrumental in business success may be overlooked even by themselves. Look for signs of it in their conduct of everyday life.
  • An important characteristic of a leader is not doubting for one moment the capacity of people to realize whatever it is that the leader is dreaming.
  • The job of a leader is to make the players powerful, and this awakens possibilities of creativity and expression. Making other family members powerful awakens possibilities in them that will benefit the family.
  • Placing similar emphasis on every note in your business will distract you from your view of the big picture.
  • Expecting a perfect performance does not allow for the creativity and spontaneity that produce a resilient and viable next generation.

All of these ideas point to ways of embracing possibilities within your family business. They speak of a leadership style of openness and confidence in the family, the business vision, and in success for generations to come.

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

 

 

 

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.

01/13/17

Pathways of Ownership Distribution

It’s not uncommon for a family to pass on ownership of their business equally among all their children. When this second generation passes on their shares these may again flow equally among their children—the family’s third generation. According to this approach, the two siblings in the second generation will each receive ownership of fifty percent of the business. Then, for example, if one of these siblings has two children, and the other has three children, the two children of the first sibling will each inherit twenty-five percent of the business, and the three children of the other sibling will each inherit sixteen percent of the business. In legal terms this distribution by equal shares is known as per stirpes.

Alternatively, each of the third-generation children might receive an equal percentage of the business; in law this is known as per-capita distribution. In the example above each of the five, third-generation offspring would inherit twenty percent of the business.

According to Susan R. Schoenfeld, CEO of Wealth Legacy Advisors, neither approach is inherently fair or unfair—each family should decide for itself.

01/6/17

Family-Business Structure—Three Circles

Establishment of smoothly working interrelationships among the business family, business ownership and business management is one of the challenges as well as strengths of a family business. In the first generation these groups invariably have all the same players. But as generations pass the picture can become significantly more complex. To help with visualizing the interdependence of the three overlapping groups, or subsystems, comprising the family-business system, Renato Tagiuri and John Davis developed an organizing framework in simple graphic terms (below).

Microsoft Word - Three Circle Graphic.docx

Their Three-Circle Model provides a basis for understanding the seven interest groups that emerge, each with its own legitimate perspectives, dynamics and goals. The long-term success of the business depends on their independent functioning, interdependent relationships and mutual support.

 

 

12/30/16

Familiness–At Work and At Rest

Familiness in family businesses: The nature or set of resources of the family in business contributing to its competitive edge including its culture, reputation, degree of confidence, level of communication, entrepreneurial spirit, management and decisions making capabilities, trust between individuals and interest groups, shared beliefs, commitment, flexibility, creativity and innovation. (Adapted from Family Business wiki, http://www.familybusinesswiki.org/Familiness)

Familiness and the winter holiday season: That time in which we pause from our business activities and the routines of our ordinary daily lives to be in community with friends and family, to eat a bit more and perhaps sleep a bit more, to recall the fantasies we learned as children, and to retell mysteries of Hanukkah and Christmas.

I hope that you found your winter holidays joyful restful and rejuvenating, and that you enjoy the very best of familiness in the year ahead.

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.

12/10/16

Authentic Leadership–Suggested Holiday Reading

Over the past month I have found myself recommending Warren Bennis’ book, On Becoming a Leader, to a number of people. Bennis, who passed away in 2014, was a prolific writer on leadership and, according to management guru Peter Drucker, this is Bennis’ most important book. I find it intriguing that I am now recommending it so often.

As per Bennis, ingredients of leadership include vision, passion, integrity, self-knowledge, constant learning, curiosity… even daring. Bennis writes: “Good leaders engage the world. Bad leaders entrap it, or try.”1

One of Bennis’ most popular quotes illustrates his perspective on how leaders can be creative: “There are two ways of being creative. One can sing and dance. Or one can create an environment in which singers and dancers flourish.” Visit Freedom Inc. to hear Mr. Bennis expand on this quote in a video interview.

In the ideas he set forth in this book, originally published in 1989 now a classic, Bennis lays a foundation for authenticity and personal ethics in leadership.

Since a capacity to develop leadership qualities in all family members is characteristic of family businesses, I strongly suggest On Becoming a Leader as productive holiday reading for all. It’s on my list to re-read in 2017.

___________________________

1.Warren Bennis, Becoming a Leader (Basic Books, 2009), 38

12/3/16

Bequeathing Family History

Storytelling is basic to human society. Around the globe and throughout history storytelling has been used to communicate traditions, beliefs and values. Stories help to strengthen the form and order of the cultures and societies to which they belong. According to Judith Kolva Ph.D., professional personal historian and CEO of Legacies in Ink:”Our stories are the heartbeat of the human experience. They teach us who we were, who we are, and who we can be.”1

In her article: Story Power: Families’ hidden asset, posted on November 30th in The Practitioner, the online publication of The Family Firm Institute, Dr. Kolva cites sources that extend the importance of storytelling to longevity in family businesses. Her sources speak of the telling and retelling of a family’s most important stories as best-practices for successfully preserving wealth.

Despite the critical importance of making time at family gatherings to share their unique history, it seems few families do. They fail to understand that family stories are important assets; legacies that can help make them less vulnerable to the all-too-common ‘rags-to-riches-to-rags’ scenario within three generations. Or, they just cannot see how to get started.

Dr. Kolva describes the difficulties involved in initiating and continuing the storytelling process as “Someday List Syndrome.”2 In her article she offers many suggestions and strategies for overcoming these difficulties.

Why not visit the article page and pick some of these suggestions to try within your own family, https://ffipractitioner.org/2016/11/30/story-power-families-hidden-asset/.

__________________

1.Judith Kolva. “Story Power: Families’ hidden asset, ”The Practitioner, November 30, 2016. https://ffipractitioner.org/2016/11/30/story-power-families-hidden-asset/

2. Kolva.

11/26/16

Diversity and Success

I recently heard Jennifer Brown, author, Tedx-Talk speaker and entrepreneur, talk about the social and economic advantages associated with diversity. 

In her new book, Inclusion, Diversity, the New Workplace & the Will to Change, Jennifer calls upon people who can drive change to embrace diversity. She argues that when we build systems that embrace diversity in all its forms, we directly impact the bottom line; and that diversity is essential for the viability and sustainability of every organization.

She identifies a bias toward our own thinking and our propensity to go with sameness as challenges to diversity. Importantly, she recognizes that diversity issues cover much more than race and gender. They extend to areas of leadership, our relationships, and collective customs.

Her talk got me thinking about challenges to diversity in family enterprises as they transition from one generation to the next. The leadership style of the founders may be significantly different from that of the next generations, and a stubborn prejudice in favor of one style can be detrimental to the future success of the business and the family. It’s important that family-business leaders recognize that the marketplace and the social environment will continually evolve. Different conditions will inevitably call upon different natural abilities in next-generation family members.

The hard-driving dominance of a founder who grew the business making tough decisions may differ from the relationship-style of the next family leader–a style perhaps now needed to carry the business and the family through the next generation.

11/11/16

The Inside Three

As I sit down to write the blog for this week, the election is heavy on my mind. On the receiving end of change, I am flooded with emotions.

I keep returning in my thoughts to author Henri J.M. Nouwen’s The Return of the Prodigal Son: A Story of Homecoming. Inspiration for the book sprang from the feelings Nouwen experienced while studying Rembrandt’s painting of a scene from the parable. He saw parallels in his own life—the younger son’s departure and return, the father’s joyous restoration of his place, the elder son’s resentment and ultimately the father’s compassion.

Nouwen found each of these archetypes in himself and suggests they are in all of us, both male and female. The younger son’s need to prove to himself and others that he is worthy of love and acceptance—often searching where they cannot be found; the elder son’s resentment, absence of joy, and obsession about being loved, felt as: “when I hear others praised it is hard not to think of myself as less praiseworthy;” the father’s infinite compassion, unconditional love and everlasting forgiveness, all resonate within us.

As the author sees it, we must live these types to be complete, passing from one to the other; at times returning to experience again the psychology of the younger and elder sons as we grow. Many pass through all three stages, some more quickly than others. Some never complete the full journey.

It is, in Nouwen’s words, “through grief, forgiveness and generosity that we become the father.”

Certainly, for members of family businesses, it is by living this journey that we truly become leaders of ourselves, our families, and fathers of our family legacies.

If you would like to have a conversation about the journey of your family business contact me at rickraymond@thefamilybusinessleader.com. To talk please call: 212-777-0083.

11/5/16

Purpose and Love

Last week I heard author Patrice Tanaka, http://joyfulplanet.com/books/, speak about the role that having a purpose has had in her life, and the benefit and importance of knowing one’s purpose in achieving success and satisfaction in life and career.

She mentioned that significant research reveals that “purpose-driven” organizations outperform “profit-only-focused” organizations. Personally I had no doubts about this, and was thankful for the confirmation

During her talk an audience member commented that she saw the purpose of life was to love and be loved –love the work you do and be loved for what you do–who you are.

Immediately, thoughts of purpose and love within family businesses came to mind. I venture to say that it is impossible for a family business to sustain itself through multiple generations without both.

10/28/16

The Top Seven Things I Learned at Crain’s

Last week I attended the Crain’s New York Family Business Summit where I heard fathers, daughters, sons and siblings discuss the joys and challenges of working side by side. I listened to stories of how families managed to grow their businesses with each successive generation, and learned how family businesses are seen from the unique perspective of non-family CEOs. http://www.crainsnewyork.com/events-calendar/details/4/3417544

Here are my top seven takeaways

1. In a family business good communication is learned early within the family environment.

2. A family business can be like a tree with many branches growing in a variety of directions, but all branches have the same root.

3. When instilling motivation in a 400-person organization, know that some people will ‘get it’ and others won’t. Focus on the ones who do. Money helps too.

4. Multi-generational family enterprises who own their real estate can better control their destiny.

5. Ten years ahead is not too early to start planning for the transfer of leadership from a non-family CEO to a family member.

6. Coming on board early and learning the business from the bottom up proves invaluable for someone who subsequently takes on the role of CEO.

7. Family firms should seek a president who has an all-encompassing perspective on the business, as well as presidential and leadership qualities. If these qualities are not found within the family, go outside to hire the next-generation leadership. A subsequent leader might be a family member.

10/21/16

That Which Endures

I recently received a review copy of Geoff Colvin’s new book, Humans Are Underrated: What High Achievers Know That Brilliant Machines Never Will.[1] In it he asks which human skills will be highly valued tomorrow, given the growth of ever more awesomely able technology.

Calvin observes that the skills valued by the economy are changing. He explains that mastering technical skills that have been in demand in the past, no longer makes us different. In her review of the book, Pulitzer-prize-winning historian Doris Kearns Goodwin writes that the skills that differentiate us are: “Instead, empathy, creativity, humor, relationship building, and expressing ourselves with the greater power than logic can ever achieve.”

I can’t help think of these as inherent qualities of successful multi-generational enterprises.

I like Colvin, not for dispelling the unspoken fear of being replaced by a machine, which does certainly appear from time to time—not so much for me as for my children—but for emphasizing the value and importance of inherent talents and personal qualities over and above skills that can be mechanized.

It is, then, the vital human touch that will carry our businesses; our economy; into the future.

______________

1 Colvin, Geoff. Humans Are Underrated: What High Achievers Know That Brilliant Machines Never Will. New York: Portfolio/Penguin, 2016.

10/14/16

Dreaming, Intention and Process

If your dream is to see your children carry on the family business, you must both look at every day with that intention, and enjoy it as a process. And, as Seth Godin writes in a recent blog: “…the end result is always at the end of an arc, always the result of many steps, of earning trust, of building a connection.” http://sethgodin.typepad.com/seths_blog/2016/10/now-is-never.html

10/9/16

Letting the Children Go

To all families there comes the time of letting the children go. Sooner or later, they leave home and move out into the world. 

But for parents, truly letting children go is often much more complex than that. It requires the emotional cutting of ties with expectations; hopes; dreams—about what our children should do with their lives; who we think our children are; our views of their abilities; personality; gifts; ambitions.

For business families especially, expectations confront realities with regard to the roles the children could, should, will, will not play in the family business. How are the children disappointing, perplexing, annoying?

By tying themselves to agendas for their children’s future, parents impinge on their own inner peace. It’s really hard to see and be truthful about these inner agendas, and harder still to let them go—but this way lies freedom.

The children are set free to follow their own paths—to continue in our footsteps; to surpass us, to do less, to succeed, or fail. And parents are set free as well, to explore the challenges and rewards their own future holds.

09/30/16

Decisions—Instruments of Movement

When struggling with a theme for this blog, I often seek inspiration from Seth Godin, well-known author, entrepreneur and marketer. In a recent blog entitled The ripples, Godin opens with: “Every decision we make changes things.” http://sethgodin.typepad.com/seths_blog/2016/09/the-ripples.html

It follows therefore that every business decision we make changes the business. It can be large–move the business from Brooklyn to Florida–or it can be small–meet a casual contact for coffee at Starbucks. The apparent size of the decision does not foretell the size of the consequences.

Some decisions are made for the short-term, some for the long-term. But decisions are instruments of movement… and what is seen initially as a short-term decision can start a series of dynamic changes that continue far into the future.

At the end of the same article, Godin asks: “How did you get to where you are? Who is going to go even further because of you?”

It may be useful in the conduct of our day to day business to keep this in mind. What decision that you made today, however small and ordinary, may bring your business and your family further than you can imagine? For generations.

09/24/16

Women—A Powerful Presence in Family Business

Some of the world’s oldest businesses are family businesses, and women have perennially played significant roles in them. From generation to generation women have served in one or more of these high-level capacities:

  • Business partner, playing a functional or organizational role
  • Senior advisor and business confidante to the CEO
  • The keeper of family values and chief advisor to the family’s upcoming generations.

Today women have become visible as prominent business leaders worldwide.

At the 4th Annual Global Family Business Event, coming up on September 29th, the keynote speaker will be Harshbeena Zaveri, leader of the engineering firm NRB Bearings and one of India’s most powerful business women.

https://www.eventbrite.com/e/global-family-business-event-leading-an-international-family-firm-tickets-26881440111.

*Previous speakers at this event have included:

Lena Jungell, granddaughter of Fazer Group founder Karl Jungell. Starting in 1891 as a small cafe in Helsinki, the Fazer family now owns an international bakery and confectionary company.

Ana Urea, one of the owners of The Privax Group, a conglomerate of predominantly fashion-related family businesses, now involving its second and third generations. The Privax Group is the current industry leader throughout Canada and Latin America.

Raya Strauss Ben-Dror, and her daughter, Nava Michael-Tsabari of The Strauss Group. Starting in 1938 with two cows, the company sold dairy products. The Straus Group is now a multinational family business and Israel’s largest food and beverage company.

*See past events at http://blogs.baruch.cuny.edu/fieldcenter/global-family-business-event-3/

09/9/16

Momentum–Let it Ride!

The NY Times’ Corner Office, by Adam Bryant is one of my favorite business columns. In it he reports on his interviews with business leaders. On Sunday, September 2, he turned his spotlight on Ben Chestnut, CEO of MailChimp.

When Bryant asked him to name some of his leadership lessons, Chestnut’s answered: “Never sacrifice momentum. I might know a better path, but if we’ve got a lot of momentum, if everyone’s united and they’re marching together and the path is O.K., just go with the flow. I may eventually nudge them down a new path, but never stop the troops midmarch.”

This lesson came to mind while I was working with a client who was trying to decide on one of several possible paths. The choice became obvious upon considering where there was the greatest momentum, and thereby the possibility of a quicker return.

Recognizing a path with momentum can be tricky, but it can make all the difference in your business’ success.

08/25/16

Hot Tips in a Small Red Package

In October of 2008, consultant David Bork published a small book filled with common sense advice and tips for business families, and family businesses. The Little Red Book of Family Business is full of pragmatic perceptions and useful practices covering issues from attitudes to wills.

On decision making Bork writes:

Families often fall into the trap of having everyone in the family involved in making all decisions. This family pattern of involving everyone is symptomatic of a business that does not have clarity of roles, responsibility and accountability for different things.[1]

On practices and policies:

In family businesses, one can craft an elegant business solution, but the keys to implementation are always locked up in the family psychology. If you pay attention to the elegant solution and the family psychology, you will be more successful in your implementation rate, and your satisfaction quotient and will be much higher.[2]

[1] David Bork, The Little Red Book of Family Business. (Sampson Press: Coda Corporation, 2008), 46.

[2] Bork, 65.

08/16/16

Facing Conflict in The Family Business

All family businesses—and all families—at one time or another face conflict. And it can be extreme. Understanding what triggers conflict and how it develops is useful. Understanding how to manage it is even more important—serious advice offered by family-business consultants Doug Baumoel and Blair Trippe in their new book “Deconstructing Conflict: Understanding Family Business, Shared Wealth and Power.”

In the course of their analysis of conflict in family business, Baumoel and Trippe argue that conflict plays a valuable role in our development; that only through being challenged by conflict do we learn, grow, and advance as individuals, families, companies, and as a society. Further, they submit that it is possible to learn how to manage family business conflict in ways that ensure the success of families and their businesses for generations to come.

Left unaddressed, they warn us, conflict leads to erosion of relationships and waste of valuable resources and opportunities.

The authors have developed an equation by which they can help a family enterprise understand why they are stuck or in conflict and what approaches are needed to move the system forward.

I heard Doug and Blair speak about their ‘conflict equation’ this past April at the annual conference of Attorneys for Family Held Enterprises. From their presentation, I took away effective language for discussing conflict, and a viable process for transforming the consequences of conflict from upheaval to growth.

08/10/16

Stewardship

One of my favorite perspectives on family business is that of stewardship, which is an attitude of seeing our responsibility in taking over the family business from our predecessors as a mandate to grow and improve it, and to pass it on to the next generation in better shape and with greater possibilities than it had when we received it.

08/4/16

A Father’s Legacy

Several years ago my daughter gave me for Father’s Day a journal entitled A Father’s LegacyYour Life Story in Your Own Words.

Each page has a question with space to write on themes from a lifetime of experiences—childhood, family life, education, career, love and marriage, parenting. It asks for recollections of time spent with school friends, of summer holidays, the sports I played, my favorite memory of my mother, what I remember about my first date (being nervous, and asking my mother if I could use her car the day after passing my driver’s exam—she said yes), of my greatest joy in being a father—to name a few.

I have been adding to the journal, a little at a time, with increasing appreciation of the thought behind the gift. It is more than a way of passing stories along. It is a way of memorializing the values that built the stories—values that build families.

I know these memories will be cherished, as I cherish the memories of my parents. The success of a family business is in the family. The joy is in the family. Without that, what is there?

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.

07/15/16

Checking The Corner-Office Timeclock

On March 5,, 2014, the Wall Street Journal published findings of a study by professors at Harvard Business School, the London School of Economics and Columbia University’s business school in which they examined differences between family and non-family businesses. The Journal article focuses on the work schedules of CEOs in the two types of firms. Do CEOs of Family-Owned Businesses Work Less?

The data indicates that heads of family businesses work less hard than heads of non-family enterprises. They suggest that the incentives and risks that motivate professional CEOs to burn the midnight oil just might not be a factor for CEOs of family-owned firms.

Results showed differences between first and second-generation family-business leaders. First generation CEOs were found to work harder than their second-generation counterparts. In my own experience, this conclusion cannot be set in stone. I personally have seen instances of both a lack of motivation and a strong work-ethic and drive in second generation leaders.

The research suggested that family business CEOs may be spending their time differently. Instead of clocking long hours in the “corner office,” they may be focusing on balancing work-family responsibilities. Family CEOs might be adding value to their firms in ways not captured by the hours they are formally working, such as participating social activities that indirectly benefit the business.

According to the Journal article the jury is still out as to whether family-owned businesses with inside CEOs perform better or worse than non-family firms with outside CEOs.

07/7/16

The Advisory-Board Confusion

“Our advisory board includes my dad and me, my uncle who is retired from the business, and our non-family Chief Financial Officer. He’s on the board because he’s unbiased, and will make decisions based on what the business needs. Otherwise, my dad and I make decision on what’s best for everyone…”

The above statement made by a second-generation family-business leader shows confusion as to what advisory boards are; how they function, and how they differ from executive boards.

A family-business executive board is a governing body. It may include family members in leadership positions as well as key non-family staff who have decision-making power. All are on the company payroll. They have a vested interest in the welfare of the business, and in the case of family members, in the welfare of the family too.

Often the first foray into a board for family enterprises, an advisory board is comprised, predominately, of individuals who are outsiders with no vested interest in the business. They have no say in deciding how the business or the family will move to meet challenges. Their job is to advise on family-business best practices and provide an impartial view of the business’ interests and how to further them.

This trusted group of mentors is handpicked to provide supplemental industry knowledge, operational know-how, financial savvy and other areas of professional expertise. With the objectivity that comes from non-attachment to the family or the business, they are in position to make clear observations and suggest strategies that are free from the morass of family dynamics and nepotism.

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.”

06/11/16

Grow People

Chinese proverbs are sources of immense wisdom coming down to us through the ages. Ancient they may be, yet they are solidly relevant to our contemporary world. Here is one whose message is directly applicable to long-term success in family business.

“If you want one year of prosperity, grow grain. If you want ten years of prosperity, grow trees. If you want one hundred years of prosperity, grow people.”

http://www.quotes.net/quote/9102

For multi-generational success, “100-year prosperity,” start by preparing your family’s next generation. Introduce your children to the business early. Have them take on minor roles while in school. Include them in meetings where both family and business are discussed. Discuss family and business values with them. Help them learn what the role of a leader entails. Help them craft a vision for the family and the business under their leadership.

Pay attention to the talent in your upcoming generations. See where their gifts can be applied in the family and in the business. Are there born leaders? Are there natural innovators among them; natural communicators; networkers; entrepreneurs?

It’s your job to uncover and nourish next-generation resources,to support the development of their talents and encourage their chosen trajectories.

With the next generation thus grown, the business will not suffer a vacuum; when incumbents retire, when fresh ideas are needed, when upcoming technology calls for new knowledge. And when it’s time to step into responsible roles, they will serve the family and the business well and far into the future.

06/2/16

The Three Faces of Innovation in Family Business

The presence of entrepreneurial spirit coupled with a culture of Innovation within your family firm is possibly the strongest predictor of long-term success.

It’s important to understand that innovation is not confined to the development of new products and services, although this is indispensable. The vital part that innovation plays in business processes and organizational procedures is often overlooked.

Process innovation, sensitive to new technologies, consumer practices–a plethora of changing marketplace conditions –enables your business to make responsive changes in the ways that products or services are produced and delivered. Organizational innovation involves changes in management, workflow, and operations. These are often sensitive to generational outlook and leadership styles, as well as advances in office and plant technology.

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.

05/20/16

‘Applied Innovation’—Defined For The Family Business

Innovation:

: a new idea, device, or method

: the act or process of introducing new ideas, devices, or methods

Source: Merriam-Webster’s Learner’s Dictionary

 Applied Innovation:

: the process of constant improvement and creative change

: a requirement for the continued success of multi-generational family enterprises

Like any other business, family businesses benefit from, if not require, a culture of innovationa culture that supports constant improvements to its products, services, processes, governance, and planning.

While the dynamics within family businesses often present obstacles to innovation, a clear view of the competitive advantages of an innovative culture can overcome them.

Next week I’ll write about these obstacles and about some of the advantages enjoyed by family businesses that support a culture of innovation.

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.

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?

04/23/16

The Word From D.C.–It Takes a Team

I am writing this blog piece while attending the annual conference of Attorneys for Family Held Enterprises (AFHE) in Washington D.C. Each year’s conference brings together a multidisciplinary group of family business advisors, financial planners, psychologists and attorneys–representatives of AFHE’s wide membership base.

One of the organization’s underlying missions is to promote the well being and sustainability of business families. AFHE understands that family businesses are complex because families are complex; that seeing their challenges as business issues alone and addressing them from the perspective of any single professional discipline will fall egregiously short of achieving this aim. The best success comes from the collaborative efforts of experts.

04/14/16

More Than ‘Do No Harm’

I saw my internist recently, and we started to talk about a book written by neurosurgeon Henry Marsh, entitled “Do No Harm: Stories of Life, Death, and Brain Surgery.” In it the author gives a viscerally disturbing account of what can go wrong in surgery and with the brain itself. He speaks about risk, he speaks about his growing experience and skill and he speaks about caring.

During this conversation my mind jumped, by association, to a principle of family business called stewardship.[1]

As a steward of my family business my leadership role is to receive the business from my predecessors, grow the business, the family wealth, the family itself, and then pass this multifaceted inheritance on to the next generation in better shape than it was in when I received it. More than do no harm, stewardship of a family business aims at building health and vigor and creating an ever greater family legacy.

The challenges of stewardship change as the business develops. The responsibilities of sole proprietorship differ from those carried by the head of a business with family members working in management or as employees. It changes when the founder’s children are born, and changes too when brothers, sisters and cousins become part of the picture.

At The Family Business Leader™ we help you meet the varied challenges of family-business stewardship and bequeath a healthy and vigorous inheritance to your family’s next generation… and the next.

[1] According to The Family Business Leader™: “Stewardship is defined as “a perspective that founding family members view the firm as an extension of themselves and therefore view the continuing health of the enterprise as connected with their own personal well-being.” http://www.familybusinesswiki.org/Stewardship

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.

04/2/16

Pulled Into the Future

The leadership, vision and entrepreneurial talent of the founding generation of a family business may be very different than that needed in subsequent generations; and installing a successor who is a copy of the founder may result in the failure of the business to change with an evolving market environment or the growing needs of a larger business.

For example, the business may now have more need of leaders who develop collaborative relationships than those who get things done by themselves, or of strategists who find new opportunities as the size of the family grows.

“Respect the past while keeping an eye on the future.” This important family-business axiom, together with a phrase I read twenty years ago in “Breaking Point and Beyond: Mastering the Future Today by George Land and Beth Jarman“allow yourself to be pulled by the future”–are potent strategies for expansion and growth.

03/26/16

The Networked Age–What Can LinkedIn Leaders Learn from Family Businesses?

I recently heard Jeremy Stover, LinkedIn’s head of leadership management and executive development, speak as part of a panel discussing the state of executive coaching. I asked him about the success of leadership coaching within LinkedIn, and he directed me to an article he wrote in December of 2105 entitled “Social Leadership in the Networked Age.”

In it Stover wrote that when LinkedIn leaders were asked about business challenges and opportunities they see, a theme became clear: “the phenomenal pace and relentless rate of change.” In his view a new type of leadership development is required at both the organizational and the individual levels to address these challenges.

“The Networked Age is here…” Stover declares. And it calls for leadership skills that go beyond those of emotional intelligence, authenticity, executive presence. clarity of vision and communication. While these will always be essential, they stop short of what is needed now–leaders who have a network perspective and understand the dynamic web of connections that impact their work, their leadership, and the leadership culture of their organization.

I agree with him, and I chose the title of this blog post because I believe successful family enterprises have recognized and made use of complex and long-standing networks connecting family- and non-family stakeholders across many generations.

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.

03/5/16

A Family Community

In January 2016 Dennis T. Jaffe, Ph.D. published a book entitled RELEASING THE POTENTIAL OF THE RISING GENERATION: How Long-Lasting Family Enterprises Prepare Their Successors. In it he discusses attitudes and actions that together comprise the success of multi-generational family businesses. 

Jaffe’s book makes a strong case for the idea that family business success is less about building the business and more about how the family goes about creating a family community focused on educating and mentoring the next generation and developing next-generation careers.

02/26/16

Working With Siblings

In a recent blog entry, Seth Godin wrote about options for finding, leading and motivating employees in a small business (he used the term “tiny business”). He characterizes three different management styles, what types of employees work best in each, how they work together, how they relate to being led: “a team of equals, “fellow travelers,” industrialized employees.” He sets forth both advantages and pitfalls inherent in each option.

http://sethgodin.typepad.com/seths_blog/2016/02/managing-the-very-small-business.html

These same types–equals, fellow travelers, employees–will exist in family businesses staffed by siblings and/or cousins whether in leadership or subordinate roles. Understanding the distinctions, their pros and cons will go a long way in strengthening family relationships and the business itself.

Are siblings in your business equals, fellow travelers or employees?

02/19/16

Accepting Anxiety

Last week I wrote about how to keep moving forward in times when we are feeling overwhelmed by challenges in our businesses. My posting today is on a similar theme—managing our anxiety.

Some business owners thrive on anxiety. They require the frenetic energy it delivers in order to do business. Others suffer severely under the weight of its emotional intensity. Neither extreme is desirable.

The ability to manage anxiety in a balanced way is a requirement for success whether yours is a family or non-family enterprise. Reprising last week’s water metaphor—with each set of rapids we navigate we get stronger. The struggles we encounter as business owners are a source of personal and professional growth.

A prerequisite to managing our anxiety is our acceptance of it.

I recently had a conversation with a young second-generation business owner about her process of managing anxiety as she grew the family business. In her view, seeing her challenges as a vital part of her personal and professional growth was an important first step.

To control the anxieties assaulting her, she learned to diminish their overwhelming character through acceptance of her feelings, instead of exhausting her inner resources in struggling against them.

 

02/11/16

Downstream

This past week a number of my clients expressed feeling overwhelmed by unexpected challenges they are facing in their businesses.

Speaking metaphorically, I suggested to one client that he keep the nose of his kayak pointing downstream—that he turn his attention to steering day-to-day business operations. A crisis is not the time for big-picture planning. What is necessary is to focus on paddling past the next group of rocks—not to ponder which may be the best rocks. A few days later he wrote to tell me this phrase kept him moving forward, taking on each new challenge as it came to him.

Our faith in our business and in ourselves increases with each stroke of the paddle. Through flat water, white water, quiet pools, raging rapids, by keeping our kayaks pointed downstream we can successfully navigate the ever-changing currents of business.

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.

01/29/16

Assessing Emotional Intelligence – The Results Are In

For the past two weeks I have been writing about emotional intelligence and its role in family business. From the many responses I have received, it is clear that this topic has struck a chord with readers.

This week I want to briefly show the value of applying emotional intelligence assessment within a family business. The case is presented by author Ernesto Poza in the 4th Edition of “Family Business,” published by South Western Cengage Learning. I use this text in my Family Business Management class in the Zicklin School of Business at Baruch College, City University of New York.

Poza writes about a family with challenging dynamics. They wished to create an environment of engaged conversation while ensuring all stakeholders were sufficiently respected. Following an assessment of the family’s facility for emotional intelligence they developed a Family Rules of Conduct. The rules they agreed to were:

  1. Focus on the future, not the past.
  2. Be a good listener.
  3. Put yourself in the other’s shoes.
  4. Stay focused on principles, not personalities.
  5. Make “I” not “You” statements.
  6. Say “Got it” whenever speech-making blocks progress.
  7. Disagreements are okay, as long as we are committed to arriving at an improved final decision.

What do these rules tell you about the family’s overall level of emotional intelligence?

Do you think the application of emotional-intelligence assessment tools was useful in this case?

01/22/16

Emotional Intelligence – Do We Have Two Minds?

Last week I wrote about why family businesses are particularly susceptible to the impact of emotional triggers. I observed that, well-directed, emotions can be useful. Successful business families blend cognitive perspectives–thinking, understanding, learning, remembering–with the energy of emotions. At the intersection where these “two minds” meet, the capacity for cooperation, innovation, growth and longevity is born.

The term ’emotional intelligence’ (EI), became popularized in the book by that title by psychologist Daniel Goleman. Also called ’emotional quotient’ (EQ), the idea can be stated as consisting of four capability factors present in differing degrees in each individual:

  1. The ability to recognize one’s own emotions;
  2. To recognize the emotions of others;
  3. To discriminate between different emotions and label them appropriately;
  4. To use emotional information to guide thinking and behavior.

https://en.wikipedia.org/wiki/Emotional_intelligence

There are tools for assessing emotional intelligence factors such as empathy, relationship skills, family relations, social dynamics at work, job performance, leadership and more. With these tools you can identify your own and your team members’ emotional intelligence quotients. While individuals are often found to be stronger in some areas and weaker in others, the good news is that EQ levels can be increased.

Next week I will present how a family integrated principles of emotional intelligence into their family-business model.

01/17/16

You Are So Emotional!

Yes, I am emotional. l am your sister, brother, son, daughter, mother, father, another family member. We not only work together, we grew up in the same family. We share common experiences and emotional history–ingrained touch points that can trigger easily. Because of this familiarity, emotions can spill over into a family business much more often than would be acceptable in a non-family business.

In themselves emotions are not bad; they are valuable. Their energy drives the human psyche; they serve as social signals. When funneled properly emotional energy can be used to achieve significant positive outcomes. Unbridled, emotions can cause untold devastation.

Denying one’s emotions or discrediting those of others is destructive. It is important to cultivate an emotional intelligence to recognize our own and other people’s emotions; to discriminate between different feelings and label them appropriately. We are then better equipped to manage our thinking and behavior to maintain harmony in our families and success in our family enterprises, especially during times of increased stress.

Emotional intelligence is so vital to the success of family businesses that as part of my Family Business Management class at Baruch College, City University of New York, I have students assess their own level of emotional intelligence, and – since we can increase our capacity for emotional intelligence – develop a plan for doing so for themselves.

01/9/16

Family-First or Business-First Revisited

In an earlier blog posting I wrote about distinctions between a family-first and a business-first business. Family-first promises employment to family members based on the family relationship. Business-first promises employment based on the needs of the business and capabilities of the individual; family relationship is secondary.

The question is asked whether family businesses are more sustainable when their focus for growth is placed on the business or on the family. While acknowledging that the health of both are important to multi-generational success, research on family businesses suggests that shifting focus for growth to the family level results in greater entrepreneurial activity and trans-generational value creation.

Said in another way, a family-business is a family focused around a business. There is potential for greater long-term value creation in a business-family that represents a number of businesses centered around a family entity.

01/3/16

Your Job Is To Prepare The Next Generation

In his influential work, The E-Myth Revisited, addressing small business owners, author Michael E. Gerber stated: “Simply put, your job is to prepare yourself and your business for growth.”

Addressed to the head of a family business this admonition applies in modified form: Simply put, your job is to prepare the next generation for multigenerational growth.

Wishing you happiness, health and prosperity in 2016.

12/24/15

A Family-Business New-Year’s Resolution

In the blink of an eye another year has passed, and resolutions for 2016 may be creeping into our thinking.

The closing of the year bestows a blessing; it encourages reflection–pressing us to review our individual accomplishments, our persistent challenges, what we are grateful for, what more we hope to accomplish, and who we would like to become as a person. Equally it affords an opportunity to reflect on the future of our family business and its significance to our families and ourselves.

Here are some practices inherent to successful multigenerational family businesses that you might resolve to begin in 2016:

  1. Devote time to better communication within the family
  2. Commit to professionalizing your business – working on it rather than just in it
  3. Establish a family council
  4. Develop a family hiring and employment policy
  5. Begin the discussion of succession
  6. Hire outside expertise
  7. Create a strategic plan

Wishing You a Happy and Prosperous New Year!

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.

12/4/15

The Best ‘Family-Business’ Leaders are Constant Learners

In their article The Best Leaders Are Constant Learners, published in Harvard Business Review  Kenneth Mikkelsen and Harold Jarche write that today’s business leaders must make meaning of a playing field that is constantly changing shape.

A valuable axiom for creating successful family businesses is that next-generation leaders need to keep their eyes on the future, while respecting the past. The challenge is perhaps never more trying than for those family businesses where past business practices have been successful and family traditions are strong.

“Sustainable competitive advantage,” Mikkelsen and Jarche write, “now depends on having people that know how to build relationships, seek information, make sense of observations and share ideas through an intelligent use of new technologies.”

In family businesses today, active application of this strategy is incumbent on the both the younger and the senior generations in order to maintain multi-generational success. And it works best when all generations are helping the others meet the challenge.

11/21/15

The Not-Ideal Path

Seth Godin recently wrote a blog post titled Natural Light. http://sethgodin.typepad.com/seths_blog/2015/11/natural-light.html.

In it he describes two ways of making things. One way is to tightly control conditions. To ensure consistently of outcome, pre-process the inputs so that all raw materials are precisely the same every time.

The other way Godin calls “the path of natural light.” Take what you get. “Embrace the idea that the conditions will never be ideal, which of course makes them always ideal because the thing about natural light is that whatever it is, is.”

My experience is that raising children and integrating them into your family business is more often successful when the path taken is the way of natural light. The differences that exist between and among you, your children and other family members are part of what makes a family business succeed.

To achieve this outcome requires participation in creating a vision for the future of the family and the business under the leadership of the next generation—and willingly relinquishing control of the results.

11/14/15

Developmental Stages of Multi-Generational Family Businesses

A few weeks ago I had the pleasure of hearing Lena Jungell, a fourth-generation member of The Fazer Group, speak at the Fall 2015, Global Family Business Event hosted by the Baruch College, Lawrence N. Field Center for Entrepreneurship.

In her talk, Ms. Jungell presented elements essential for the growth and sustainability of a multi-generational family business. In my last two newsletters I touched on three of these: Vision, Values and Mission.

Ms. Jungell presented a fourth critical element–outlining the developmental stages of her family and its business across generations:

  • First generation: Built the business
  • Second Generation: Lived with and worked in the business
  • Third Generation: Worked in the business and established business-governance structures
  • Fourth Generation: Developed family-governance structures
  • Fifth Generation: Learned the business- and family-governance structures
  • Sixth Generation: Is already participating in the business while the fifth generation governs.

This pattern is fairly typical of family-business succession. I believe it is representative of a business that successfully evolves into a multi-generational enterprise without an initial intention to do so. Recognizing the pattern can facilitate the growth of any business family interested in multi-generational success.

11/7/15

Values, Vision, Mission: The Bedrock of Family Businesses – A Real-Life illustration

Last week I wrote about having attended the Fall 2015, Global Family Business Event hosted by the Lawrence N. Field Center for Entrepreneurship at Baruch College, where I heard a talk by Lena Jungell, a fourth-generation member of The Fazer Group.

An international, family-owned-and-run firm based in Finland, The Fazer Group proudly produces top-of-the-line bakery, confectionery and biscuit products as well as food and café services

Lena spoke about one of the essential components of family-business success and longevity, “The Development of an Owners’ Vision” Today I will write about two other equally important components–values and mission.

Microsoft Word - Document2To clarify what I mean by these three terms: Your vision is something you can see as a result of your efforts. Your mission identifies the action of achieving the vision. Values are those qualities, behaviors and points of view that a family holds to and deems important for the guidance of its members and its business.

In working to fulfill its mission —To Create Taste Sensations–guided by its vision–responsible business growth with a strong focus on long-term development–the Fazer Group stands firm on the bedrock of its values: Passion for the Customer; Quality Excellence, and Team Spirit. http://www.fazergroup.com/about-us/we-create-taste-sensations/

These values are the basis of all of their corporate strategy processes, ethical principles, responsible environmental standards, management systems and more. http://www.fazergroup.com/responsibility/our-responsibility/

This solid footing along with open articulation of their values is, no doubt, integral to the Fazer Group’s success as a thriving and growing sixth-generation family business looking into a prosperous future. As such, The Fazer Groups is a real-life illustration that demonstrates the long-term possibilities inherent in family businesses.

Next week I’ll write about the evolution of the Fazer-Group from its first generation into its sixth, and explore its business- and family-governance structures.

10/31/15

An Owners’ Vision

On October 22, I attended the Fall 2015, Global Family Business Event hosted by the Lawrence N. Field Center for Entrepreneurship at Baruch College, City University of New York. The keynote speaker was Lena Jungell, a fourth-generation member of “The Frazer Group.”She shared with us the story of her family’s business.http://www.fazer.com/our-brands/karl-fazer/finlands-most-valued-brand/.

Her talk, “The Development of an Owners’ Vision” presented a valuable model of the potential possible in family businesses. The Frazer Group has grown into an international company, now supported by and supporting six generations. One significant take-away from the talk was a picture of the strength the family derives from their collective values and the clarity of the firm’s vision—“to create taste sensations”. It’s simple, easily understood, and looks outward toward their customers and community.

Ms. Jungell added that the family-business’ vision has evolved over time through ongoing input from the owners, family members, society, and their environment. This reminds me of the statement made by Sam Johnson, former CEO of The Sam Johnson Company; that every generation has the responsibility to determine a vision for the firm under their leadership.

Next week I will write about family’s values as foundation of the owners’ vision.

10/22/15

Differences and Consensus

In his October 4, 2015, NY Times column “Corner Office” Adam Bryant presented his interview with Gary B. Smith, CEO of the Ciena Corporation: “Gary Smith of Ciena: Build a Culture on Trust and Respect.” In it Smith shares some of his history, his early influences and how his views changed with experience. In last week’s blog I wrote about Smith’s understanding that “it’s all about people.”

 And of course, with people there will be inevitable differences of opinion. Smith says that this is healthy. These differences should exist. But ideally, he aims at consensus. “I’m a great believer in getting consensus,” he says. But he knows that consensus cannot always be reached, so “you’ve got to say, O.K., that’s good enough.”

What’s critical he says, is that once agreement has been reached the leadership team must be synchronized and the agreement is communicated down the ranks of the organization so that all are moving in the same direction.

One of my first clients started our engagement by stating: “My dad has fired me twice.”

The point of contention was over my client’s approach for implementing a strategy. His father would neither acknowledge nor respect his son’s difference of opinion saying: “any way you do it is ok, as long as it’s my way.” Clearly there was no working toward a consensus.

Perhaps for the health of the organization it might have been easier, in the short run, for the father to fire his son, thus avoiding having the operation of the business skewed by trying to follow two conflicting directions. But for multi-generational longevity, an opening must exist, for at least a partial consensus.

To ensure multi-generational success, members of the next-generation need to be granted a degree of autonomy, allowing them to acquire leadership skills and giving them the invaluable opportunity to learn from their own mistakes.

Handling this transition is one of the most difficult challenges facing family businesses.

10/15/15

It’s All About People

In his October 4, 2015, NY Times column “Corner Office” Adam Bryant presented his interview with Gary B. Smith, CEO of the Ciena Corporation: “Gary Smith of Ciena: Build a Culture on Trust and Respect.” In it Smith shares some of his history, his early influences and how his views changed with experience. In last week’s blog I wrote about how Smith’s management philosophy of creating an environment that people could be successful in is important to the success of family businesses.

This week’s blog: “It’s all about people.” This is another important management principle, one that Smith says he learned early in his career, but that took time for him to truly grasp. “…if you get that right,” he says, “the other stuff will get addressed.”

In family businesses the people are all stakeholders–leaders, family members, team members, staff. The “other stuff:” smoothly running business operations, processes and procedures depends on careful attention to building and maintaining a culture of mutual trust and respect.

For me this means putting relationships first and business transactions second. It’s a philosophy for building a family-business legacy.

If you have thoughts or questions about building relationships of trust and respect within your family and family business, contact me through my website.

This is the second of three important management principles I pinpointed while reading Adam Bryant‘s interview with Gary B. Smith. I’ll share my thoughts on the third: “Differences and Consensus” in next week’s blog post.

10/10/15

Nurturing Next-Generational Success

In his October 4, 2015, NY Times column “Corner Office” Adam Bryant presented his interview with Gary B. Smith, CEO of the Ciena Corporation: “Gary Smith of Ciena: Build a Culture on Trust and Respect.” In it Smith shares some of his history, his early influences and his experiences as he took on his first management roles. In the beginning of his career Smith recalls, he managed people by the numbers. If they hit their numbers they were fine, and if they failed to hit them, they were not. Then, at a certain point, there came a kind “ah ha” moment that changed his thinking. From then on he viewed his role as facilitating and creating an environment that people could be successful in.

It struck me that the role of facilitating and creating an environment that will nurture the success of next generation leaders is relatively rare within family businesses.

In defense of family businesses however, it’s a role not often found in businesses of any kind. Perhaps it’s an anomaly, found in the character of particular individuals. But this role is vital for family businesses that are interested in building a multi-generational legacy.

Sounds too vague as a strategy? Smith offers a first-step towards achieving it. He stated that upon understanding his role of facilitating others’ success, he learned to listen more than he talked– a working axiom for success in any kind of relationship.

If you have any thoughts or question about your own listening skills or those of others in your family business, contact through my website.

This is the first of three important management principles I pinpointed while reading Adam Bryant‘s interview with Gary B. Smith. I’ll share my thoughts on the second: “It’s all about people” in next week’s blog entry.

10/1/15

Moving the Center

A point is reached in the life of a family-owned or closely-held business where in order to continue growing it needs to begin a process of transitioning from an owner-centric to a management-centric enterprise. This is one of the top challenges for businesses where family members maintain tight operational controls.

In order to move forward from this point new systems and procedures need to be established in areas of organizational structure, fiscal management, operations, marketing and sales, business development and even in the way a receptionist answers the phone.

I recently joined business attorney Nina Kaufman on a podcast hosted by Business Exponential.com, where we discussed this challenge and ways to meet it. Click here to listen: Scale From Owner-Centric to Management-Centric with Rick Raymond.

I would like to hear your thoughts and questions about this and other family-business challenges and concerns. Please contact me though my website.

09/26/15

Fear or Dreams

Seth Godin recently wrote in a blog that motivators for important actions come down to either fear or dreams http://sethgodin.typepad.com/seths_blog/2015/09/dreams-and-fears.html.

Godin is writing from the perspective of how marketing is positioned. Fear and dreams are equally strong motivators in family businesses, especially during times of impending transition.

Both parents and children can experience fears of being left out, of lack of purpose, inadequacy, being rejected, not being needed, becoming powerful, supplanting a parent, loss of financial security, or dying.

Dreams focus on the future and help us see beyond our fears. The catalyst for a successful transition lies in the answers to: When your grandchildren take over, what do you want for your family and business? What do you want your children to be like? What do you want your family and business to look like? How do you want them to be standing with respect to others and within their community?

Drop me an email or give me a call if this is a concern for you in your family or business.

 

09/19/15

We Are An Eight-Track Tape Deck…

…or we are a buggy whip or any other product whose purpose is largely irrelevant to the needs of the current marketplace.

Family businesses, built on the vision and hard-work of their founders, may no longer be viable a generation or two later because of the inevitable changes in the external business environment. Herein lies the danger of failing to envision a future for the business apart from the founder’s dream.

Building a culture of innovation into a family business can be challenging and require multiple approaches. To meet this challenge successfully, the stakeholders must come to grips with the fact that change needs to occur in order to save both the business and the family’s legacy.

However the need for innovative change may not be obvious. Even if seen, it may be resisted by the incumbent generation. Developing a culture that continually welcomes innovation as part of your ongoing business strategy–in talent acquisition, systems development, methodology, risk taking–will strengthen your possibility for success as a multi-generational family business.

09/12/15

For Older Family Business Leaders Goals Turn Inward

A family business has been established for many years. It has been guided to a level of maturity and success and is firmly established. For the leader of such a firm, focus now shifts from financial concerns and growing the business to an emphasis on human contact and relationships.

Instead of seeking outside professionals whose primary goal is helping the business maximize its financial wealth, older leaders of family firms seek the advice and emotional support of an inner circle of friends and relatives. Close relationships take on central importance, as do family harmony and ensuring an enduring legacy.

Understanding this shift is critical for the success of aspiring next-generation leaders and their advisors.

 

08/27/15

Teaching Trust

This past Spring my daughter completed two years teaching high-school math in the Dallas-Fort Worth area with Teach For America https://www.teachforamerica.org. She is staying on another year so she can see the first class she taught graduate. Now in her third year, she is participating in a semester-long professional-development program sponsored by Teaching Trust http://www.teachingtrust.org/.

She showed me the resource they are working with: The Speed of Trust, by Stephen M. R. Covey, whose father, Stephen R. Covey, wrote The Seven Habits of Highly Effective People.

So many family enterprise stories come to mind with trust as a factor–the good, bad and in-between. Family businesses built on strong trust among family members are going to win out over any other kind of business, time and again.

 

08/21/15

What Do Google, Apple and Successful Family Businesses Have in Common?

Authenticity.

In a recent posting on Tech Crunch Network Justin Rosenstein writes that Apple and Google, both having reached the pinnacle of business success, are very different companies in their business style and leadership. What they have in common though is a culture of authenticity that is the source of their success. Rosenstein writes that what all great organizations and all great leaders share is self-actualization—working in a way that’s authentic to who they are. This requires, he adds, that they deeply know who they are.

Authenticity is largely believed to be inherent in family enterprises. And nothing could be more important for any business that put its family name behind who they are and what they do. For some family enterprises authenticity may be difficult to maintain as the generations transition. But this need not be so.

Rosenstein identifies six practices that a business can undertake to achieve authenticity. The top three are:

  1. Achieve clarity of purpose
  2. Determine and live your values
  3. Define your brand’s personality attribute

To read his article and all six practices: http://techcrunch.com/2015/08/05/the-one-thing-every-great-company-has-in-common/

08/14/15

How Did Grandpa Start the Business?

This is a question that should instill a sense of pride. The entrepreneurial spirit that started the family business is both a touchstone for the family and a competitive advantage in the market place. It is a story generally built on clear values, creative problem solving, experimentation and hard work.

Regrettably, most family businesses fail by the third generation, not for want of any of these qualities, but from changes in time, place, and markets.

Family businesses that include ongoing innovation as part of their strategic planning, similar to the spirit in which the business was started by grandpa and his brothers, are ensuring their multi-generational longevity.

 

08/8/15

“A Crisis Is a Terrible Thing to Waste”

Quote attributed to economist and entrepreneur Paul Michael Romer https://en.wikipedia.org/wiki/Paul_Romer.

It’s natural behavior that when things are good, business is growing and we are making money, we pay less attention to costs. It’s a time when expenses can creep upwards, but don’t matter significantly. Eventually though, they may get out of hand precipitating a crisis; which is, in Romer’s view, a terrible thing to waste.

I often use the metaphor of going down a river on a raft and encountering unexpected rapids. How do you react? In the rush of adrenaline do you panic, freeze up? Or do you act to maintain control–tie down what you need and discard what you don’t; keep the front of the raft headed downstream; steer away from rocks. In this crisis your ride down the rapids can be debilitating, even disastrous. Or it can be safely negotiated, even exciting, exhilarating–an experience that leaves you stronger to meet challenges ahead.

07/31/15

Washing the Hands of Your Father

 Axiom and Challenge in Family Businesses

In discussions about successful multi-generational family businesses I frequently state what I believe to be an axiom: “each generation needs to respect the past and keep an eye on the future.” Challenges, often expressed, to achieving this ideal are a loss of perspective, and even worse, a sense of entitlement in our children–a result of giving them what we ourselves did not have–wanting them to have a better life than we did.

This is touchingly illustrated in a post (now removed) from This Blew My Mind http://www.thisblewmymind.com, shared by friend Joseph Meerbaum on his Linkedin page on June 21, 2015.

Microsoft Word - Document1A young man went to seek an important position at a large printing company. He passed the initial interview and was going to meet the director for the final interview. The director saw his resume; it was excellent. And asked, “Have you received a scholarship for school?”

The boy replied, “No.” “It was your father who paid for your studies?” “Yes.” He replied. “Where does your father work?” “My father is a Blacksmith.” The Director asked the young man to show him his hands. The young man showed a pair of hands soft and perfect.

“Have you ever helped your parents at their job?” “Never, my parents always wanted me to study and read more books. Besides, he can do the job better than me.” The director said, “I have got a request. When you go home today, go and wash the hands of your father and then come see me tomorrow morning.”

The young man felt his chance to get the job was high. When he returned to his house he asked his father if he would allow him to wash their hands.

His father felt strange, happy, but with mixed feelings and showed their hands to his son. The young man washed his hands, little by little. It was the first time that he noticed his father’s hands were wrinkled and they had so many scars. Some bruises were so painful that his skin shuddered when he touched them.

This was the first time that the young man recognized what it meant for this pair of hands to work every day to be able to pay for his study. The bruises on the hands were the price that he paid for their education, his school activities and his future.

After cleaning his father’s hands the young man stood in silence and began to tidy and clean up the workshop. That night, father and son talked for a long time.

The next morning, the young man went to the office of the director.

The Director noticed the tears in the eyes of the young man when He asked him, “Can you tell me what you did and what you learned yesterday at your house?”

The boy replied, “I washed my father’s hands and when I finished I stayed and cleaned his workshop.”

Now I know what it is to appreciate and recognize that without my parents, I would not be who I am today. By helping my father I now realize how difficult and hard it is to do something on my own. I have come to appreciate the importance and the value in helping the family.

The director said, “This is what I look for in my people. I want to hire someone who can appreciate the help of others, a person who knows the hardship of others to do things, and a person who does not put money as his only goal in life”. “You are hired.”

A child that has been coddled, Protected and usually given him what he wants, develops a mentality of ” I have the right ‘ and will always put himself first, ignoring the efforts of their parents. If we are this type of protective parent are we really showing love or are we destroying our children?

You can give your child a big house, good food, computer classes, watch on a big screen TV. But when you’re washing the floor or painting a wall, please let him experience that too.

After eating have them wash the dishes with their brothers and sisters. It is not because you have no money to hire someone to do this it’s because you want to love them the right way. No matter how rich you are, you want them to understand. One day your hair will have gray hair, like the father of this young man.

The most important thing is that your child learns to appreciate the effort and to experience the difficulties and learn the ability to work with others to get things done.

 

 

07/25/15

West Point Leadership and Family Businesses

In his article The Re-Education of Jim Collins published in Inc. Magazine, Bo Burlingham of Editor at Large, Inc., writes about the lessons that Jim Collins, business guru and author of such business classics as Good to Great and Built to Last, learned during his two-year appointment to West Point’s Chair for the Study of Leadership. He came away with a new understanding of leadership based on a 3-point model he observed in the West-Point culture

Collins describes the attitudes among the West-Point cadets as points of a triangle: Service– Growth–Success. To my mind, these attitudes apply as much to family businesses as they do to the careers of the cadets.

Expanding on the triangle, Collins sets forth three bullet points pertaining to building a culture of engaged leaders and a great place to work. When applied to family businesses these can be paraphrased as three questions:

  • Service–What cause or purpose are we passionately dedicated to, and that we are willing to sacrifice for?
  • Challenge and growth–What huge and audacious challenges do we as a family have that will push us and make us grow?
  • Communal success–What can we do to reinforce the idea that we succeed only by helping others?
07/18/15

Struggle and Strength

Ongoing Discussion at the Family Business Mastermind

The Family Business Mastermind is a peer-to-peer learning group. Participants meet monthly at the Lawrence N. Field Center for Entrepreneurship at Baruch College of the City University of New York to discuss the pressures, challenges and concerns of being part of a family business.

http://www.meetup.com/Family-Business-Mastermind-at-Baruch-College-Manhattan/

At July’s Mastermind meeting, there was discussion initiated by second and third- generation family-business members. They were seeking to define their roles within the context of the three major family business subsystems: family members, business management and ownership.

They expressed their frustration with being ignored when seeking to initiate innovations they believe to be critical to business growth. They shared a sense of “being right” about what their business needs; what they need for themselves in order to work in the family business, and what needs to be done differently to grow the business.

Ernesto J. Poza, author of Family Business, states that each generation needs to “respect the past, while keeping an eye on the future.” The Mastermind participants all expressed respect for what their parents had accomplished. They were struggling though, with how to evolve into their own leadership, perhaps like a caterpillar struggling to escape its cocoon. The takeaway here is that without the struggle the emerging moth will not have the strength to fly.

This is a conversation to be continued, as leadership needs time to develop. It is ultimately a conversation not about who or what, but about family values, future possibilities and opportunities.

07/11/15

The Unreasonable First Generation

Seth Godin recently wrote a blog post on a characteristic bias of human nature regarding the perception of “reasonableness.” http://sethgodin.typepad.com/seths_blog/2015/07/unreasonable.html. He pointed out that in relationships, we consistently perceive and “act as though” it’s the other person, and not ourselves, who is being unreasonable.

This situation is not infrequently seen in the interactions between members of first and second generations in family businesses. The son describes, often from a place of frustration, that the father is being unreasonable, in one way or another, in restricting his being promoted to decision-making status in the business. Their ensuing stories may be buttressed on the father’s side by perceptions of being railroaded, and on the son’s side by the feeling that his father lacks belief in his abilities.

Perceptual disconnects like these are based upon years of family interaction, ripe with ingrained habits and complex attitudes invisible within the family itself. A professional family-business advisor can reveal the complexities and misperceptions, align expectations and help develop positive governance structures within the family business.

07/4/15

Talent and Commitment

If I were asked to recommend top-of-mind best strategies for multi-generational success in a family business, I would advocate fostering the development of next generation-talent and leadership, and instilling a values-based commitment to being a multi-generational family business.

 

06/28/15

Family Policies

I was speaking with a long-time acquaintance with whom I went to high school. He is a third-generation member of a family business. He mentioned that his family has an ongoing policy, starting when the family’s children become teenagers. If any of them ‘think’ they want to go into the family business, they are expected to attend the annual family-business meeting.

The teenagers sit on the side of the room. They see who are the current and future leaders. They become familiar with the family’s vision for the business. They absorb the family’s values and begin learning what is expected from family members active in the business.

Writing on family-business policies, Craig Aronoff[1] describes them as the guides for decision making and defining relationships between the family and the business. Good policies help families build skills, gain confidence, and increase their ability to face issues together. The policies should emerge from the bedrock of the family’s values, beliefs, philosophies, and principles.

Most family businesses do not survive past their third generation. The policy put in place by my high-school friend’s family has not only helped bring them securely into the third generation, but it looks good to take them into the fourth and beyond; a real-life illustration of the merits of solid family-business policies.

[1] Craig Aronoff, Joseph Astrachan, & John War. Developing Family Business Policies. Family Business Consulting Group.