01/23/18

Sharing your family story makes your business stronger

Guest Blog: By Sally Collings

“We have no direct access to historical truth … Our only truth is narrative truth, the stories we tell each other and ourselves.”
— Oliver Sacks, The River of Consciousness

A team of researchers who set out to analyze the business attributes of family-owned wineries in Germany came across a strange fact. They were studying 21 wineries that were, on average, 11 generations strong; the oldest dated back to the 10th century, when Vikings were still colonizing Europe. About half of these family wineries had continued to innovate across generations in areas such as growing new grape varieties or adopting the latest production technologies. The other half were more inclined to follow than to lead, only adopting new techniques or entering new markets after their competitors paved the way.

Among the attributes that distinguished the more entrepreneurial wineries, one in particular was somewhat surprising. These business families had what you could call an “entrepreneurial legacy story” that they shared from one generation to the next. It might be the tale of a great-great-great-great-uncle, say, who rode his horse to Paris so that he could attend an auction to buy back the family winery after it was seized by Napoleon. At family meals and festive gatherings, stories of persistence in the face of peril, theft, adversity and war were told over and over again.

What is the significance of that? “These stories give meaning to today’s entrepreneurial actions and put current risks and problems in a broader context,” Peter Jaskiewicz of Concordia University’s John Molson School of Business reasoned. “It is hard to complain about losing a customer knowing your great-grandparents overcame war and starvation to build the business.”

From speaking with both the current generation’s leaders and their children, the research team found that the families less inclined to innovate lacked pride in their ancestors’ achievements. They either did not know the stories, or they played them down as being simply a matter of chance with no enduring significance.

Who would have thought that stories could actively make a difference to the capacity for innovation? Of course, this correlation will not be confined to German wineries. Stories are the glue that hold any family together, and the mortar that makes a business strong going into the future. If the current leadership connects the next generation to their shared narrative, the result is a more cohesive unit with aligned values and goals.

When the Mouawad family celebrated 125 years in the diamond, jewelry and watchmaking business, they set about creating a book that would capture their heritage so that future generations could appreciate it, as well as providing insights for other families seeking longevity for their business. After completing the process, current business leader Fred Mouawad says, “By better understanding our history we were able to set a better trajectory into the future.”

Set aside some storytelling time at your next family gathering. It is far more than an indulgence for the older generation: it could be the difference that makes your family enterprise a leader in its field, rather than a follower.

Sally Collings (founder and CEO of Red Hill Publishing, specializing in writing books for family businesses and social enterprises)

05/10/17

Innovation—The Surprise Factor

In The Economy of Cities, Jane Jacobs tells the story of 3M. The company started as a supplier of processed sand to metal manufacturers. As an offshoot of their core business, they decided to manufacture sandpaper. And they failed. The adhesive they developed just did not work to stick the sand o the paper. But they did not give up.

And surprise!—Their continued experiments with adhesives eventually led to the development of a whole line of tapes—including  that office staple, Scotch Tape—and much more.

A friend told me about a conversation with a master ceramic artist at this year’s Smithsonian Craft Fair. The artist said that often when he opens his kiln to remove the fired piece; it is not what he expected. He finds instead a beautiful surprise!

So innovation, with its inevitable process of trial and error, should not, and importantly, must not be feared. And it’s also no use to insist on finding what you initially are looking for. The secret: be open to surprise!!

04/29/17

Innovation—The Fail Factor

Nothing stays the same. Things find fresh avenues of growth and prosper or become stagnant and fail. This is certainly true of family-led enterprises. As a family business continues from generation to generation, significant social and economic changes can nullify what had been their core business. A culture of innovation is needed to ensure continued multigenerational success.

Two things are sure about innovation. One: It is necessary for long-term survival. Two: it is prone to initial failure.

Innovation undertaken when beset by hostility, by doubts; under pressure to succeed; under fear or failure, situates the whole process on unstable ground.

In Failing Forward: Turning Mistakes into Stepping Stones for Success, author John C. Maxwell writes: “To succeed you have to be open to problems. You have to be open to failure.” He presents examples throughout his book of many well-known people who failed—on average more than once—before succeeding.

As it goes in entrepreneurship, so it goes with innovation. The message: don’t be afraid.

03/18/17

Family Businesses Got Edge

A range of factors inherent to family businesses give them “the edge,” a natural set of competitive advantages over non-family business. Included among these:

  • Values embedded over generations
  • Generations of accumulated knowledge of their business and the industry in which the operate
  • Agility within rapidly changing markets derived from interaction of family, management, and ownership
  • Desire to protect the family name and reputation translating into high product/service quality and higher returns on investment
  • Next-generation ingenuity helping the family business maintain touch with emerging technology and the youth market
  • Concentrated ownership structure leading to higher overall corporate productivity
  • Longer-term commitments that stabilize investments in people and innovation

A first-generation family business that recognizes these advantages up front is better positioned to develop a far-seeing vision and empower the business’ growth into a multi-generational enterprise.

02/18/17

Star Trek Ideals and Family Business

It’s a well-known fact that since its first airing in 1966, the Star Trek series has inspired generations of young people to become scientists. YouTube abounds with videos of astrophysicists; theoretical physicists; astronomers; cosmologists; giving lectures, taking part in conferences, presenting their latest findings. And in video after video, the scientists invoke their debt to Star Trek.

Star Trek’s optimistic view of the future continues to bring young people into careers where they see themselves helping to make that future a reality. In a way, the Star Trek world might be seen as a global business owned and operated by and for the family of mankind, one with diversity, innovation, communication, cooperation and courage.

The Star Trek world has similarities to well-established multi-generational family businesses. It has a far-seeing vision. It has a mission, and it has uplifting values. It encourages innovation—often the very lifeline for survival. Among long-lived family businesses can be found perhaps, some of the ideals that Star Trek showcases; a zest for exploration, flexibility, loyalty, job placement by virtue of inborn talents and acquired skills, mutual respect, integrity in leadership.

Could this kind of view, and these types of ideals, inspire your family’s young people to seek their place and their careers within your family business? What kind future do they see? Is it one they can wish to help realize?

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.