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Leading by "Pull" in the Next Generation: Tips for Managing the Growing Family Enterprise |
A client of a 4th generation family business recently shared a view of what it is like to run his business. "There are so many people, branches, competing interests and views to contend with, I sometimes feel more like a circus ring leader than the chief executive of my family business!"
Today's family business leaders face a different leadership challenge than their predecessors. While a founder's success often depended on charisma, heavy-handed single leadership and determination, future generations must master the skills of diplomacy, influence and collaborative leadership in order to steer the family and business successfully. Why this is the case may seem obvious. (Read more from Debbie Bing and add comments).
Debbie Bing is a Principal at CFAR, Inc. |
| Family Business or Family Enterprise? |
The language of family business is gradually changing. Business families are increasingly considered engaged in family enterprise thanks to the expanded research from Babson, the STEP Project and the efforts of Pramodita Sharma and Rob Nason whose work is based on the original findings of John Ward.
So how does this work? How does a family business become a family enterprise? Most often, it's through a liquidity event, where the cash, other assets and often the retained real estate are still being managed by multiple family members. It may appear that if the family no longer has an ownership stake in a specific business, then the family is no longer a business family, i.e., that they are no longer engaged in a family business. But if the gathered assets are still held and managed by multiple family members, then a family enterprise emerges.
(Read more from Paul Karofsky and add comments).
Paul Karofsky is
Founder and CEO of the Transition Consulting Group. |
| Take a Look at Your Advisory System |
Advisors to family enterprise, and those who live or study family business, are familiar with the 3 primary systems that make up the family business: Family, Business and Ownership. John Davis and Renato Tagiuri graphically depicted this systems approach to understanding family business as overlapping circles in the 3-Circle model published over a quarter century ago. In subsequent years, advisors have added the Governance system, including both Corporate Governance and Family Councils to this systems perspective of family enterprise.
There is one additional system that requires consideration, however: The Advisory System*. The advisory system is often overlooked as a unique system within a family business because it is a system which rarely self identifies as a unique inter-connected system. In most cases, advisors to a family business have strong individual relationships with a family stakeholder or family branch, but are far less connected with each other. They identify as individual advisors and rarely see themselves as part of the family's team of advisors.
(Read more from Doug Baumoel and add comments).
Doug Baumoel is Founder and Principal of Continuity Family Business Consulting LLC, and is President of the New England Chapter of FFI. |
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Greetings!
Family Business Wiki is proud to announce our 2012 Family Business City of the year -- Boston. What makes Boston one of the greatest family business cities in the world? - World class university-based centers for family business education, research, networking and business support: Babson, Harvard, and Northeastern.
- Professional development for family business advisors: Family Firm Institute (FFI) headquarters and the New England chapter of FFI.
- Prominent family business advisors and consultants
- Respected single and multi-family offices
- Family business recognition awards
- Many great -- and historic -- family businesses: including The Avedis Zildjian Company Inc. -- the oldest family business in the U.S.
In this special edition of the newsletter, all of the contributors are family business professionals from the Boston area. We thank them for taking the time to share their insights -- and for helping the world to see the depth of family business expertise in Boston. _________________________ REMINDER: Future Family Business Wiki Master Classes -- available at no-charge -- are: Click here for further information about the Family Business Wiki Master Class series. |
 | FBWiki TV: John Davis | |
The Most Important Factor in Determining Why Some Family Businesses are Able to Continue for Multiple Generatons
 In this video interview, John Davis starts by describing the evolution of the field of family business -- from an initial focus on family business pathology, to a focus on building frameworks for explaining specfic issues, to a definition of family business systems. A topic of increasing importance today is understanding why some family business systems are able to succeed over many generations.
While there are certainly external factors which can affect the longevity of a family business, a challenging environment can actually produce a better company when the internal factors are strong.
Regarding internal factors, excellent management is of course critical -- management which takes a long-term perspective; focuses on quality; and knows how to build a culture which supports innovation. Beyond management, the strength of the ownership group greatly affects the longevity of a business. The company is best served when owners are relatively united regarding goals for the company; when they have a positive regard for each other; and when they don't take too much from the company in terms of financial benefits or personal benefits such as providing employment for family members who are not adequately qualified.
But the most important factor in determining family business longevity -- a factor which impacts both the quality of management and ownerhip -- is the strength of the family. John's search for the ultimate defining factors of family strength "has been a curse and a benefit in my life -- because it dogs me even today." The two factors which define family strength are the unity and industriousness of the family. Family unity refers to the ability of the family to come together regarding family misssion and core values, and to be generally aligned regarding the direction of the company and how it should be managed. Family industriousness refers to a drive to do constructive things. This does not necessarily mean family members working inside of the business. Members of the family might be active on the board, or involved with family governance, or focusing on philanthropy or building the family brand in the community in other ways. Or family members might be busy raising good kids, or starting other businesses, or creating art -- but they have a sense of purpose and they are trying to add value by doing constructive things.
Families who are able to remain united around their mission and core values, and who raise children who have a desire to work at something -- and an ability to delay gratification -- are the families which provide a base of support to ownership which in turn allows for quality management of the enterprise. ( Click here to see the video.) John Davis is a faculty member at Harvard Business School, and is Founder and Chairman of Cambridge Advisors to Family Enterprise. |
| Judy Green | |
Beyond the Hub -- FFI Global Education Network(GEN)
 The "Wicked Good Guide to Boston English" tells us that Boston as "the Hub of the Universe" was a term first coined by writer Oliver Wendell Holmes, who, in 1858, referred to the State House as the hub of the solar system. For many years a plaque in the sidewalk in front of Filene's downtown commemorated the exact center of the universe. Now that's bold! In 2012 FFI is going "beyond the Hub" with its Global Education Network (GEN). What is GEN? The FFI Global Education Network (GEN) is a global forum for teaching and learning that offers cutting-edge multidisciplinary courses and world-class certificate programs for family enterprise advisers, practitioners, academics, and professionals. GEN is the education arm of the prestigious Family Firm Institute, the leading membership association worldwide for professionals serving the family enterprise field. Courses are offered online and in hybrid formats. (Read more from Judy Green and add comments.) Judy Green is President of the Family Firm Institute. |
| Jane Hilburt-Davis | |
Let's Get Together
This is not an article about being a better family business consultant, a more successful family business or even a more respected family researcher. Rather this is an article challenging some of our assumptions and appealing for increased collaboration between researchers and practitioners. Despite years of consulting to family businesses, our knowledge of what really works in practice is in the elemental stages and we all need to be aware of our own assumptions, biases, orthodoxies and not mistake them for facts. Our 'best practices' have generally been borrowed from other professions such as management, family therapy, and organization development. Some widely believed 'facts' are as yet unsupported by data: (1) family councils improve family relationships; (2) outside directors improve firm performance; (3) it's always healthy to express and vent emotions; (4) earlier experiences have a greater influence on personality than adult events; and (5) empathy is always a good thing.
Yet we practitioners continue to use the term 'best practices' and offer advice freely without even a nod to what data exists. Likewise researchers are more often than not driven by holes in the existing research, academic-career concerns rather than practical questions or needs. This gap is costly to our clients. (Read more from Jane Hilburt-Davis and add comments.)
Jane Hilburt-Davis is President of Key Resources, LLC. |
| Matt Allen | |
STEP: Successful Transgenerational Entrepreneurship Practices
While I have only been at Babson for a short time, I am thrilled with the opportunity it has given me to become involved with a worldwide research project on family businesses. Having grown up in a family business myself, I recognize the need for increased understanding of what drives entrepreneurship in this context and am always happy to see new initiatives that will increase our family business understanding. Family Businesses have been at the core of Babson College from its foundation. Indeed, the institute which later became Babson College was founded in order to educate the sons of businessmen to take over their fathers' businesses. It is only natural that Babson would be involved with the STEP project for family enterprising from its inception.
STEP stands for "Successful Transgenerational Entrepreneurship Practices". Founded in 2005, the purpose of the project is to conduct cutting edge research about entrepreneurial practices and capabilities of family businesses worldwide. The vision is that the project will generate understanding about entrepreneurship within the family business context that will help family businesses to thrive into the future. In addition, the project provides a forum for academics and family businesses to interact and share information across the globe. (Read more from Matt Allen and add comments.)
Matt Allen is an Assistant Professor of Entrepreneurship at Babson College and Research Director for the STEP Project.
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| Art Stewart | |
Family Business Evolution in a Transforming Competitive Landscape
At the onset of the economic crisis in 2008 and through much of its cascade of destruction into 2010, it was widely assumed by family business principals and trusted advisors alike that the unique model of ensuring shared value - with its historic emphasis on the long-term horizon - would prove to help shield family businesses from the damage that other business organizations would fail to escape.
For the most part, the assumptions proved accurate. While most family enterprises weathered the storm well to emerge with their competitive assets intact, it would be short-sighted to not recognize that even the most successful players in the field have been impacted. Some family businesses have had their competitive resiliency stress-tested, their leadership resolve questioned, their business proposition challenged, generational tensions made more apparent, or customer expectations dramatically reoriented.
How could one expect anything less? What's clear now, nearly four years into the crisis, is that the global landscape is being permanently transformed as the result of systemic upheaval - whether it is from economic, political, and cultural forces or the fallout from scandalous behavior by various business, institutional, and public leaders. (Read more from Art Stewart and add comments.)
Art Stewart is President of Stewart Strategies Group LLC. |
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