Getting Inside Family, Business, and Ownership
I’ve been a huge fan of the Three Circle Model (TCM) since I saw it for the first time. See: Three Circles + Seven Sectors = One A-Ha Moment. It is as useful today as ever, and continues to anchor much of the work that I do when interacting with business families.
I’ve seen many adaptations, some more useful than others, over the years. It is quite simple, and because of that, it also lends itself to lots of possible uses.
I recently saw something that made me look at the three circles a bit differently, and that’s the basis of what I want to share this week.
The source of this idea is a local colleague and friend of mine who works mostly in French, allowing me to play language instructor or translator in this space once again
His way of looking at the challenges in the family, the business, and the ownership concentrates on the intergenerational transitions inherent in each of the circles, which in and of itself, was eye-opening to me.
Parents and Their Offspring, G-X and G-X+1
While the genius of the TCM is the simplicity with which it conveys the overlaps of the circles via a Venn diagram, it doesn’t do much for how to look at the generational transitions within each circle (not that it attempts to).
My colleague Michel Handfield, works mostly with family businesses where there’s a simple structure of a parent and one or more children involved, where they are all involved in both the family and in the business, and are also the current and future owners of the business.
So whereas the TCM is really good for more complex situations, because it outlines 7 different sectors where different people might fall, Handfield gets into the dynamics between the generations, but looks at them specifically as they exist in each of the three circles.
Mind Your P’s and E’s
I don’t shy away from ideas in different languages, and because I’m bilingual, I have access to things in both English and French as possible resources
By happenstance, Handfield has come up with an elegant model in French, which unfortunately loses some of its elegance in English, because of the way key words happen to translate.
Have no fear, I’ll make sure the gist of it doesn’t get lost along the way.
Here are the three “P & E” relationships he’s identified:
Family: Parent – Enfant
Business: Patron – Employé
Ownership: Propriétaire – Futur propriétaire
So we have a Parent-Child relationship in the family, a Boss-Employee situation in the business, and an Owner-Future Owner scenario in the ownership circle.
No, it isn’t rocket science. But man is it powerful because of its simplicity.
Same People, Different Issues
The first important thing to note is that the people don’t change. Actually, the people themselves do change, over time, of course, but we are always looking at the same people, no matter which of the circles we’re talking about.
In the simplest and probably most common version, it’s father and son, although there are now many more father-daughter combos than ever before, and also mother-son and mother-daughter.
But no matter the genders or even the numbers, the relationships between the senior generation and the rising generation all fall under the Parent-Child, Boss-Employee, and Owner-Future Owner dynamic.
Different Hats, Different Rooms
There are a couple of analogies that people in this field go to when discussing the importance of recognizing which “hat” one is wearing (“Boss” hat versus “Dad” hat, for example) or which room the decision being discussed belongs (owner room versus management room).
(For more on the Four Rooms Model, check out my podcast interview with Josh Baron)
Outside advisors can sometimes be most resourceful to business families when they simply point out these distinctions and get the family to see things more clearly.
But Handfield’s P & E model focuses on the dynamic within each circle as it applies in the three situations, which is why I like it.
When an advisor works with a parent-offspring pair, recognizing what’s going on between them and offering guidance is made easier when they can separate out those dynamics for the benefit of those living them.
Being able to grasp which relationship dynamic is at play in any situation allows one to understand the context in which the people are operating much more easily, which is quite useful when you’re trying to offer them guidance.