Family Champions and Champion Families

Let’s Talk Family Enterprise Podcast Episode #34

Host: Steve Legler

Guest: Joshua Nacht

Host Steve Legler speaks with Dr. Joshua Nacht, author of Family Champions and Champion Families, about how FEAs can identify and support the champions who are part of many of their client families. These champions often have less obvious roles in the business circle but provide important leadership in the family and ownership circles, and as advisors we can become important resources to them.

On family enterprise explores global ideas, concepts and models that help family enterprise advisors better serve their family clients brought to you by family enterprise Canada. All views Information and opinions expressed during this podcast are solely those of the individuals involved and do not necessarily represent those of family enterprise Canada.
Hello, and welcome to another episode of The let’s talk family enterprise podcast. My name is Steve Legler. And it’s great being your host again. Today we’re going to be talking about a subject that I think more family enterprise advisors should be aware of. And that’s the concept of a family champion. Our guest today is Joshua knot, author of the book family champions and champion families. If that sounds a bit obscure for now, don’t worry, we’re going to delve into just what that’s all about. The secondary title of the book is developing family leaders to sustain the family enterprise. So that should provide a bit of a clue about where we’re heading today. The book is a follow up to Joshua’s PhD dissertation on the subject, which he did under Dennis Jaffe, who was our guest way back in episode 11. I got to know Joshua a few years ago through both FFI and the purposeful planning Institute. And I can’t believe it took me this long to think of having him here as our guest. We’ve got lots of ground to cover. So let’s say hi to our guests and kick things off Joshua. Thanks for joining us today. Welcome to the let’s talk family enterprise podcast.
Well, good morning, everybody. And good morning, Steve. Thanks for having me.
It’s good to have you here. We’ve been talking about this subject for years. You and I, and it’s interesting. The last guest I had Nicole Garten, her book that she had just released was also the outgrowth of some studies she had done, she had done a master’s in something and turned it into a book. So the idea of taking the work that you had done for your PhD and then turning it into a book that’s available for the general public. How did how did that
all come about? Yeah, the original concept of the family champion was something that emerged out of kind of my pre dissertation work and that was, I was actually doing a nother research project for Dennis Jaffe, I was helping him with his research. And a lot of the people that he set me up with, to interview for his work played a similar type of role and that was they were playing a really notable leadership role in their family enterprise. But most of these people did not work in the enterprise itself. And I started to get really interested in Okay, they’re very involved in governance. They’re very engaged. They’re really helping advance their family as an ownership group, usually, you know, third, fourth generation families, but they’re not working in the business. And I started to get really interested in this role of like a non operating owner, leader and I started asking more questions and really talking with with dentists about this idea, and we’d say, well, they’re really kind of family champions. It’s this, this important role, but it’s not an official role. It’s a little bit informal in some ways. And so as we started to talk about this, I got really excited about this idea of the family champion. And the more people I spoke with in the field, and when I described the role and use the term family champion people like, Oh, I know what you’re talking about. You should talk with this person and people said, Oh, well, maybe that’s me here. Let me explain what I’m doing. And I knew I was on this something because of the general excitement among family business people. And when I started to dig deeper into it, I really thought to myself, you know, this could be a book and as I was doing my dissertation, I thought I want to create the research and I want to have the dissertation as something that then could be shared with a wider group, because I know not many people are going to read the dissertation and I understand why you’re here. But hopefully a lot of people can read a book. So my mindset was, I can take these ideas in this research and turn this into something that’s more accessible for a wider group of
people. Okay, so and this is a real niche that we work in here with enterprising family. So it’s not like people you know, go to the bookstore and they’ll see this book and say, Oh, I get it. So it’s a lot of the work we do. 99% of the people we run into just have no concept but I love the fact that you talked about the excitement that developed so it’s like you put your finger on something that was out there that nobody else had named. And then I guess as you saw it and talked about it, you started to hear about it more and more. Now, you put some vocabulary to it so other people could point you to other examples.
Yeah. And you know, I don’t think I was the first one who used the term family champion, but I do think I was the first one to take it and really develop the idea what is a family champion? What are some of the characteristics and to go deeper with it? There was actually the transitions conference that I was before. I was doing my research and I really tried to speak with a lot of people about the idea and the energy and the response. From people around. The idea of the family champion was was tangible. And I knew I was on to something when I started getting really good responses from people and people lit up and I knew that there was a good idea there that needed a lot more research and development to truly come into something that could be hopefully part of the family business world vocabulary, right? Because
I guess it speaks to the informality that you were referencing and the fact that most more often than not these people are not, they don’t have a huge place in the business circle. But they have a huge place in the family circle, and probably also in the ownership circle many times so they they don’t necessarily have an official title, but they still play a very key role. Especially as a business is they’re trying to transition from one generation of the family to the next.
Yeah, and I think you’re spot on and this is something I noticed that’s really important is that commonly people who are working in the business and especially those who are leading the business, that’s their full time job, and that’s where they need to put their energy because as we all know, that’s that’s very complex and challenging. And so they don’t necessarily have the bandwidth to help organize and lead the family. However, there’s a lot of people who may be their family council chair, you know, maybe they have an official governance position, but not necessarily. I interviewed and I’ve met a lot of family champions who have worked in a much more informal way, just to say, as a family if we’re going to continue to be successful into the future, we need to get more organized and intentional as an ownership group. And a lot of times that rule is more informal. And I thought that was really interesting that it doesn’t come about always as this positional authority but it comes about because of their engagement and their actions. And commonly, that’s too much for somebody who’s leading the business to also do so it’s somebody who has a real stake in how the family and the business are interacting, but they’re working much more with that family ownership group, usually much less in the business, but not not necessarily. I don’t want to draw any really bright lines, but I would say commonly, it’s somebody who’s not working in the business because they can concentrate that on the on the ownership group.
So I wonder if these family champions once you’ve identified them, do they understand? Always that that’s who they are. When you explain what the concept is? Do they always get it because I gotta tell you I sent a copy of your book to a client family, to the matriarch who I considered the family champion, and she read the book and said, No, that’s not me. Now, this is, you know, a small family where there isn’t necessarily a huge and they only started to develop their family council. But is this common for people to say oh, no, Oh, shucks, no, that’s not me or,
well, I think some people are very humble. And I think that like a lot of concepts, you know, sometimes it fits really well for people and then other times, there’s such a range of what a family champion can be. And I think in these families, as we know, with multi generational families, it’s not just a singular role. Sometimes the role is shared by two people. Sometimes it’s shared across generations. And it also may shift over time as the family grows and the business grows. So I am willing to bet at one point, the matriarch that you just mentioned, really was the family champion. But her role as the leader of the family may look very different from what it was for her to the next generation. And the next generation because there’s more people the business is bigger, family is more complex, that next family champion may play a different role and it may look really different. So for somebody to say, Oh, well, it’s not me. It might not be but it is going to evolve. Over time. Because just as the family evolves, the leadership relationship has to evolve as well. And what I see with these families where that leadership role evolves, oftentimes it does go from something that’s less formal, less defined to something that is more formalized, more defined, usually as part of their family governance system.
Right. So it really comes down. If you had to put it like under one category, it’s really a leadership position. And it’s not one that is necessarily, you know, drop a Job. Job Description and say, who’s gonna become the family champion, somebody sort of evolves and shows some leadership. And then I like the fact you talked about how the family evolves and, and then the leadership needs to evolve. And the fact that the head of the business is more often than not not also the head there because in all the different three circles, you can and should probably have different leaders in each of those circles.
I think you need to have leaders in each of those circles, otherwise, you know, who helps organize the direction of things and obviously, the family champion is not the sort of authoritative positional leadership, right? It is your ship that comes about because of a need, and somebody steps into that position. And I think it’s interesting, you know, and I looked how to family champions evolve. How do they get here? And I really, there was four ways, right? And sometimes there’s a transition from one generation to the next. Somebody says, Well, we had leadership in the older generation, but now we really don’t so that the transition can be a catalyst for more leadership. There might be a leadership void. Simply, you know, one woman said, we were a ship without a rudder. We were all on the ship. Everybody had a job, but we didn’t know where we were going. And it needed somebody to grab the wheel and say, what direction do we want to go? Okay, if we want to go that direction, this is what we need to do and that leadership void, somebody can step into. Sometimes there’s an older generation or same generation peer generation, who really encourages somebody to say, You know what, I think you would be really good in this role. You can really help us out and somebody is encouraged. And, and I want to say these are all combinations. These are not exempt Ilos a lot of times and I think we see this as there’s more knowledge and education in the family business world, that as somebody reads articles tends conferences comes across books. They say, Oh, you know, here’s a role that’s interesting. Here are other families who have encountered the same challenges. And there are things we can do that we know have worked for their families, and through that education, they start to step up and become more knowledgeable and then carry that knowledge back in their family, say, hey, other families are encountering similar challenges. Here’s what they’ve done. Here’s some ideas. Here’s some energy into the system to help us grow. So all of those different pathways are ways that family champions can emerge into a position of more leadership.
So they emerge, they’re encouraged, they evolve. It’s a never ending thing though. I liked the fact that you said as the family gets bigger sometimes it’s a shared role. And so it might be an aunt and then her nephew or niece and then it goes to somebody else. As different people get to different arcs of where they are in their life and the family is evolving. It’s sort of like an informal leadership. role that gets sort of shared and passed down and and as long as the person I guess, has the confidence of the family to follow them.
Yeah, exactly. And that that it’s not always an individual role. I mean, sometimes it is right because that’s what works best in that family. But oftentimes, maybe it’s a spouse pair. Maybe it’s brother, sister, maybe it’s cousins. It’s really what works best for that family and what emerges from that family. That is going to be the most effective leadership. And that’s always you know, there’s there can be some healthy tension there. Some families are very supportive of family champions that really grows and with a lot of support, some families it takes more work simply because of you know, all the dynamics, the tensions have might be present. It might take more work for a family champion to emerge, or family champions, you know, it might be plural because that’s what that family can support and what they need to move forward.
So our audience here is our target. Audience are the people who have taken the family enterprise advisor designation that the program and the designation and so a lot of us work mostly with the business circle leaders. And so I wonder if you have any ideas on how if we want to support a family champion, but they’re not the person that necessarily we’re coming into contact with? How can we help those family clients to discover and understand this role to bake to so we can better support that person who I imagined that often this starts off as kind of a lonely
role. It can be a lonely role, and I think that the more the family champion is supported by business leadership by people in that position of more you know, formal, positional authority, the more successful they can be. And to your question, and you’re speaking with leaders of the business. I think that the entree there is that if the family is well organized and aligned to support the business, it makes the job of the business leaders that much easier. Because you have a family that’s consolidated, they’re aligned, they’re supportive. And I really think and I’ve said this in the book and I still believe this, I think that effective leadership in the family of the family ownership group is as important as effective leadership of the business. And that’s because these roles really play well together and they let each person focus on specific types of leadership. And I think we know most family businesses fail or run into problems, not because of the business, but because of the family. And so if the family is cohesive, they’re aligned. They’re functioning well together. They might, you know, agree and disagree, but at least they can speak with one voice to support their ownership goals. That makes the job of the business leader that much easier because they know we’ve got a strong family that can support the business that can weather the ups and downs of business and can move forward. We can move forward as a consolidated group. And so I think when you’re speaking with business leaders, the entree there is what would it mean to you have an ownership group that is well aligned, that communicates well, that is fully supportive of the business? That can mean a lot to business leaders instead of business leaders who are thinking oh, my, I know how to run the business but our family is a mess and how much energy and detraction does that take from their job leading the business, it can be significant.
I love that because that’s new for me the idea of I could imagine the person leaving the business might at some point view those family members who aren’t part of the business who don’t understand it, but are you know, kind of sticking their nose in and maybe asking questions. The business leader may look at that as a negative and not really want to engage but what you’re saying makes so much sense if you are so if we as the advisors who are dealing with the business leaders can make them understand that if they can support someone or some people on the family and ownership side to get better organized and aligned, it will actually make their jobs so much easier, rather than dealing with you know, various people that are coming and bothering them. Let’s let’s get someone to organize that group. And let’s then I’ll lead the business and you help lead the family and together we can make a lot of progress.
Yeah, I mean, I’ve talked to a lot of business leaders who say you know, the worst thing in business are the unknowns and the variables and so if you can reduce some of those variables, particularly on the family ownership side, you can run the business more effectively. And you might say, well, well, okay, how does that really work? And the conduit here are the governance forums. Right. And that’s commonly family council or an ownership Council. For the family. So they have a forum speak together, and a board of directors for the business. And so to what you just said, a family champion can help establish effective governance and obviously this happens in conjunction with the business leaders. What is effective governance, let’s make sure we have an effective board of directors with independence and family representation. And let’s have an effective family council to where the family can come together, make decisions and the family council can help lead the family. And okay, so that’s a good understanding of roles and responsibilities and boundaries. And to be able to say, and family champions, I think can really help this. These are the appropriate roles of owners. This is where that stops you can’t call management and ask them about decisions you know, the board have that’s the part of the responsibility of the board of directors. So I think this is another way that you know, business leaders can understand well, if a family champion can help us better define the roles, the responsibilities and boundaries between operators owners, between these governance forums, it helps the entire system work better, it helps communication, it helps information flow and you know, it helps everybody stay in their lanes, so to speak, and that can be a huge help to people running the business. Because they’re not fielding inappropriate or difficult inquiries or conversations or situations with family members who may not be working in the business itself. Does that make sense?
Yeah, it does. In fact, earlier, I had said if there’s one word here, it’s leadership. But now there’s there’s another word that’s coming to my head and then it’s really about governance. And and if we go back to the circles, it’s the governance of each circle and someone who has to leave that governance because people when families hear the word governance, sometimes they you know, they have an allergic reaction because they don’t like to talk about governance because it sounds like making things overly formal. But it really isn’t. It’s it’s really just helping them organize and so whereas the business circle typically will have the most evolved governance because they are running it like a business for the family. And the ownership. It’s a little less obvious and might take maybe a generation or two further down the road by the time the family recognizes that they need to put some time and effort and leadership into making that governance of those circles. A little more formal. And I guess the family champion is the person who sort of takes that mantle and starts to try to formalize it and try to bring people on board and get people working together as you’re saying so that not everyone is throwing stuff. from the peanut gallery of the business owner that they sort of organize themselves, to have a more coherent voice and to
be more effective as a family group. And you know, I found family champions who are operating with very little governance structure and part of their work was to help create that governance structure and to create those forums so people can talk together more effectively. I mean, that to me is what governance is about. It’s Do we have a forum where we can meet and make decisions, we can build strategy. We can arrive at consensus, and we have a way to be organized and that’s true for the business or the family. And when I say family here I really mean ownership group, right? Because we know that sometimes not all not all family members or owners are really talking about the ownership group. And and that yes, each of those circles, needs leadership. Some family champions have to create that governance. Some family champions are coming out of an existing governance structure that just needs updating or revitalizing or evolving. It’s not enough to create governance and then just say, Okay, well now it’s set. There’s, as you know, and as everybody listening knows that governance has to be refreshed and updated and has to evolve to meet the evolving needs of the family. The family champion can play a lot of different roles in their in helping governance be effective, but some of
them have to create it. Some of them have to renovate it. Some of them are lucky and just sort of have to take the baton from someone and then maybe put their own spin on it if they’re getting it from an older family member who is closer to the exit and as the advisors who work with these family champions. A lot of them don’t even realize that they may be our that. And so I think just giving them some vocabulary and explaining what your book is all about where they could then realize who they are and the role that they’re playing. And that might help them evolve as well.
Yes, and I think that’s one of the things that I got really excited about when I was doing the dissertation I thought okay, this can really turn into a book. Let’s build some vocabulary. Let’s define what a family champion is. Let’s look at what some of their attributes are. Let’s look at what what they do. Not to say you have to be in these categories. But more to say these are characteristics and commonalities that a lot of family champions share. And then people can say, yeah, I really see myself in there I see doing these things. Okay. Maybe not these things, that’s fine. But it gives a framework. You know, I didn’t want to write the book to be really hard and fast so much as an idea starter. Think about these things. Think about what’s worked for other families, and what’s worked for leadership, and then people can grow and adapt that and be whoever they are, in whatever way they need to be for their unique family. But I do think that having the vocabulary and the framework and the reference can help a lot of people see Oh, I see myself in here.
And I love the way the fact that all of this stuff just like in Dennis’s book. It’s all about you guys went out there and talk to people who were doing things well and tried to kind of reverse engineer it into something that would be useful, as opposed to some you know, person who is just trying to devise something theoretically and say the family should do this. And I guess if someone were to do that, they would probably be more specific. But the fact that you have taken this you’ve kind of crowdsource what has going on out there. You got to see a whole bunch of different things and you’ve presented it in a way where it’s kind of like a buffet that here are all the things that you can do. And not everyone’s going to do the same things as the the other family business down the street. They’ll do things that fit with their unique circumstances and their unique skills and abilities.
Yeah, and you’re absolutely right. i And Dennis, this, you know, I was really inspired by Dennis, he said, let’s look at what’s working right. Let’s not go in with a lot of preconceived notions. Let’s look at these families for his research and mine. What are they doing well and then what are they doing? Well, that’s common, right? And that’s where the themes emerged when I looked at this range of family champions, would they were all doing something similar. Now they were doing in different ways, obviously, each is unique. But as I started to see these themes, you know, those are the major things that emerged as the cornerstones of the book. Because if we look at what’s working well, and we look at those commonalities, that really starts to develop, I think some ideas that people can use, again, recognizing not everybody does the same thing. They all do it in unique ways. But the positions of leadership and some of the characteristics I think are important because family champions and leading in the family requires a different skill set. It requires a different mindset than leading the business you know, leading the businesses positional authority, it requires business acumen and operating in that world. A lot of times those same attributes and approach doesn’t work as well in the family that requires different leadership approach somebody who’s more generally attuned to the communication within the family, being able to manage family dynamics, and being able to lead in a way that’s not positional, but much more relational in a lot of ways. They really have to build credibility and trust in a new way. They have to have a sense of purpose, and their interpersonal skills and emotional intelligence has to be really high. And I’m not saying those things aren’t important in business leadership. They are, but it’s a different relationship, in a business leadership role than it is in a family leadership role.
Right? Because it felt like the person leading the business is at the top of a pyramid with a certain hierarchy of people working underneath them, but the person with a family leadership role, well, it’s a lot less hierarchical and so democratic abilities to be very democratic and build consensus are surely more important. And so there’s a high EQ component that I guess a lot of
these people have. There really is and that helps them navigate those challenging family dynamics, which we all know are one of the most challenging elements of working with families, these long standing relationships. And so I found a lot of these family champions were able to navigate those dynamics and build more healthy, productive relationships in the future and not get hung up on some of what’s happened in the past. But, you know, that’s a big challenge for these family champions.
Right? Nobody said it was gonna be easy. Joshua, this has been great. And I want to thank you for being here today. Unfortunately, we’re getting close to the end of our time. So I always pivot here to the the two questions that we ask all our guests. So the first one is a book recommendation. And then the other one is one piece of advice from an advisor to family businesses, to other people who advise business families as well. So can we start with a book recommendation?
Yeah. And so this is a book recommendation. That came from a colleague, and it’s called The Art of gathering. And it’s my premium Parker. And I will admit, I have not read this book cover to cover, but I have pulled some really important pieces from this book. Around facilitation and how people gather together, because I find so much of my work is bringing people together and having effective meetings, regardless of what we’re talking about. It’s like how do you bring people together to have effective conversations that really advance the work that you’re doing together from formal to informal, and so I found this art of gathering a really interesting book to help set the stage so families can do the work that they need to do.
I’m trying not to laugh, Josh because I have read the book cover to cover and I think I even wrote a blog about it at one point, but yeah, it is. It’s really it talks about all the important little things that that sometimes people forget when you’re calling a family meeting for example, there are things that you know, if you if you are more careful in how you bring the people together, you’ll get much better results. So we’ll put a note. We’ll put a link in the in the show notes to that book, The Art of gathering by Priya Parker. And so now the last thing is one piece of advice as if there’s one piece of advice but just give us one piece of advice from an advisor to other advisors.
Yeah, I had to think about this and this is something I asked myself at the start of engagements and as engagements grow, and I asked who am I to these people? Am I a facilitator, my guide, am I more of authoritative who am I to these people? What is my relationship with this client? And what do they need to help them grow? And that may change and you know, go back and forth at different times in the engagement. So I’m always asking myself, How do I need to show up with them so that I can help them in the best way possible. Sometimes they need more direction. They need me to be a little more prescriptive. Sometimes I just need to help organize and let them run with it. Sometimes I need to support the family champion. So I’m working a bit more behind the scenes. Sometimes they’re really they don’t know where to start. And so I have to step in and give them the framework be a little bit more prescriptive and then step back. So the idea here is to ask, Who am I in this engagement as a whole? And then who am I in this meeting for them? What do they need right now? And being able to be adaptable in that relationship with my client I think is really important and something that is an ongoing learning process. Absolutely. In this work,
yeah. Because we you’re right, you’re so right, as as as our relationship through a mandate evolves, the role that we should be playing or could be playing will also evolve. But if we don’t stop every once in a while to ask ourselves the questions and sort of reset, where am I? What might I need to do differently that that can change? And if we’re not, if we don’t notice that there’s a change required, we might miss it. So thank you very much for that. Thanks, Josh. Thanks. This has been great. Thanks for sharing your expertise and your experience. With our audience.
Well, thank you, Steve. It’s a great opportunity, and I hope that everybody found something helpful, interesting and useful out of this.
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