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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
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