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.

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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/.

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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.