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Working with Exceptional Families – Redux

Coming at this Again from a New Angle

There are some aspects of the work that I do with families that are difficult to grasp for many people, including some of my loyal readers.

In conversation, I typically note that I work in a niche within a niche, and have been known to add another level of niche as well.

This week I want to delve into this idea a bit more in writing, even though I did touch on it relatively recently (last year) in Serving Exceptional Families – Proceed Slowly.

Let’s begin by digging a bit deeper into the key word, “exceptional” a bit more, because it sits at the crux of the matter.

In the True Sense of the Word

My good friend Mr. Google is helpful as always, this time bringing me to vocabulary.com, which served up for “exceptional”, among many others, the following:

  • Surpassing what is common, or usual, or expected
  • Syn: Uncommon: not common or ordinarily encountered
  • Syn: Extraordinary: highly unusual or exceptional or remarkable 

My idea in sharing these definitions is to help accentuate just how much of a niche a lot of the in depth work really is.

Working with Exceptional Families - Redux

Universal Applicability of Many Concepts

Of course most of the general concepts I write about here do in fact apply to families and the challenges of having every member remain on good terms with one another.

I had a tag line on the back of my business card years ago that read “Helping families create the harmony they need to support the legacy they want.”

The first half of that, about the harmony, is admittedly pretty universal, as just about every family would be all for improving the ways that each family member relates harmoniously with all the others.

It’s the second part, about the legacy, that is less common, especially insofar as finding families who are willing to bring someone in (and pay them) to help with this part.

There needs to be a certain level of financial wealth, as well as complexity, and of course a desire to maintain family ownership, at least through the next generational transition.

Working with Exceptional Families - Redux

 

Challenges of “Democratizing” This Work

Over the years I’ve heard many colleagues mention a desire to “democratize” this work, and offer it to families who are not part of the “1%”.

I get it, and of course when anyone mentions this idea, many heads begin to nod in agreement. But there are a few challenges to this.

The first challenge is that this typically involves a lot of work, that the family members need to buy into. That’s because they all need to actually commit to doing this work themselves.

You see, while you can (and should) hire people to come and help the family with the work, the family members need to play a very active role.

And of course, most families, even if they are willing to do the work, are not in a position to hire someone qualified and experienced to properly guide them.

“What About Your Family?”

I was recently on a call with a new colleague who had the idea of doing this work with more “regular” families, and I tried to explain these challenges.

He then asked me about me and my own family. 

It was after sleeping on that question that I decided to revisit this question.

My family isn’t exceptional enough for this. My family of origin might have been, but after our liquidity event over 30 years ago, it eventually became clear that we weren’t going this route.

The family I married into also had some potential elements in place, but their liquidity event also made it clear that this wasn’t for them either.

In fact, very few of the families I’ve ever met are good candidates for full blown family governance and continuity planning.

And that’s not a bad thing.

Examples from the Other Extreme

While being labelled an exceptional family is usually a compliment, it’s obvioously not always the case.

I’ve had the misfortune of working with some families that were exceptionally dysfunctional too.

Some members of such families have also proven to be exceptionally narcissistic, exceptionally delusional, have exceptionally high self-regard, and I could go on.

There are of course many families who could use the kind of help I love to provide. Finding the exceptional ones who tick all the boxes is hard work. 

Could yours be one?

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On Letting Professionals Run your Family Business

A Different View on a Common Question

I’ve been operating in the family business sphere for about half a century now, if you count from my first memory of being told that I was expected to eventually take over the company my Dad founded before I was born.

Back then, in the 1970’s, family businesses were still considered “less good” than corporations, and were typically spoken about with at least some derision.

Happily, times have changed, at least to some degree, and family enterprises are seen as models in some areas, especially insofar as their cultures are often strong and people want to work for them.

There is still, however, an aura of them being “less professional” than their more corporate counterparts.

When Do You Bring In Professionals?

There are ways to see what people search for on Google and other search engines, and I occasionally ask someone skilled at this to share what kinds of questions people typically ask about family business.

Here’s a recent question he sent me:

                  “At what point should a family business      

                              let professionals run it?”

While this feels a bit like an outdated question, because from where I sit I thought we’d moved past that, the fact that people are asking it means it is worth spending some time on.

My gut says that for anyone asking this question, the word “professional” could likely be swapped out for “non-family member”.

There ARE Professional Family Members Too

The question itself assumes a black and white view of the world where a family member is not professional.

The corollary of that view might then be that a non-family member therefore is a professional.

I hope that I don’t have to explain the absurdity of this view.

But I absolutely do understand where this comes from, and that’s where we’re going to go now.

There certainly are enough examples that we’ve all seen where we’ve witnessed family members working (or at least employed, even if they’re barely working) in jobs for which they are not adequately equipped.

And that’s putting it gently, in some cases.

Family-Owned and/or Family-Operated

Over the years, various people have tried to define “family business” in different ways, and those definitions typically involve some components of family ownership (either currently or eventually) and family operation.

I’m not a stickler for detail in such definitions myself, my motto is, if you think of yourself as a family business, then you are a family business.

But there are of course differences between businesses that are simply “family-owned”, yet not (or no longer) “family-operated”.

I daresay that most examples of those that we think of are probably also viewed as being more professionally run.

But they sure didn’t start that way, did they?

Like So Many Things, “It’s a Process”

Getting back to the initial question, about “when is it time” to “bring in professionals”, this is likely the idea people are getting at.

You certainly can continue to own a business with family members, even if no family members still work for the company.

You can serve on the Board of Directors of a family business as a family member as well, even if you aren’t an owner or employee.

There are certainly a number of advantages to situations like that, because it sure is easier to fire someone that isn’t related to you!

Of course few businesses get to that stage until they’ve been around for a long time, typically until at least the end of the career of the founding generation, and more often after a couple of generations of being family-operated.

A Really Long-Term View

This of course requires a really long-term view, and at some point it may become quite obvious that the business and the family have reached that stage already.

When you get right down to it, what are the chances that the best person in the whole world to run say, Ford Motor Company, is actually a descendant of Henry Ford?

My guess though is that anyone asking this question about a much smaller or younger company is likely doing so because they’re witnessing some family members who just aren’t up to the quality level required to do the job “professionally”.

If that’s the case, you may want to speed up the process of bringing in competent management, because if you don’t, you may not have a profitable company for much longer!

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Appreciating the Worldwide Family Enterprise Community

Learning from Others from Around the World

Some people are lifelong learners and never stop searching for ways to improve what they do, and I don’t think there’s ever been a better time to be one of these people.

I certainly consider myself to be among them.

I’ve just returned from one of the events I love to be a part of whenever possible, mostly because it’s a gathering of like-minded people who live and work in the family enterprise space as I do.

I’m talking about the Tenth Annual Schlesinger Global Family Enterprise Case Competition (SG-FECC) at the University of Vermont.

I’ll Be the Judge of That

I can’t believe that I first participated as a judge way back in 2014, but I wrote a blog about it, so I’ve got proof! See The World’s Only Family Business Case Competition

It’s an honour and a privilege to be invited back again and again, and the bonus for me is that it’s only an hour and a half away by car.

Contrast that with some of the other judges I spent time with over the past few days, who flew in from France, Gautemala, Arizona and Louisiana.

The 19 teams competing this year represented 12 different countries on 4 continents, which always impresses me. 

Recall that this takes place in January, in Burlington Vermont.

Academics, Professionals, & FamBiz People

One of the coolest aspects of the event is that the judging panels are always composed of a mix of academics, practitioners like me, and real life people who are part of family businesses.

I love spending time with people who are part of this world but who play very different roles than I do, and that’s what makes this event so enriching for me.

After each team presents their recommendations based on the case facts, a Q & A period follows, which can often become a “make or break” moment for the team of students.

Thanks to the varied composition of the judging panels, the types of questions we fired at the teams were always focused on different aspects of each presentation.

 

Pent-Up Demand for Being Together in Person Again

As I noted in From Multi-Disciplinary Field to Interdisciplinary Ecosystem, there was also a warm buzz at the event thanks to the fact that we were all together once again.

This event, like many others, continued on despite Covid and the restrictions from being together over the past few years.

While everyone did their best to make those events as good as they could be while being done remotely, there really is no substitute for occupying the same room together.

At the same time, though, the past few years have shown us all just how much can still be accomplished via virtual get-togethers.

 

Family Businesses Are Common Around the World

With students, coaches and judges from around the world, we were reminded just how prevalent family businesses are, all around the world.

In fact, in some countries that we might label as emerging markets, they’re even more common than in North America.

Different countries means the cultures for FamBiz might have a different feel and flavour, but I love the fact that we can always learn from someone else’s situation.

A Worldwide Family Enterprise Community

The cases used on the days I judged featured family businesses that had already transitioned a couple of generations, and such examples can usually be used as a model for us to learn from.

The family business community continues to grow and solidify, with events like this and organizations like the Family Firm Institute creating opportunities for us all to come together and share what actually works for families.

Typically, small firms learn from larger ones, and new ones learn from older ones, but very much like mentoring it can also work the other way around.

The key is an open-minded attitude and a willingness to learn.

I appreciate all of this and my place in this great community, and every year when I leave this event I have great hope for the future.

The young people who compete at GS-FECC each year always impress me. I’m usually a bit jealous that all of this did not yet exist when I was in university. 

Kudos to the whole UVM team!

And the Winners Are….

The team from Wilfrid-Laurier University took home the Undergraduate Division, while the University of Manitoba won the prize for the Graduate Division.

I hope to return for the 2024 edition, to see what else I can learn.

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Responding to Family Catastrophe – Come Together or Drift Apart

It Can Go Either Way (And One Is Better)

In my work, I get to hear lots of stories about families and how they try to deal with preparing for the future together.

For the most part, the situations remain stable for long periods of time and it’s relatively simple to know what to expect going forward from one year to the next.

Sometimes, however, something unexpected hits the family, and it really throws them for a loop, which seriously upsets the equilibrium, and chaos ensues.

This week I want to talk about how some families are able to respond to such a catastrophe in a good way, while for others it can mark the end of positive relationships.

Examples Abound, Never Black and White

Everyone has heard of the various kinds of events that can occur, but today I’m sharing stories of a couple of families with whom I’ve had recent contact, either via my work or though acquaintances.

One involves a business family that suffered a significant and sudden loss of their financial wealth, and who are now trying to come to terms with their new reality.

The other is about a family whose patriarch passed away relatively recently, at far too young an age, and the subsequent effects of the hole in his family that this left, including the straining of relationships that used to be strong.

I want to share some ideas on how both families can hopefully realize how important their attitude will be in how things play out for them.

In short, as I teased in the title, they can either come together and become stronger for each other, or else they can point fingers, give up, and split apart.

Regular readers know which side I come down on.

 

Different Kinds of Grief, On Varying Schedules

Naturally, there’s an element of grief involved in recovering from any kind of disaster that results in a significant loss. And, as we’ve all heard, everyone processes grief in their own way, and on their own schedule.

The types of grief in the two family examples are quite different, as the loss of a person and the loss of financial wealth are not comparable.

But there are possibly more things they have in common than one may realize, especially when a family is left grieving together.

This is where some of the ideas around attitude come in.

 

Responding to Family Catastrophe – Come Together or Drift Apart

Additional Strength and Resources

When speaking with such families in these circumstances I like to offer a perspective that they might not be seeing, where each person can serve a useful purpose to their other family members by providing strength when another is feeling weak.

Because they each process their grief differently, hopefully at least one of them can be strong for the others when needed, and then the others can reciprocate when things are in reverse.

Regular readers know of my dislike for the word “help”, as in “let me help you”, so that’s not exactly what I’m getting at.

I like to look at it from the viewpoint of being a resource for others, the difference being who approaches whom.

I’m not offering to “help” you per se, but I am offering myself as a resource to you, when you decide you want to avail yourself to that.

 

Picking Each Other Up 

Without this becoming a dissertation on the stages of grief, once shock and denial are in the past, then anger, bargaining and depression are likely areas where one family member can help pick up another from time to time, and the burden can be distributed.

The alternative, which is always sad to see, is when these stages lead to family members dragging each other down instead.

An attitude of “this hurt me more than it hurt you” is easy enough to understand, but it’s difficult to see how that’s helpful to anyone.

Responding to Family Catastrophe – Come Together or Drift Apart

Taking the Time to Make the Time for Each Other

My hope for families trying to come out on the other side of tragedy is that they can learn to take the time to make the time for each other.

Simply being there for one another, even if not much is said, can be so much more important than most people realize.

Yes, misery does love company, but one person with a positive attitude can make a huge difference.

Strength in numbers is possible for families, especially when working through the grief of a catastrophe.

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The Many ‘Ships of Working with Family

The Many ‘Ships of Working with Family

Lots of Ways to Look at Managing Assets Together

The inspirations for these weekly missives come from a variety of sources, because writing 52 blogs every year necessitates a wide universe of catalysts.

Some members of my family have accused me of having an “addiction” to Twitter, and I suppose that sometimes it might seem that way, although I believe it’s very much under control (spoken like a true addict, I acknowledge).

And so you might have already guessed that Twitter is the source for the idea behind this week’s post.

Hat tip to Ryan Foland, who tweeted out a post a few month’s back that caught my attention, which stated “PartnerSHIPS are delicate, navigate wisely”, along with a cartoonish image of a captain at the wheel of a boat.

I emailed his tweet to myself, adding “relationships and leadership” to cement the idea for this piece, and put it into my “blog ideas” folder.

Since my “beat” is families who own and manage assets together, I want to explore those “ships” along with a couple of others I since added to the pile.

 

OwnerSHIP

The simplest one to start with is ownership, since it is the fact that people actually own something together sits at the root of the challenges that they face, as well as the opportunities.

It’s much simpler when you own something all by yourself, since you alone can make every necessary decision without even informing anyone else.

The families I work with all own things together, or there is a strong intention for them to co-own assets together in the future.

It’s this “co-ownership” that holds most of the challenges.

PartnerSHIP

That co-ownership brings us to the next ship, which is the partnership. Every partnership has its own advantages and disadvantages, of course, and being a partner in anything with family members just adds to the excitement, for lack of a better word.

When I speak about the work I do, I often make an analogy to leverage used in investing; if you borrow money so that you can make a larger investment, you can make more money, provided of course that you do make money. If you lose money, you also lose more money.

Being in any partnership with family members is wonderful when things go well, but when they go poorly, there’s more a stake to lose as well.

 

LeaderSHIP

In order for any ownership partnership to go well, some form of strong leadership is also required.

I used the term “some form” on purpose there, to highlight the fact that leadership doesn’t always look the same, especially in the case of families.

As a family goes from the first generation (G1) to the second (G2), there’s typically a shift from an autocratic style to something more democratic. 

Ideally, there’s strong leadership of the business aspects, keeping that area strong, as well as some strong leaders of the family as well.

Those roles often reside in the same person in G1, but by G2, and certainly if they get to G3, more than one person will play key leadership roles, even if they’re not “official”.

See The Unsung Role of Family Champions

 

StewardSHIP

One type of leadership attitude and style that’s sometimes adopted is stewardship. Definitions of stewardship include words like “supervising” and “taking care of” something, and often include adjectives like “responsible” and “careful”.

There are worse attitudes a family can take, and stewardship continues to be a style to which many families aspire. 

It does have its drawbacks as well though, such as how it can leave rising generation family members unfulfilled and can see family assets dissipate over time.

See Striving for the “All and Nothing” Inheritance

RelationSHIP

I saved relationship for last because I think of this one a bit differently. This one sort of serves as the foundation for all of the others in my mind, because if relationships between family members start to go sour, all of the other “ships” suffer as a result.

Relationships are precious and need to be tended to consciously, because their quality affects everything else the family does together.

Communication is so important and I always lean towards more communication than less, because a vacuum of communication typically causes more issues and harms more relationships than when there’s plenty of it.

All these SHIPS are delicate, so please navigate wisely!

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No Beef with this Family Resemblance

A Roadside Billboard Creates a Paternal Flashback

My Dad was a very key figure in my life until he lost his battle with cancer way back in 2008.  

Much of the work that I now do with business families emanates from the fact that I was born into the family business that he founded before I was born.

I think about him often, and share some of his more memorable sayings at every opportunity.

But last week, while driving down the highway, I saw a billboard that made me recall something he was passionate about.

It was an ad for Quebec beef. 

A Man Who Was Always Ahead of His Time

Even before the liquidity event of selling the operations of our steel fabrication business, Dad had bought a farm about an hour away from the city, which was something we all knew that he would do someday.

If you are picturing a typical gentleman farmer, you’re partly correct, but you could never put it that way to him.

See Folksy Steve and the Gentleman Farmer

He took an interest in beef cattle, and even though he was new to the game, he dove in and quickly became the go-to cattleman in the area.

Thanks to his newfound passion project, I was able to learn about all sorts of things I never cared to know, like scrotal circumference and why the vet needs to wear arm-length gloves on both hands to do artificial insemination.

But he also saw the big picture for the industry, and was always trying to advance things, including creating a brand for Quebec beef.

Perhaps it was an idea whose time had not yet come, but seeing the billboard featuring an idea he had a couple of decades ago got me into reflection mode.

The Apple Doesn’t Fall Far from the Tree

A few weeks ago in From Multidisciplinary Field to Interdisciplinary Ecosystem I noted a bit of jealousy that I have towards the younger colleagues in my professional network, because they will benefit from the advancements of our work more than I will ever be able to.

Despite my coming to this work relatively late in life, I have seen a number of advances in how the families behind the enterprise are finally getting more of their due, in terms of how we professionals serve them.

If anything, it seems like this is an idea whose time has come, and the industry is still trying to come to grips with how to best serve these families, and not just their businesses.

I have been evangelizing about this in this space and elsewhere for about a decade now, but I had never realized that I was following in the footsteps of my Dad until I drove past that beef billboard.

If He Could See Me Now

Perhaps it’s because it’s the holiday season as I write this, but I wonder what he would think about the work that I’m doing.

About five years ago, in No Dad, Coaching Is Not “Helping Losers” I noted that his grasp about what coaching is and what it isn’t wasn’t exactly firm.

I would hope that he would be glad that I finally found the kind of work that I enjoy and do well, in service of families who can use my guidance to become even better than they already are, as opposed to being losers.

No Beef with this Family Resemblance

The Billboard My Kids Will See 15 Years After I’m Gone

Now I’m trying to imagine what the equivalent to that billboard will be for my kids to see a decade and a half after I die.

This work is very much a niche and the vast majority of people will never actually “get” what I do, but at least the professionals who work with business families will be fully on board with the importance of serving the family members, and not just the businesses they own together.

I suppose that we may then be at what some may call “Wealth 4.0”, as an outgrowth of the Wealth 3.0 that I mentioned a few weeks back in Do Family Businesses Really Fail by the 3rd Generation?

I know that the organisations that I’m a part of are all continuing to evolve in their own ways. 

Whether it’s the Purposeful Planning Institute, Family Enterprise Canada, or the Family Firm Institute, none of them are standing still, and each is trying to keep up with the evolution of the work we’re doing with families.

And like Dad, I guess I’ll continue to try to do my own work with them, and play an important role.

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Staying in Step with the Client Families We Serve

Staying in Step with the Client Families We Serve

Adjusting your Speed Is Always Top of Mind

One of the many challenges that people like me face when working with families is to make sure we are going at the right pace for the family we’re working with.

For many professionals who serve enterprising families, it can be much simpler, since they typically do most of their work with only one or two people at a time. 

Because that work is largely technical and the work product consists mostly of documents, the back-and-forth between the outside expert and the family is relatively straightforward in most cases.

But when you specialize in the “family circle”, as I often call it, that all flies out the window.

And I know that I’m not alone in recognizing that.

The Benefits of Peer Groups

Since I began this work a decade ago, I’ve always been seeking out others who also serve families in this way, and over the years my network has grown.

In early 2020, just before “you-know-what” hit us all, I had started a monthly peer group meeting with friendly colleagues from various places, mostly in North America.

We meet once a month for an hour and share a case each time, and get feedback and learn from each other.

With time we’ve begun to connect in even more enriching ways and have developed some close, trusted connections.

This work can feel lonely at times, and most of us don’t have a local peer group who understand our challenges working in this niche.

Getting Out Ahead, Or Following Along Behind

Towards the end of a recent call, the advisor presenting her case (DS) noted something about wanting to “stay ahead” of where the client family was going, which made perfect sense to her.

Along came a reply from another group member (PE), who noted that his style was different, and he stated that he never went anywhere until his client led him there. 

I must admit, that point of view resonated strongly with me.

But is one right and the other one wrong? 

No, I don’t think so at all. And I’m certainly not trying to make a case for either way.

Truth is, though, that each of us will have preferences in how we interact with client families, and they will likely fall somewhere along the continuum from completely proactive to completely reactive.

And it will also probably vary from one situation to another too.

Family Members Move at Different Speeds

Let’s get back to the topic we started with, the number of different family members we’re dealing with.

Unlike technical specialists, family facilitators deal with large groups of family members, and they don’t all move at the same speed.

That may have to do with their skill level, their motivation, their interest, the other things going on in their lives, conflicts with other family members, or simply the way they’re wired. 

Or a handful of other reasons we’ll never understand.

When it comes to adjusting my speed to that of the family, I try to look at it as “leading from the middle”.  Whereas DS had a desire to get out front, and PE preferred to follow from behind, we cannot forget about trying to stay with the critical mass of the family.

The Tour Guide Analogy

Years ago, doing college visits with my two children, I went on a couple dozen campus tours.

A tour guide analogy works for me, because you can’t simply run ahead and expect the whole large group to keep up with you. 

The good ones would say, “We’re heading over there”, and point, and some group members naturally wandered there ahead.

But you can’t expect the group to all go ahead and get to where you’re trying to go either, so you cannot be the caboose of the train either.

If you can manage to stay with the center of the group, guiding the natural leaders ahead, while making sure the stragglers don’t get lost along the way, you’re probably going about it as well as you can.

When There Is No Destination

Of course all of those tours ended, usually back where they began.

When you work with a family, there is no destination. 

You may not always be there to guide them, but you need to try to keep them close enough together and move at the right speed to help them make progress.

See There Is No Destination

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How Bricolage Applies to Family Governance

Words from Another Language Can Illuminate Ideas

Over the years since I’ve been sharing my thoughts in this space, there’ve been occasions when I’ve used translations from other languages (mostly French) to make a point.

We’re going back there again this week, because a certain word that I learned in my childhood, while attending primary school in French, just keeps coming up in different ways, and one of those ways actually relates to the work that I do with families.

The word is “bricolage”, which was something we typically did on Friday afternoons as part of the “arts plastiques” component of our curriculum.

For the first five decades of my life, that was what that word meant to me, but then suddenly, sometime in the past few years, I heard it used in English.  Hunh?

A Whole New Meaning for “Arts and Crafts”

If someone had asked me to explain bricolage, my quick answer would’ve been “arts and crafts”, because that still makes the most sense to me, as a translation of that childhood activity.

But now it means a whole bunch of other things too. My good friend Mr. Google helped me uncover a few:

  • Bricolage is a term used in several disciplines, among them the visual arts, to refer to the construction or creation of a work from a diverse range of things 
  • Bricolage is the skill of using whatever is at hand and recombining them to create something new.
  • Bricolage is defined as “making do by applying combinations of the resources at hand to new problems and opportunities.”

(Bold as per originals; italics added)

Switching Over to Doing Improv

Last year in Doing Improv While Developing Family Governance I noted that the idea of “improvising” your family governance when translated from French could be confusing, as some of it runs counter to the way I typically suggest families handle it.

My idea is to kind of “make it up as you go” and as you need to, but that you should definitely NOT try to do it on your own.

And so it is with a bricolage approach to creating family governance. The family members need to do the work, but not by themselves.

Family Members Must Get Their Hands Dirty

Any agreements, guidelines, or documents that a family creates to define the way they’re going to govern the members of the family, must be co-created by the family members themselves. 

Assuming, of course, that you want them to abide by them.

This work cannot be delegated and still be expected to be worth the paper it’s printed on.

It can, though, be cobbled together as needed, incrementally, over time.

Kind of like an arts and crafts, or do-it-yourself project, like doing bricolage. Only the do-it-yourself part doesn’t have to be (and shouldn’t be) done by yourself.

You should engage someone independent, from the outside, to guide the process.

A Bricolage Guide or Assistant’s Roles

If you think about what this person would do, their roles would include the following:

Organize:

This hired guide is tasked with organizing the work that needs to be done, which includes staying in contact with family members on a regular basis, both one-on-one and in groups.

Keeping the momentum going is a big part of the role, and adjusting the cadence to the speed of the family members is not as easy as it might seem.

Co-Lead:

While there’s a leadership component to the role, it is not always “solo leadership”, but often requires teaming up with at least one family member, who co-leads and plays a key role as well, rallying the family members in ways the outsider cannot.

See Sustaining Family Ownership Through Generations

Motivate / Coach:

Another key part of the job is to motivate and coach each of the family members to be as involved as necessary and to find their rightful place in the process. 

Treating each person as an individual is an art in itself, and gaining everyone’s trust takes time and effort.

Draft / Circulate Drafts:

When a family takes on this work of defining how they are going to be together, it usually makes sense to write things down, and creating some form of “Family Charter”. 

Getting agreement on wording is not always easy or linear. 

Some of my colleagues do the drafting of the documents, while others prefer to play a role in circulating the drafts and making sure everyone provides input.

There’s no wrong way to do it; keeping things moving forward is the key.

Clean Up the Mess:

Every bricolage project gets messy at times, and part of the role includes cleaning up messes along the way.

Ideally most of the big ones will be prevented by having someone from outside the family play this role too.

And don’t forget, the process is even more important than the finished product. Because it’s never truly finished.

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Do Family Businesses Really Fail by the 3rd Generation?

Taking a Fresh Look at an Old Saying

This week we’re dealing with a subject that gets talked about a LOT by many of the people who work with family businesses, and that’s the adage that family businesses often fail, usually by their third generation.

Personally, I’ve always avoided this topic, because whenever I speak to anyone from an enterprising family, they never ask about these “statistics” and even when they do hear them they usually believe that their family will prove to be the exception.

But I guess it’s probably high time that I at least address this question, so that we can unpack it a bit and see what can be learned.

I’ll Tell You What You Can Do with Your “Shirtsleeves”

Everyone who works in the field of family business and family wealth is familiar with the old proverb “Shirtsleeves to shirtsleeves in three generations”.

And we’ve all heard that there are similar versions in every language and culture around the globe.

And, I’m pretty sure most of us are sick of hearing about it.

Of course, that hasn’t stopped many of the people who advise such families from trotting out that stuff at every opportunity, because, well, it works!

But what I mean when I say “it works” has much more to do with the fact that it works for solution providers, for whom this point of view helps them to sell their “solutions”.

A “solution” is easier to sell when you can point to a clear “problem”.

We’re Looking at the Wrong Question

The image I chose to accompany this blog comes from an ice storm that hit my region almost 25 years ago, in January 1998.

The tower that collapsed was one of dozens that could not stand the weight of the ice that had accumulated on the electric wires they carried.

The business my Dad had founded and for which I worked happened to have manufactured thousands of towers like these over the three decades we operated.

After that storm, people who knew we had been in that business would ask my Dad, “How come those towers collapsed?”.

His reply was always this: “You’re asking the wrong question; you should be asking ‘how did so many of the towers stay up’”.

Accentuate the Positive

I hope that my analogy is obvious enough, but just in case, allow me to share my point more explicitly.

While the ice storm that damaged so many of those towers was a “once in a century” type of occurrence, the challenges of keeping a family business (or any business for that matter) going for decades are a constant uphill battle.

In fact, I’d venture to say that family companies actually fare better than non-family businesses in general.

Do I have any stats or studies to back that up? Well, no, I don’t. 

But the “studies” that were done decades ago on FamBiz were not exactly done with the most scientific rigour either. 

That hasn’t stopped those who benefit from them from trotting them out at every occasion, however.

The Wealth 3.0 Version

I’ve felt this way since I entered this field a decade ago, and thankfully now some higher profile colleagues are leading the way to change the narrative around this subject.

I first heard the term “Wealth 3.0” at the RendezVous of the Purposeful Planning Institute (PPI) in 2019, from Dr. Jim Grubman in his closing keynote.

Since then, Grubman has continued to share his thinking via the Ultra High Net Worth Institute. See Wealth 3.0 and the Ten Domains of Family Wealth for much more background.

The crux of that viewpoint lies in the fact that creating structural “solutions” for the business is wrongheaded, whereas focusing on the human capital of the family is what we should be supporting families with.

More recent research has shown that concentrating on the family, rather than any enterprise they happen to create, makes more sense.

Because so many of the experts have traditionally been hired by the companies, though, it’s not surprising that the focus has been misplaced.

The more recent emphasis on the family is welcome and overdue, but not yet firmly implanted in the field of professionals who serve them.

Progress, Not Perfection

Progress continues to be made, however, and we need to be satisfied with making that continue, rather than lamenting that we are not yet at the “perfect” state of the industry.

See “From Multidisciplinary Field to Interdisciplinary Ecosystem” from a few weeks ago for more on this.

We need to continue to make this progress, one advisor and one family at a time.

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Sustaining Family Ownership Through Generations

The Essential Element Required

It can sometimes be difficult to explain the work I do to those who don’t happen to belong to a family that runs a business or owns assets together.

There are at least three interdependent sub-systems at work, between the family, the enterprise (businesses/wealth/assets), and the ownership group.

Just about every enterprise is in constant contact with outside experts for a variety of services from the outset.

But the family and the ownership typically take on more of a “behind-the-scenes” role and get much less attention.

The family circle happens to be where I do most of my work, and I’ve been developing a bigger appreciation for its overlap with the ownership group lately.

Focusing on “family ownership” and how important it is for the future of the enterprise is the focus of this week’s post.

For those in the know, you won’t be surprised that we’ll be talking about the essential role of a family champion.

Their Nebulous and Misunderstood Role

I first wrote about the concept of family champions back in 2019, in The Unsung Role of Family Champions.

Recently, I had the wonderful occasion of spending a day with a number of people who play such a role in their families, even if they weren’t all sure that they “qualified” for such status.

I led the opening discussion, where I shared the origin of the term and just how essential having at least one such family member has been for all of the families featured in Dennis Jaffe’s study of 100 family enterprises that had endured for at least 100 years. 

See Jaffe’s book Borrowed from Our Grandchildren

But just because Jaffe and Joshua Nacht, one of his researchers, came up with the term, that doesn’t mean it’s well understood, even by those who play this role in their enterprising family.

Will Every Family Eventually Reach Its Limit?

While certain family members often play a starring role as the CEO and perhaps others are some kind of rainmaker, the family champion is typically much more low-key, and out of the limelight.

Few families are able to maintain family ownership over generations, often because they lack someone motivated and interested in doing the work of keeping the family focused and organized ahead of important transitions.

Eventually the family often grows bigger than the enterprises that are meant to support the people, and choices need to be made.

While these choices occur infrequently, the idea of discussing whether or not continued ownership by the whole family still makes sense is usually a scary notion that is not easily put on the table.

But when it is raised, you can bet that the family champion played an important role in setting the stage for it.

Forever Asking the Key Question

A family that owns an enterprise together will likely assume that it can and will and should remain that way, and for a certain period of time, which may be measured in decades and even generations, it’s often true.

At some point, though, most families need to ask themselves if that is still going to be the case after the next generational transition.

Hopefully, once they get to the point where hard choices need to be made, they’ll be able to figure out how to make the necessary changes in a way that leaves the family intact.

The result could be to prune the family tree or maybe sell the enterprise and have a liquidity event. See Pruning the FamBiz Ownership Tree and Huge Liquidity Events – Great News, Right?

For someone like me, who considers himself a family specialist, my thoughts are always “family first”, and many families I know also adopt this attitude. 

There are exceptions, those who put the success of their business first, which sometimes has me shaking my head. I typically do not work with such families.

Who Is Looking Out for the Family?

So much focus is put on the business that the family owns, so it’s not that surprising that the family and the ownership areas sometimes get lost in the shuffle.

The business stuff happens at a much faster pace (see Varying Time Factors in Each of the Three Circles) and those who work in that area are put on the spot on a daily basis.

Meanwhile, though, there needs to be someone who is thinking about and talking about the family’s role in all of this, and who makes sure that the family and its ownership of the enterprise also get the attention they deserve.

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