Creating a culture of innovation

Joe Schmieder

Joe Schmieder

Innovation can be described as creative change that produces meaningful results. Family businesses that demonstrate a proactive ability to drive meaningful, value-adding change are those with the strongest cultures of innovation.

In some family firms, the notion of innovation, creativity or change is clearly stated in their values, which may be posted on the walls of the company.  S.C. Johnson, the global household cleaning company that uses the tag line “A family business,” makes its values as clear as glass freshly cleaned by its products:

  • Entrepreneurship
  • Innovation
  • Risk-taking
  • Knowledge and technology
  • Employee welfare
  • Eustomer relationship marketing
  • Vision
  • Proactivity
  • Global thinking

According to this list, the Johnson family explicitly values innovation. Supporting innovation are the complementary values of entrepreneurship and risk-taking. It takes an entrepreneurial drive and some investment risk to make innovation real and meaningful. The four generations of Johnsons have been inspired to exemplify these values by the story of founder Samuel Curtis Johnson: at age 53, he launched a flooring company and soon diversified into floor maintenance when he observed his customers needed a product to preserve their new floors.

Most family businesses have not been as intentional or broad scope about innovation as the Johnsons. In other family firms, innovation may be exhibited mostly in one area of the business, or only for specific periods of time. A family firm in the adhesive coating industrial sector discovered that one of their key ingredients was going to be discontinued by its sole supplier. Understanding that this would devastate their business, a team of engineers, managers, and salespeople banded together to generate A CREATIVE solution. It turned out that one of the salespeople’s customers knew a different vendor with a similar ingredient. After some joint development with that vendor, which was also a family business, the formula was developed to suit their needs, resulting in an even better adhesive. This was just one time the family firm exhibited such joint problem-solving innovation.

Creating a culture of innovation shouldn’t be about product/service DEVELOPMENTS alone (although the next chapter discusses that topic in detail). On the one hand, there may be no greater practical way to create a “sense” of innovation than to produce a steady stream of new market-focused products. New-product introductions are exciting and highly visible to the organization and its stakeholders. On the other hand, to maximize performance, companies need to aim for innovation on multiple levels. That means long-lasting family firms also work on creative ways to:

  • Take measured risks to develop new wealth while preserving foundational or legacy wealth.
  • Blend diverse family members working in the business with capable nonfamily executives.
  • Transition ownership from one generation to the next while balancing incentive to work hard with financial security.
  • Develop the next generation into leaders who are able to reinvent the business for greater growth, building upon the founder’s legacy without trying to replicate the founder’s hero image.
  • Live family values that set the tone for business continuity while remaining focused on managing a healthy business in the short term.
  • Steward family resources in a manner that benefits customers, employees, communities, and family members.
  • Develop effective governance practices that balance the sometimes conflicting needs of the family, management, and ownership.

Together, these elements support a highly innovative family business culture.


innovationJoe Schmieder’s new book Innovation in the Family Business utilizes the IP from the Family Business Consulting Group team and includes case studies from successful family business ventures such as SC Johnson, Beretta, Mogi (producers of Kikoman), and others. This is the first book to focus on innovation in a family business setting.

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Understanding conflict in the family business (Part 2)

Otis Baskin

Otis Baskin

Although conflict in a family and therefore a family business is natural and inevitable, it does not have to be destructive. If it is expected, conflict can be managed into productive behaviors. Denying and avoiding conflict only exacerbates its destructive potential.

I often work with families that have major differences regarding the direction of the business they own but never openly discuss the varying opinions among themselves. The fear that bringing up any disagreement will be harmful to the harmony of the family, hurtful to the previous generation, or otherwise destructive to the business keeps important decisions from being made with all the information available. Limited input into major decision making processes always leaves a business vulnerable to out-of-date or short-term thinking. However, if conflicting ideas can be heard without destructive behavior, the result can actually be increased harmony because everyone has confidence that the final decision was made with all points-of-view and as much information as possible.

First, find as much in common as possible before there is a conflict. For families, this can generally be done by spending some time defining the values that have made it possible to have the great blessing of a successful business. What are the stories of grandparents and great grandparents that everyone finds inspiring and enjoys telling with regard to the success the family has enjoyed? What are the “truth sayings” that have been passed along within the family? How have these beliefs and values influenced the development of our business in the past? How can they be useful in today’s environment?

Second, people should not be forced to give up their individuality to participate in the blessings of their family business – they simply need to value the important things they have in common. When the day-to-day operating focus is on common principles that are important to everyone, differences can be accepted without the fear that “we no longer know who we are.” Grounded in the knowledge that they have a set of core beliefs in common, family members can listen to differing opinions and value all perspectives; talk about problems rather than people; seek common interests and develop “both/and” rather than “either/or” solutions as often as possible.

Yes, communication is the key but it must be respectful, caring, and carefully managed.

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Understanding conflict in the family business (Part 1)

Otis Baskin

Otis Baskin

Family ownership is unquestionably the most frequent model of business ownership in the world after the initial founder. Yet, it is almost universally feared because of the perceived likelihood of internal conflict. Too often bright young people who grow up in the legacy of a business owning family reject the opportunity offered by their business because they are afraid of conflict with other family members.

I have encountered wonderful family-built enterprises where the parental owners sell their business out of fear that it will be the source of family conflict in the next generation. Some current generation owners attempt to create rules against next generation family members working in the very business they want to pass on as an inheritance.

Is this fear unfounded? Certainly not!

Conflict in a family is only natural and therefore, it is inevitable in a family business. Siblings in every family grow up attempting to distinguish themselves as individual members of the family unit. We don’t want parents, teachers, or friends assuming that we are just a “copy” of our brother or sister. The result is that we, as siblings, grow up emphasizing our differences and our families reinforce that behavior to assure us that we are valued for ourselves.

All good things, since it helps to produce independent and responsible adults. But, when siblings and cousins continue that behavior into their business relationships the results can be disastrous infighting and dysfunctional ownership. The challenge is to understand this behavior and accept conflict as a natural phenomenon. In other words, rather than allowing the fear of conflict to paralyze the future of a great family business we should instead embrace the reality of conflict and learn to manage it in productive ways.

Learn to accept our differences as strengths to support a growing enterprise that needs many different talents and refocus our energies on the common values that are also the legacy of our family.

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Vulnerability: The birthplace of innovation, creativity and change

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Anne Hargrave

Being vulnerable involves risk, exposure, uncertainty and courage. Given that Dr. Brené Brown found, in a decade of research, that vulnerability is the birthplace of innovation, creativity and change, for most business owning families it’s worth exploring.

We often expend exorbitant amounts of time and energy protecting ourselves so that those around us don’t see our weaknesses and vulnerabilities.

Family members and business owners who do the work to truly understand and appreciate each other, embracing individual imperfections as well as strengths, create a foundation for thoughtful and more effective planning for the future. Dr. Brown’s recommendations include:

  • Letting our true selves be seen by others; while it may not be comfortable its necessary
  • Being wholehearted through courage, compassion, and connection
  • Practicing gratitude and joy
  • Believing that we are enough; being kinder and gentler to ourselves and others

Check out Dr. Brown’s TED talk “The Power of Vulnerability” consider the role of vulnerability in innovation, creativity and change for your family and your business.

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Might vulnerability help you crack the code to deeper engagement?

hargrave_100x150

Anne Hargrave

A non-family CEO remarked recently that his level of connection with G2 and G3 family enterprise owners had “vastly improved because (he) decided to be vulnerable.”  

He had always stuck to the task at hand in discussions with family members in their one-on-one meetings but felt something significant was missing.  There was a resistance to open, authentic conversation which he suspected would be essential in order to have important, and distinctly different, conversations needed with each owner.  

The CEO, with encouragement and guidance from a coach, looked for ways to connect with each family member – ways that he could say “me too” and share difficult experiences. Over time, he came to know their hopes, dreams and fears and found that being authentic wasn’t as hard as he had anticipated.  

As he connected more deeply with each person, he gained insights on how to broach difficult conversations around their interaction with the family enterprise. 

Research has shown that embracing our own vulnerabilities helps us be more open and accepting of others. Dr. Brené Brown, a University of Houston researcher, contends that “our imperfections are what connect us to each other and to our humanity.  Our vulnerabilities are not weaknesses; they are powerful reminders to keep our hearts and minds open to the reality that we are all in this together.”  From: I Thought It Was Just Me (But It Isn’t): Telling the Truth About Perfectionism, Inadequacy and Power”

When family enterprise executives and owners connect with each other authentically, they are able to develop deeper, meaningful and independent relationships, laying a platform for thoughtful decision-making. 

What change might you create by being more authentic with those around you?  

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What does “family” mean to you? (Part 3)

Stephanie Brun de Pontet

Stephanie
Brun de Pontet

Part 1: Defining family
Part 2: Investing in family
Part 3: Evolving family

As the saying goes, “change is the only constant.” While our family may well be a source of stability for us, families and the individuals within them regularly change. Though many of these adjustments will strengthen and enrich our families, in the short-term we often experience these changes as unsettling.

Marriage, births, divorce, death, family blending, adoption, etc. – all shift the landscape of the family. How do holiday traditions change once grandma dies? Are your aunt’s new adult step-children included in the annual family photo? How does your relationship to your brother change once he gets married and how do you build a meaningful connection with his wife? Similarly, how do you develop a relationship with your mom’s boyfriend – what are the rules? What feels comfortable?

Most families struggle initially to welcome new individuals into their tribe. We worry “outsiders” will not appreciate our values, norms and traditions and will disrupt the sense of unity in the family. For business-owning families, this risk to family alignment can feel particularly threatening.  Yet every system needs renewal and a family needs a new generation for continuity. The infusion of “new blood” almost always strengthens the system, bringing skills, ideas and traditions that add richness for all in the family.

In addition to adjusting to new players, each person within a family is always evolving by virtue of life experiences. How is your cousin different now that he has been working as a teacher for the past five years? How has your brother changed since he became a father?  How has your aunt changed since she retired from her day-to-day leadership in the business? How has your sister changed since her scare with cancer?

Yet, because we all play a “role” in our family system (smart one, accommodating one – or, in the business setting: the leader, complainer, micro-manager…), our closest family may struggle to see the change in us, just as we may resist recognizing the changes in them. Our reasonable assumption that we know our family members and our comfort in the constancy and connection to our past they represent, often blinds us to the ways they have changed or evolved. While this is understandable, it can create enormous emotional distance between family members who feel increasingly as though their family “doesn’t get them.” This can be a terribly isolating experience and represents a far greater threat to family unity than any new family member every will.

It takes a great deal of effort to see past the role you want your parent or sibling to continue to play and experience them for who they really are today. Yet it is essential to make this effort to bridge the distance that time so often creates. Question your assumptions and seek to proactively see and understand the changes in your family members’ lives. At the same time, approach newer family members with an open heart and mind, seeking to appreciate all that they can bring to your family. These attitudes will enable you to have more authentic and rewarding family relationships – something we would all hold as a key life priority.

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What does “family” mean to you? (Part 2)

Stephanie Brun de Pontet

Stephanie
Brun de Pontet

Part 1: Defining family
Part 2: Investing in family

As I indicated in my post earlier this week, Jay Hughes’ notion of the “family of affinity” has long struck a chord for me as a great definition of “family” writ large.  Over the years, I have developed a truly extraordinary family of affinity – some friendships originating in childhood or college, others forged through extensive shared experiences in adulthood, all sustained through effort and commitment on my part and theirs.

Though this circle of friends deeply enrich my life, the older I get, the more I strive to invest as intentionally in the more “traditional” aspects of my family system (parents, children, partner, cousins, siblings) as I do with my closest friends.  For many of us, the family with whom we have more formal or biological ties can sometimes be the part of our family circle we take for granted.  The truth is our sister will always be our sister, so we may not put in the same effort to stay truly connected.

The expression: “you choose your friends, but not your family” implies that family is an accident of fate so not something over which you have much control. But what if we turned that expression on its head? What if we did choose our family? Or at least acknowledge that we choose how we relate to our family as adults and give consideration to whether or not we are relating to them the way we want. Are we being as authentic with our parents and siblings as we are with our friends? Are we investing the effort in these relationships with the same kind of intention and simple time commitment?

Family members who work together may have more opportunities to spend time and “stay current” with one another, yet business responsibilities sometimes crowd out the family relationship.  I have heard many clients say that they don’t really socialize with family because they spend “enough” time together at the business.  While that may be true as a measure of time, interacting professionally is a different way of relating than simply being a family and sharing the nurturing and loving bonds that ideally come with those relationships.

Do you feel you truly know your siblings, parents, cousins or adult children as well as you would like?  If you cannot point to three substantive ways they are different today than they were 10 years ago, you might not know them as deeply as you could.  Also, do you feel they know your hopes, dreams and fears – do they see how you have evolved over time?  If not, what could you do to remedy this lack of understanding?

The simple truth is all relationships need to be nurtured.  As you prepare for Thanksgiving, take a moment to reflect on how you are investing in your family relationships and challenge yourself to go deeper with your “kinfolk.”

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What does “family” mean to you?  (Part 1)

Stephanie Brun de Pontet

Stephanie
Brun de Pontet

Part 1: Defining family

A friend recently asked me this question and it caused me to reflect. Many of us identify family as our “top priority” and we strive to live up to that principle in our personal lives or in the complex balance of our family business collaborations.  Yet, how do we define “family” today and what do we expect or want from family?

If we think about family as society’s core building block, we can understand it serves many important roles.  Your family should be a “safe harbor,” a place where you can be yourself, where you find and offer love, security and acceptance. Family is anchoring as it represents your past and roots, yet it should also be a place where you grow and foster growth in others, accepting and celebrating change. Family is your closest personal relationships, your most profound commitments, your tie to the broader community, a reminder you are not alone in this big universe…

While most people’s families include traditional “players” such as parents, children, siblings, cousins, etc., many of us also count a broader range of close others as part of our core family, what Jay Hughes describes as your “family of affinity.” Jay’s concept relates to the intimate circle of friends and associates you develop over your lifetime – people with whom you have shared key portions of life’s journey, who know and understand one another deeply, support each other through heartaches, and celebrate triumphs.  Bonds with this group are built through many shared experiences, laughter, stories, traditions, and mutual support. They may not be “kin” by blood, but they are an essential part of your “tribe” – and for some whose traditional family is not well equipped to provide them with safe harbor and understanding, this family of affinity is their truest anchor.

As humans are inherently communal, this sense of connection and being understood is among the most precious experiences we can have with one another, and an enormous benefit of family, no matter how defined.  When we work with our family every day, we can lose sight of this broader purpose and role they play in our lives.

As we enter this season of Thanksgiving, set aside the big and small challenges of your shared responsibilities for a moment, reflect on the full range of your “family,” and share your gratitude with each of them for the richness they bring to your life.

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Using the paradox model to unstick a stuck situation

Amy Schuman

Amy Schuman

Recently, I presented to a very engaged, thoughtful and curious group of family businesses and their advisors at the High Center for Family Business at Elizabethtown College in Pennsylvania.  They quickly grasped the importance of managing paradoxes for both/and outcomes. But they kept pushing me to explain more specifically how they might apply these concepts, so I told them I’d use this week’s blog to explore some practical applications of the paradox insight.  (Additional examples can be found in Part 1, Part 2 and Part 3 of the series “Managing unsolvable problems: Understanding paradox.” )

Let’s take a very common paradox in family business: Harvest and invest.

Many business owners — especially founders — believe that every earned dollar should be invested back in the business.  Funds deployed within the enterprise outperform every other possible investment. Investing dollars in any other way appears foolish, almost crazy.  Keeping all the eggs in one, closely controlled basket is the only approach that makes sense. Besides, it is often argued, individual family members have plenty of funds and rarely have a real need for more money.

However many folks — especially in G2 or G3 — disagree. They believe that a harvest event, i.e. a dividend or distribution, is essential to give them some measure of independence and self-determination. They recognize that their financial return on investment may be smaller outside the family enterprise, but they value other, non-financial returns. For example, the opportunity to move some eggs into a variety of baskets and diversify their assets, or to engage in a project all their own.

Why is it so hard for the investors to see the advantages of an appropriate harvest? Can an appreciation of paradox help them see that harvesting is not a threat to investment, in fact it generates support for investment? Paradoxically, a modest harvest to owners is probably the most powerful force for building support for future investment which will be necessary for creating future harvests.

And what about the harvesters? They must appreciate the importance of expressing support for investment as the source of their past, present and future distributions. The classic need to “protect the goose that lays the golden egg” must be made crystal clear to those who are tempted to overemphasize the benefits of harvests.

How do you unstick a situation where folks are tussling over two desirable approaches? Paradoxically, start by helping each side embrace, support and even advocate the position of the other side.  It is part of how the paradox works: Expressing staunch support for your “complementary opposite” actually creates stronger conditions for the implementation of your preferred approach. In the same way, any action you take in support of your less preferred option will help create more stability and trust in the larger system.

Many family businesses do this instinctively with great success. Now that you’ve heard these ideas, give them a try — they work! Let us know what happens.


My deep thanks to Dr. Barry Johnson for his pioneering work and inspiration in this field. Please see www.polaritypartnerships.com for more on polarities and paradox. 

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Managing unsolvable problems: Understanding paradox (Part 3)

Amy Schuman

Amy Schuman

In Part 1 and Part 2 of this series, we have talked about the need for “both/and” responses to paradox. Easy to say, but how to put into practice?

Let’s take a fictional example based on actual situations. Bizco is a 35 year old real estate company, growing and profitable, moving from G1 to G2. From the beginning, mom and dad, along with their son and daughter, have set a goal of building BOTH a strong family AND a strong business. And, they have succeeded!

How? They started early!  While the children were young, the family actively participated together in volunteer activities and travelled together, building strong relationships and open communication. The parents spoke openly with their children about the growing business, its contribution to the community, and the values that guided the business’ growth and decision-making.  Although the parents encouraged the siblings to consider a career in the family business, they were clear that employment would be based on qualifications and skills, not family status. At the same time, they encouraged the siblings to explore their individual interests and passions with no pressure or requirement to come work in the family firm. The parents also demonstrated through their actions the power of a strong, mutually supportive family.

As the siblings entered college, the sister participated in the business’ summer internship and began to develop an affinity to real estate. Brother was more interested in animal medicine and found summer employment in a local vet’s office.

These different interests reached their logical conclusion, and the decision to employ the sister but not the brother in the family business came logically and without drama. The brother pursued his interest in veterinary medicine, but remained an active and supportive family member to his sister and parents. They continued to travel and volunteer together, now including in-laws and grandchildren. Employment of one sibling and not the other had no negative impact on the family, which continued on its supportive and loving way. And, since ownership of the business will pass to both siblings, they have begun meeting as owners to learn and plan for the future.

The family’s emphasis on family AND business started very early. As the years went on, the two were proven to be compatible — not in conflict.

We have looked at the most fundamental — although not simple — paradox for family businesses and gained insight into the importance of starting early and being consistent in supporting a “both/and” approach. Please share your questions and experiences with us!


My deep thanks to Dr. Barry Johnson for his pioneering work and inspiration in this field. Please see www.polaritypartnerships.com for more on polarities and paradox. 

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