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The Institute for Family Enterprising Blog brings you the latest in events, research and thoughts from within the nexus of family business and entrepreneurship. We will also use authors and findings from our major research arm - the STEP Project.
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Framing a Family Dialogue
Family business owners often fret over succession and dream of the day when their children will come merrily back to work with them. But, what happen when the next generation comes back a little too merrily, toting their own plans for aggressive growth? Instead of debating against one another around growth and change, the solution for multigenerational family teams is to establish a dialogue. A dialogue is formed with the willingness to challenge each other's assumptions, to keep an open mind, and to test different options. Most importantly, a dialogue does not follow hierarchical roles like parent-child, boss-employee, or the one who owns the business versus the one who does not.
Here are some of the questions that may help frame a family dialogue:
First, do you have the communication skills to have an effective dialogue? Most families assume they are able to carry on a dialogue simply because they are a family. In actuality the familiarity of a family can make it very difficult to have a true dialogue around differing views.
Second, do you have the same vision for the future? Families often have a vague vision of working together and they assume that they will figure the details out over time. This is a clear formula for future discontent and conflict.
Third, do you have the same risk profile? It is not surprising that the successor generation is willing to risk more than the senior generation. They key is to establish a dialogue that allows you to generate a business model and structures that accommodate (and possibly moderates) the risk profiles of both generations.
Fourth, is the timing right? Timing is everything. Usually for the successors the time is NOW and for the seniors the time is SOMEDAY. Chances are that both generations will end up out of their comfort zones a little.
Fifth, how creative can you get? Chances are the final outcome will not look exactly like either of you envisioned. We often tell family members to remember their algebra when it comes to change dialogue. Just because a equals b it doesn't mean that a might not equal, c, d, or even e, f and g. The point is that once you start a true dialogue, you may find many more options than you originally envisioned.
Posted by Timothy Habbershon on August 04, 2008 14:47 | link
 Succession as Resource Transition
Every Family business owner thinks about succession, but few would actually plan for the transition. For business owners, transition indicates retirement or death. I, however, would urge senior business owners to think of succession because once they leave, their companies may lose the resources and capabilities to compete in the future.
Senior generation leaders often are the resource pool for their companies and the basis for its competitiveness. They are what I call the "familiness" of the firm. Familiness is a term that measures how critical a family member's influence is on the resource pool of the company. I assess this familiness factors as an "f+" or "f-". A successful senior leader can contribute many "f+" resources and capabilities to the company: years of experience in the industry, the ability to teach and consult, numerous certifications, the broad networks, governmental partnering capabilities that bring in the company's contracts, and professional reputation. In the meantime, a family member may have some "f-" familiness that constrain the company's future. For example, he or she may have poor communication with the next generation successors: not teaching or guiding them, not planning for the future growth of the business or professionalizing the business processes such as budgeting, marketing and personnel practices, etc. To ensure the future of the business, a senior generation leader needs to develop a familiness succession plan. Such a plan has three parts: picking, building and transitioning resources and capabilities. Picking is bringing replacement resources in from the outside, such as hiring or partnering with other safety specialists. Building refers to enhancing resources you already have, such as putting intellectual property into written books and materials. And transitioning is moving resources to other places, such as passing on the network contacts and industry knowledge to the next generation leaders and having them become part of the brand for the future.
A company is only an on going business if the senior leader's resources and capabilities exist for the next generation. Taking a familiness perspective means changing your idea of succession from an end-of-life conversation or a dry set of documents into a lifetime of business leadership and development.
Posted by Timothy Habbershon on August 04, 2008 11:29 | link
Succession Mindset and Strategies
I love looking at the history of family businesses, and the great stories of their founding entrepreneurs seeking opportunity. But the sad truth is that when we think about family businesses and succession, words like conflict, feud, nepotism, and failure come to mind, rather than opportunity, vision, growth, and wealth creation. Why is it so hard to have positive entrepreneurial thoughts about succession? Succession can be a great time to think about new businesses, new products, new markets, or new opportunities. Let me suggest a few changes in the succession mindset and strategies to help you move toward the new:
First, succession discussions should focus on the business and the family as a platform and pool of resources for new opportunities. Business owners need to talk about succession as a plan and strategy for creating new streams of wealth.
Second, think about succession as a change process for the whole organization in deciding which roles people will play, building new teams, planning for the future, and professionalizing structures and processes. Don't think about picking a single person as the successor. Not only will there be conflicts, emphasizing on a single successor will also make the organization egocentric and internally focused.
Third, succession should be a family conversation, not a senior generation decision. Succession is a business issue, not a retirement or death issue. The family should have regular family meetings at which the future health of the business is openly discussed. Secrecy, silence, and self-absorption need to be banned from the succession process.
Fourth, realize that tension and conflict surrounding succession are normal and healthy, not an indication that things are going to blow up. Succession is a very complex, emotional and scary process. Acknowledge that, and manage the process by addressing these issues openly, not by creating a conspiracy of silence. A facilitator may be able to help ensure that the bold, opportunistic spirit that started your business is part of your succession planning, too.
Posted by Timothy Habbershon on June 12, 2008 14:31 | link
Gentle Giant in Innovation
Gentle Giant Moving is the dominant regional mover around Boston, particularly because of its ability to think and act innovatively. President Larry O'Toole says that Gentle Giant's innovation is deceptively simple: Don't copy the accepted - or unacceptable - practices in the moving industry. Consider a few common business phrases, and how Gentle Giant has renewed them.
*Customer-Driven. O'Toole's innovative thinking about his company stems from his radical application of this phrase. Moving is a stress-filled experience. But Gentle Giant begins with the premise that customers deserve a stress-free move.
*Team-Based. Unlike others in their industry, Gentle Giant's movers do not get their pay docked when they damage furniture. Instead, as a team, movers review the breakage on a job and talk about how it could have been avoided. Gentle Giant invests heavily in training every employee to be a leader, take responsibility, and care for the customer.
*Cultural Consistency. An innovative culture is built by making sure that even the everyday habits of the business are innovative. Gentle Giant movers run--they don't walk—to or from the truck when they're not carrying something. When employees join, they are taken to the Harvard football stadium and asked to run up each section of stairs in order. That's not only to see how physically fit they are but also, as O'Toole says, to see whether they can finish what they start without whining.
*Leadership Buy-In. Gentle Giant's top managers and team leaders are committed to perpetuate the Gentle Giant approach and hold others accountable for their actions. There is no compromise on the values and vision within Gentle Giant - even to make money. Gentle Giant is now sending their team leaders to start branches in other cities. In a rough-and-tumble industry, O'Toole has proved that you can be a Gentle Giant.
Posted by Timothy Habbershon on June 02, 2008 13:46 | link
A Next Generation Vision
Do you feel trapped in your own business? People and organizations get caught in
self-reinforcing patterns of behavior and they loose perspective on how to
change their situation. For small
business owners, one of the traps is around their desire to grow, in addition
their belief that the business it too small to utilize the tools and practices
of larger businesses. These patterns of thinking are usually passed down the
generational latter which results in a no growth strategy.I found that one important maxim applies here, "Keep on
doing what you're doing...keep on getting what you are getting." The principle is simple. Unless you change the inputs you will get the
same outputs. The thing that amazes me
the most is that we don't change what we are doing, but we still complain about
what we are getting.
The strategy for changing this behavior is to adopt a vision
that is bigger than you are so that you are forced to invest in making it
happen. However, through discussions I have found that many owners confuse the
vision of wanting "more" with that of wanting growth. In my experience, many owners
think they want "growth" but they really just want "more." Because they are unwilling to adopt the processes
and practices that lead to growth, they live with an inconsistency that fuels
the feelings of being trapped in their current situations.
When you have a vision that you know you can't accomplish on
your own it takes you beyond the business model of "more" and leads you to view
the establishment of professional business practices as an investment in growth. It is this investment mindset that changes
you from thinking like a small business to acting like a big business. It is
important to understand what you want and how you can achieve it. When you have
a vision that you are willing to invest in, you free yourself from the trap of
wishing for growth but now knowing how to find it.
Posted by Timothy Habbershon on April 17, 2008 15:01 | link
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