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Family Business Vision

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Jennifer Pendergast

If you and your family hope to create a lasting family legacy by passing your enterprise down through the generations, a family vision statement will help guide you in the achieving this goal. 

What is a family vision statement?  Most people are familiar with a business vision statement.  It lays out management’s aspirations for what the business will become – what customers it will serve, products and services it will offer, markets it will operate it in, and at a higher level, what value it hopes to create.  A family vision statement is similar, but its focus is the family, not the business enterprise. 

The family vision statement answers these questions:

  • What do we hope to achieve as a family together?
  • What is the purpose of our wealth and what will we use it to accomplish?
  • Are there particular needs or expectations we have of the business?
  • What values do we expect to see reflected in the business culture?
  • Is our philosophy to put the needs of the business before the family, the family before the business, or balance the two?
  • What role do we, as family members, intend to play in the management and ownership of our enterprise?
  • Do we hope to stay together as a business owning family for generations to come?
  • What will our family’s legacy be – to our employees, our community, future generations of family members

The answers to these questions will shape both your family and your enterprise in the years to come. Many long-lasting family businesses come to see that the greatest advantage of being a business owning family is not the financial benefit but the opportunity to leave a lasting legacy.  Without thought and guidance, your family will under-utilize this wonderful opportunity.

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Paradox

Another Family Business Paradox

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Jennifer Pendergast

Where is your family’s focus?  In the early stages of a family business, the family must focus its efforts on the success of the business.  Second generation members often share that the business was the child in their family, absorbing all the time and attention of their parents.  While it can breed resentment, this unwavering dedication may be required for the business to survive.  And, for most families, the success of the business is imperative because it pays for their basic needs. 

As the business becomes established and thrives, the success of the business will actually depend upon shifting focus away from the business.  By no means do I suggest that the business should be ignored. Rather, the needs, expectations and aspirations of the family must be considered simultaneously with those of the business.  Clarifying these needs, expectations and aspirations will actually contribute to the survival of the business. 

How so?  Once the business proves to be viable (e.g., it can attract customers, it can compete effectively, it makes money), family owners have the opportunity, or perhaps more strongly stated the responsibility, to set a long-term vision.  This vision defines what they are in business to achieve, what parameters or constraints they will place on the business and what values they want it to represent, among other things.  Articulation of a commonly held vision by the ownership group ensures that the family owners are aligned with the business.  Without the owners’ commitment, the business is unlikely to succeed.

Think about where you are in your family business evolution and where you are focusing your attention?  If you’ve gotten beyond the stage where the business requires 100% of your focus, maybe it’s time to start focusing on the family.  Continue reading this week for more thoughts on creating a family vision.

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Family Meetings, Paradox

“Family Organization” – An Oxymoron?

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by John L. Ward 

Family organizations, such as family offices, face many paradoxical contradictions. Several follow; then a fundamental paradox will be examined.  

  • Centralized leadership or direct democracy
       – Who makes decisions?
       – How is leadership selected?
  • Individual freedom or collective responsibility
       – Is privacy protected or are there no restrictions on social media use?
       – Is each mindful of the physical security of all?
  • Engagement or emotional space
       – What expectations are put on people for participation?
       – How draining are family meetings?
  • Voluntary involvement or remunerated roles
       – How broad is participation?
       – How appreciated are “doers” feeling?
  • Direct costs or shared costs[*]
       – Who pays for what?
       – How much effort determines real costs? 

Perhaps the most fundamental family organization paradox is Familial or ProfessionalWhen family members participate in family meetings or activities or governance they expect BOTH:  informal, family-like feelings AND productive, effective progress. 

One approach to paradoxes is to seek balance – when there are increasing efforts to professionalize put more attention on how to also emphasize more familiarity. Another approach to paradoxes is to seek a synthesis – “win win.”  Perhaps a family will find that the more professional its meetings, the more time there is for just plain, casual fun?

 

[*] Sometimes the long-term view dissolves paradoxical contradictions. Perhaps in the long-term all costs are shared?

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Paradox

Just Like Her Dad, part 3

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Amy Schuman
Amy Schuman

All week we’ve been pondering the case of ‘Jennifer,’ daughter of the founder, who has been told by those around her that her success seems assured, because she is seen to be Just Like Dad. Jennifer is a wise young woman, so here are her thoughts on the matter:

“I know people are watching me really closely. My father is so loved and respected by those around him here at the business. He built a fantastic enterprise in only a few decades, and the people here are dedicated and committed to the values and vision he has put forth. Treating others the way you want to be treated. Working hard. Providing top-notch products at fair prices. Earning a fair wage and sharing in the gains made by the business. The entire family believes in these values – originally stated by my dad.

When people tell me I am just like Dad, I think they are referring to these values and vision. It is definitely my job to show everyone that I am equally committed to those values, and to make sure the larger family understands this too.

That’s the easy part. The hard part is when I am in meetings, and people seem to turn to me for decisions on matters that are well outside my job responsibilities. I never know if I should speak up or stay quiet. I am working in sales right now, and when we discuss pricing or product design, I often have a strong opinion. But I worry that when I state my opinion, the people around me will take it too much to heart. Sometimes it appears that when I make a comment, some of the people in the room assume this is my dad’s opinion, which is not the case. This has all caused me to hang back a bit — but, I still have a lot of good ideas and want people to know! It can be pretty confusing to know what to do.

As time goes on, it becomes clear tha I am very different from my dad in many ways. First and foremost, I am a mother of the most adorable little girl you’ll ever meet. Although I care about the company’s success, I also want to be there for her when she needs me. I’m not sure how this will work out but I already know that I need a strong international sales team, because I am not going to spend half the year travelling to our customers on other continents like my dad did. Also, I want us to look into making flexible work arrangements more available for the parents in our workforce. Both my father and the CFO are not too excited about this, but I want to find a way to make it work without hurting our company. In the long run, I believe policies like that will actually make our company stronger.

 I’m sure there will be plenty of other important differences between my father and I, but my support of the same values will never change.

So, there we have it. Being Just Like Dad has upsides and downsides that merit our attention and energy.

Those of you that follow our blogs and read our books probably know that when an either/or question like this is slapped on the table, our answer is likely to be: YES. In other words, rather than being forced to choose between two desirable options, we will never give up seeking a way to get BOTH.

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Paradox

Just Like Her Dad, part 2

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Amy Schuman
Amy Schuman

Earlier this week we presented the case of ‘Jennifer’, who joined the family business two years ago. The COO reported that the executive team was excited about Jennifer because she was “Just Like Her Dad”. We posed the question to you: Is this a good thing or a bad thing?

Well, let’s take a closer look. What are the upsides of Jennifer being Just Like Dad?

   *Dad’s approach is proven – why fix something that isn’t broken?

   *Dad’s approach is familiar – the entire organization, as well as customers and suppliers, are already comfortable with this leadership style.  Continuing in this vein will be minimally disruptive and comforting to the larger organization.

   * Values and legacy – a great source of pride and competitive advantage – will be preserved into the next generation.

Can we list any downsides of Jennifer being Just Like Dad?

  *If Jennifer assumes she is being invited to act with the same authority as her dad, she is headed for trouble.   Making pronouncements (like Dad) or taking special privileges (like Dad) without clearly earning the right to do so, will surely lead to trouble.

  *Jennifer is a unique individual with her own talents and abilities. Rather than aspiring to be a clone of dad, she should pursue her own leadership style and let her own light shine forth.

  *Unlike Dad, who always operated as a sole entrepreneur, Jennifer is accountable to a large cast of characters. The ownership group is now larger, and multi-generational. The organization is more far flung with an ever-expanding group of stakeholders. Jennifer’s role as leader will require more consensus building and communication, and calls for a whole constellation of skills and efforts that were not required of the founder.

We are clearly looking at a paradox – two desirable approaches that appear to be in conflict.  Our analysis tells us we need a both/and approach. How can Jennifer be ‘Just Like Her Dad,’ and, at the same time, be her own person?

Stay tuned for Part 3 of this exploration – and if you have any further thoughts about this dilemma, we’d love to hear from you!

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Paradox

Just Like Her Dad, part 1

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Amy Schuman
Amy Schuman

Recently, the COO of a large family business told me that he was really excited about the daughter of the current CEO who had just celebrated her second anniversary with the company. The daughter, who we’ll call Jennifer, had followed the family employment policy to the letter and was now moving through the organization in several key learning positions.

“She’s just like her Dad”, the executive happily reported, with clear relief.

Later in the day, I found myself pondering that remark. Is it best for the family business when the next family leader is ‘just like’ the one that came before? Or is it better for the next generation leader to take a different approach?

Also – what is best for this young woman? Should she model herself after her father, the successful founder of a company with global reach, supporting thousands of employees on several continents? His approach clearly was successful, why would she do anything different? Is her main task to study her father closely, and dedicate herself to perpetuating his proven leadership style, or should she follow the beat of her own drum?

I would love to hear your thoughts on this question – and we’ll take this discussion further in a post later this week. What’s been your experience – do you look for someone just like the current leader, or someone very different – why?

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Paradox

The Paradox of Fixed and Flexible: How to be More Like a Palm Tree

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In my last posting I talked about the advantages of being both fixed and flexible and promised a few specific examples. 

Let’s start by taking nature as our role model in this regard – trees that are both strong, deeply rooted, clearly bounded, and yet flexible enough to withstand high winds and driving rains. Imagine a palm tree bending and swaying in even the most chaotic weather conditions.  How can we create family businesses with that wonderful combination of strength and suppleness?

 

  • Build in regular opportunities for reviewing and updating family policies, structures and agreements. Don’t’ assume that the current approach will be the best forever. As time goes on, you will learn what works and doesn’t work – expect that things will change as time goes on. Some families even build in sunset provisions for agreements that force the family to get together and either affirm or alter existing policies.
  • Learn more about Fair Process. As described by Ward and Carlock in their Parallel Planning book, Fair Process requires both consistency and changeability. Families that find ways to honor both of these characteristics create approaches that all recognize as fair.
  • For family involvement and employment policies, plan to provide more flexibility for younger children (pre-college age) and more fixed rules for older children (post-college). Within the policies, some aspects are mandatory (we require all family applicants to complete a college degree) and some are flexible (we encourage family applicants to complete at least one summer internship while they are in high school or college).

There are many more examples of approaches that are both fixed and flexible. Perhaps in a future blog we should provide unfortunate examples of families going too far to one side or the other – being either too rigid or too loose.  We’d love to hear about any examples from your experience….

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Paradox

Paradoxes found in the Jewish New Year parallel many Family Businesses Paradoxes

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Amy Schuman
Amy Schuman

Starting at sundown last Wednesday night, Jews across the globe ushered in a New Year, specifically the year 5772. It struck me again this year, how many tensions and contradictions are found in the traditions surrounding the holiday. These paradoxes echo many of those familiar to family businesses and quite a few that are described in Family Business as Paradox which I co-authored last year with John Ward and Stacy Stutz.  

For example, as we contemplate the yet-undiscovered possibilities of a brand new year, we are brought up short by a major theme of the New Year’s service: Teshuvah  or ‘return’. How is it that a new year begins with a ‘return’?  Upon reflection we realize that meaningful new efforts are rooted in the legacy of the past. They are shaped by the treasured values and lessons learned by those that came before us.

This tension is a major theme for family businesses that must find ways to honor both tradition and change.  My co-authors and I have been inspired by many family enterprises that grapple with this paradox, notably Beretta and   Cargill.

There are other paradoxes with resonance for family enterprise – for example, the tension between structure/rules and spontaneity/intention*. As with all religious observance, there are plenty of rules related to the holiday, and proper observance is spelled out well in advance. However the tradition also makes clear that observing the law alone is not enough – one must observe with an intention that embodies trust and respect, and that resonates with caring, even passion.

Family enterprises also wrestle with a similar tension.  Policies and rules are essential– for family employment, for compensation, for ownership. However, they can’t stand alone. They have to be partnered with the right intention – the right relationship.  And they are best when infused with real commitment and passion. Although it may seem impossible, families must find a way to approach policies and practices in ways that are both fixed and flexible.

I’ll share some real world examples in an upcoming post. In the meantime, do you have stories to share about these familiar paradoxes?

*Known in Hebrew as keva (fixed structure in ritual, fixed texts) and kavana (intention, focus, concentration).

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Family Business Values, Mission, Vision, Values & Culture, Next Generation Development, Paradox

What They Think in Brazil (Part 2)

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by Stephanie Brun de Pontet &
John L. Ward

We continue to share the results of a survey of 100 significant family firms in Brazil which were part of a program hosted by HSM, a program we were very privileged to lead.

Shirt Sleeves to Shirt Sleeves…

What do they think are the greatest challenge to family business continuity?

  1. Senior generation “Letting Go” (29%)
  2. “Sibling Rivalry” (17%)
  3. Business challenges (16%)
  4. Cousin differences and indifference (16%)
  5. Nepotism (12%)
  6. Attracting non-family talent (8%)

Family Education

The most common education initiatives at their family meetings were:

  1. Family history and values (38%)
  2. Understanding the business and industry (31%)
  3. Improving family interpersonal skills (24%)
  4. Financial literacy (7%)

Most surprisingly, 49% had more than one family meeting per year!

Problematic Paradoxes?

We asked what was their most perplexing paradox as a family business:

  1. Change and tradition (27%)
  2. Selective and inclusive (25%)
  3. Fair and equal (18%)
  4. Freedom and loyalty (16%)

With special thanks to HSM, Brazil for encouraging the survey and for their dedication to family business education.

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Next Generation Development, Paradox

Protecting Next Generation Often Has Opposite Result

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Craig Aronoff

I’ve recently been dealing with a number of family businesses where the “next generation” is already in their 40s and even 50s and whose parents are “protecting” their children.  Protection comes in several forms:  providing lots of money; bailing them out of trouble; giving them jobs in the family business with little or no accountability for behavior or performance, and the like.  As one family business business leader put it:  “I want my children to be accountable — I just don’t want their feelings hurt.”  Paradox aside, the result can be a next generation full of entitlement, unprepared to rise to the responsibilities of management and/or ownership, and oblivious to their own shortcomings.

New York Times columnist David Brooks recent column aimed at new college grads sound a similar note.  He describes current graduates as “members of the most supervised generation in American history,,,they have been monitored, tutored, coached and honed to an unprecedented degree.”  Brooks points out the mismatch between the mindsets and skills learned under such circumstances and those required for success in an environment “requiring a different set of skills which they have figure out on their own.”  

Self reliance is the key and it is difficult enough to develop in affluent young people even when the conditions are right.  The ability and confidence to figure out which problems need solutions and how to go about developing and applying solutions are essential to successful family business leadership.  Such skills and attitudes can be developed only with the opportunity to make and implement decisions, to get rigorous and unvarnished feedback, and to be explicitly held accountable for behavior and results.  Young people held to high standards won’t always feel “happy” with such discipline.  They may even decide (or have it decided for them) that a career outside the family business is a wiser choice.  In the long run, such decisions are usually best for all involved — the young person, the parents, the family and the business.

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