Getting Vertical: From the Iceberg to the Balcony

Finding New Angles and Perspectives

A couple of weeks ago in The Value of Symmetry in Enterprising Families, we were looking at things on a relatively horizontal plane.

This week, I want to take a 90 degree turn and move us to the vertical axis, and see what we can gain by changing the angle and seeing what we can learn when we look at things from a new perspective.

Once again, this is a post inspired by a discussion with colleagues, who were together over a group Zoom call, all trying to learn to serve our family enterprise clients even better.

It’s amazing how often sessions like these get me thinking about ideas in new and useful ways, and I’m glad to have this outlet for them. 

Writing these weekly blogs forces me to think about them in ways that I can explain easily, which often comes in handy later.

 

Iceberg, Straight Ahead!

It’s easy to think of an iceberg as a potential villain.  I’m not going there, but instead to another visual analogy.

I think everyone’s familiar with the part about the visible portion of the iceberg, above the water line, being only about 10% of the entire mass of the entire block.

One colleague in that aforementioned call brought up the idea of having to dive deep into the water to look at a family’s issues from various depths, to try to identify the real root of certain presenting problems.

Of course the things on the surface are easier to see, but then again if everyone could see and agree on all the problems, there would be a lot less work for people like me!

 

The Old Standard “30,000 foot” view

So one way to get vertical is to do a deep dive, but what about the other direction, up?

Many people talk about the view from 30,000 feet, and that can also give you a very different perspective that can be useful in a lot of ways.

As someone who has studied family systems theory, I’m a big fan of the idea of looking at things from outside the system, because it is often so much easier to understand what’s going on when you are not stuck in the middle of it.

It’s a key reason that bringing in an independent outsider can be such a benefit to so many families.

 

The Balcony Is High Enough

But you don’t need to get into a plane or helicopter to begin to get some of the benefit from the new perspective that an overhead view can provide.

In fact, that’s where the balcony comes in.

If you really went way up into the sky, you wouldn’t be able to hear what people are saying or notice the facial reactions of the people anymore, and these are key to understanding what’s going on.

A balcony is just high enough to allow you to see things differently while remaining close enough to stay in touch with the emotional field in the family group.

 

Horizontal Views Are Often Obstructed

There are naturally limits to any analogy, but I think this one still has some juice left in it.  When you’re all on the same horizontal plane, your view of each other is often obstructed

There’s a reason why round tables work better for many kinds of meetings than rectangular ones.

When a family invites someone like me to work with them, one of the things that they get, in addition to my unbiased independence, is the advantage of different perspectives.

So whether I am trying to dig deeper and look under the surface, or going up to the balcony to see how things look from up there, it’s all about trying to get the family to better understand and clarify what’s going one.

 

Shining a Light on What I See

Of course sometimes when I travel to a different plane and notice something new, it can be an interesting task to figure out what to do next.

Most often I try to shine a light on what I’ve seen and share it with the family, if only to verify what I think I’ve found.

But that isn’t always the right thing to do; sometimes I need to process what I’ve seen before sharing.

Either way though, getting vertical by going deep or going up can both be valuable ways to gather important information to help a family move forward.

Be Wary of Asymmetry Wherever It Lurks

A subject that’s been coming up in my work a lot recently is the idea of symmetry, and how important it can be for families.

In reality, it’s one of those things that’s more noticeable in its absence; that is, when asymmetry crops up and needs to be dealt with, that’s when it becomes apparent.

Please bear with me as I explain where I’m going this week, because I’m introducing some vocabulary that’s personal to me, meaning that I’m not sharing ideas from others, but my own.

Let’s start with a fact that most people appreciate about a standard family diagram (or genogram), which shows a family drawn as a series of generations, one flowing beneath the other, in succeeding waves down the page.

Because of this, I like to refer to the relationships between generations as “vertical” due to the way they’re portrayed.

 

Moving on to the Horizontal Part

So if the relationships that involve those from one generation to the next are vertical, it then stands to reason that those between siblings, drawn on the diagram along the same line, are those we would label as “horizontal”.

By my understanding, the concept of symmetry involves things being balanced around a central line, like a person’s face, for example.

To be sure, I Googled “symmetry” and happily found this to corroborate my thinking:  

                   “the quality of being made up of exactly similar 

                       parts facing each other or around an axis”

That’s close enough for my standards.

 

But Aren’t All the Siblings Different?

Of course anyone who has siblings or who has children can tell you how different each sibling is, even though they come from the same pair of parents.

The most dangerous kind of asymmetry that I harp on with families is “information asymmetry”, which happens all the time, and is impossible to fully eliminate.

Before we go too much further, I want to recall the Three Circle Model and remind everyone that we can and should look at enterprising families in terms of the three major systems of which they are composed, namely: family, business, and ownership.

 

Family and Business Asymmetry

Every parent is familiar with the concept of trying to treat all their children equally, or as similarly as possible, at least in age appropriate ways.  

We strive to find the right balance and are always trying to make sure things don’t get too far out of whack in the family.

In a business, it’s acceptable to have some hierarchy in your structure, but more often than not, siblings are put into roles that are relatively close in stature, wherever possible.

So if asymmetry shows up naturally and is tolerable in plenty of families and businesses, what’s the big deal?

 

Are We Forgetting Something?

Of course we’ve yet to explore the ownership circle, and this is where the biggest dangers lie.

The whole idea of ownership is already too easily overlooked.  See Ownership: The Forgotten Circle of Family Business

Not only is ownership not discussed enough, but sibling relationships are also not highlighted enough in family business continuity discussions, because everyone prefers to focus on the vertical relationships between the generations instead.

When you think about it, our sibling relationships are almost always the longest lasting relationships of our lives.  

While parents and their offspring are lucky to get 4 or 5 decades together, brothers and sisters typically get 7 or 8.

 

Ownership Information Asymmetry – Red Light Flashing

Having noted that siblings are all a bit different in a family and roles in the business are normally not identical, it’s in the area of ownership that each person’s stake will most likely be identical.

I know that there are plenty of exceptions, but as a general rule, siblings end up with identical stakes in their family’s enterprises, because of a desire for fairness, which is easy to understand.

But because people hold differing roles with respect to the management of the assets, they end up with much different levels of knowledge of what’s going on with everything the family owns.

I regularly see instances of “insiders” versus “outsiders” in sibling groups that can become a huge issue if not addressed.

The onus is on those insiders to do whatever they can to rebalance this information asymmetry, by willingly and openly sharing as much as possible with their siblings.

Over-communicating is almost always better than under-communicating. Please don’t forget that.

A Family’s Most Important Project of All

Welcome to another edition of “Steve tries to take a bunch of ideas and spin them into something coherent and useful for enterprising families and those who work with them”.

It should be interesting as I try to weave together the fact that families are very interdependent, that recognizing this is a key to intergenerational success, and that proper guidance on the journey will be of enormous help to them along the way.

These thoughts have all been brewing in my head for a while, stimulated by various recent interactions, and now it’s time to share where I’ve arrived. Thanks for joining me again.

 

Coaching Every Family Member Is Ideal

My favourite gigs with families are the ones where I get to spend both one-on-one coaching time with each family member, and then also participate in their group meetings.

While I’ve noted that in some cases it’s possible for a family to make progress in situations where there’s only one family member who’s sufficiently motivated to seek outside coaching, my best engagements are those where I get to work with everyone, both individually and together.

While recently discussing some cool aspects of coaching in general with another coach colleague, we kicked around the importance of the coach exuding an attitude of “I’ve got your back” and “I’m here for you without any other agenda, unlike most other people in your life”.

You can imagine that this might be a difficult role to play when you work with many of those “other people in your life” as well, and you wouldn’t be wrong either.

 

Serving the Whole Family’s Interests

The keys to doing this well are quite simple, in fact, but please don’t ever forget that simple is not the same as easy.

The first key is for the coach to see themselves as a servant of the entire family, not simply the one who hired them, or the one who pays their bill, but the group as a whole.

And then there’s another key that goes with that, and that’s the fact the to truly serve the family, it’s much easier when that coach is not serving an institution whose logo is on their (the coach’s) business card.

Family members are interdependent, and coaching them on their family journey is a special role with a unique skillset.

In fact, it’s more than just coaching, it’s also a bit of facilitation and lots of guidance.

 

Guidance for the Journey, Not the Destination

The term guidance is one that has grown on me lately, as I’ve re-branded my services and now call myself a Family Legacy Guide.

Part of the appeal is that I want clients to realize the importance of the journey they are on together, as opposed to any particular destination they’re trying to reach.

This is bringing back memories of a piece I wrote in 2018, There Is No Destination, the title of which is the first part of an expression I had recently discovered then, which is completed by “It’s ALL Journey. All. Of. It.”

 

The Individual – Togetherness Dichotomy

When working with various family members I also need to keep in mind the “familiness continuum” that exists, and how each person sees that.

Every member of the family is trying to find the right balance between their own individuality and the togetherness of the group, and that’s also a moving target.

By alternating my interactions from 1-on-1 calls with each of them to meetings with the group, I can stay on top of how this balancing act is evolving.

It’s during the group meetings that I notice issues that I can then take up with them individually.

 

Interdependence and Moving Targets

Most families underestimate their level of interdependence, as well as the importance that learning how to work as an interdependent system will have on their ability to transition their business or wealth to the rising generation of their family.

A few months ago in Planning your Family’s Declaration of Interdependence we looked at the fact that there needs to be a realisation that they are in fact all dependent on each other, in all directions, in order to make true progress.

The family is on a long journey that they are all on together, and so having someone come along with them, at certain strategic stages, can make all the difference in the world.

Just What the Doctor Ordered

This week we’re looking at a subject in a slightly inelegant way.   

Having previously written about a personal MRI story back in 2019, in You Want an X-Ray? I’ve Got an MRI! I have a spark and lead-in.

That event is irrelevant here, except insofar as my having previously written that allows me to introduce my new version of a “family legacy MRI”.

 

Legacy Families Need to Make Some Efforts

The field I work in is populated by professionals who work with families, and we try to help these families not only build wealth, but maintain it over generations, often with a certain “legacy” component.

Many families, as well as most advisors, believe that the amount of financial wealth is the key, and that more wealth will correlate well with how long a family’s wealth will last. 

That makes sense, in theory, but, regular readers know that I have other ideas around this.

As I wrote in 2017 in Is your Continuity Planning “PAL” in Danger? the assets that the family own will likely NOT be sufficient to guarantee the family’s legacy.

In that play on letters, I highlighted this “equation”: 

                                   People   +   Assets   =   Legacy.  

The people are as important as the assets (if not more so).

 

My Version of the Family MRI

So my prescription for what families need is another version of “M.R.I.”, and I hope you aren’t disappointed with the build-up.

In order to increase the chances of creating a family legacy, the family members need to make sure that they have plenty of: 

                         Meaningful, Repeating Interactions

That is my MRI Prescription. 

The rest of this blog post will look at those three components, and then explain why all three elements, the noun and both adjectives, need to be present.

We’ll start with the noun, “interactions” so it flows more logically.

 

Interactions Come in Many Forms

Current technology offers so many ways for people to interact, many of which our forefathers did not have at their disposal. And if our goal is to have meaningful and repeating interactions, the existence of more methods should work in our favour.

We’ve all been affected by the reduction of “in person” meetings this past year, but that won’t last forever.  

In fact, the pandemic has forced us all to adjust and that has resulted in more and more people getting comfortable with various online virtual meetings, including senior generations who may have previously resisted.

Even social media plays a part in this, and that brings up the whole “asynchronous” aspect of interactions that many people might overlook.

I have several professional relationships with colleagues that are “kept fresh” simply by commenting on their LinkedIn and Twitter posts.  

It doesn’t take much of a leap to move this idea into the family space, in fact many families are already there, using a variety of online social platforms to stay in touch.

 

Lather, Rinse, REPEAT!

Let’s move on to making sure our interactions repeat. One of my first rules for holding family meetings is that you don’t let people leave until you have scheduled the next one.

Whether you meet monthly, quarterly, or even annually, getting the next meeting in everyone’s calendar is a must.

Now let’s go back to the technology and note that even if you only have one, big, annual in-person meeting, you can supplement those with other regular get-togethers too.

This isn’t about either/or, it’s all about the both/and.

I barely remember much about any specific childhood family camping trip we took, but I do remember that we would regularly go camping, and those more general recollections still spark fond memories.

 

Thanks for the Memories

Making your repeating interactions meaningful is mostly about creating opportunities that will be fondly remembered as time well spent together.

It’s important to limit the amount of “shop talk” during such times, especially when there are some people present who aren’t privy to the details, and then end up feelings like outsiders. 

Of course it is important to level the information playing field with them, and those efforts need to be repeating too, but that’s not the matter at hand.

I’m talking about meaningful in a family way, and reinforcing the family bonds that will be necessary to maintain the family legacy, which really needs to be about non-business aspects of the family.

Try to maximize opportunities for Meaningful Repeating Interactions for the whole family. 

What family traditions will you reinforce?

It’s not often that I go out on a limb right off the top of these posts, but I suppose coming out against the importance of efficiency could certainly qualify as going against the tide when talking about business.

Of course I don’t typically deal in true business subjects, since my preferred domain is that of family business, where my emphasis is on the family aspects.

Getting things done quickly and efficiently seems like a laudable goal of course, with some notable exceptions.

The main exceptions I’d like to note here are those where you need to bring in the entire wisdom of a group of people, and where it’s important for everyone to feel heard.

Such situations abound in the family circle part of family enterprises, or, said better, enterprising families.


When Finishing Faster Isn’t the Key

I’ve dealt with certain examples of this before, notably in Going FAR? Go TOGETHER, which deals with a scenario involving a group of siblings in the rising generation of their family, preparing to eventually take on leadership roles, both in the business and in the family.

In recent months I’ve been involved in two group processes where I’ve truly embraced the idea of throwing efficiency and speed out the window, with positive results (so far).

The first example took place in a professional organisation I’ve been involved with as a volunteer for the past few years, as part of a committee charged with an important role in putting on our annual conference event.

The second example is ongoing, and has me playing a facilitation and mediation role with a sibling group who share ownership of some legacy assets together.

 

Professional Development “Live Case” Opportunity

In the first case, my role had recently changed from simply being a member of the committee to now leading it. I had the benefit of following in the footsteps of someone who had done a great job before me, but that also gave me big shoes to fill.

There are always challenges in putting on an annual event in the summer but having to make most of the planning decisions months ahead of time, and these are only magnified by the pandemic’s uncertainty as to what will even be possible regarding large groups six months out.

So we definitely had a number of considerations, lots of moving parts, and a general lack of clarity around much of the information we needed to base our decisions upon.

We also on-boarded three new volunteers to the committee, and the admin person from the organisation was also new, and had never been part of our annual event.

 

Learning About How to Be with the Group

There was plenty of pressure on us to come to some final decisions but I resisted the temptation to push for some closure on some items that I knew could and should wait.

It was way more important to make sure we took the time to consider all our options, evaluate a number of ideas, and take advantage of the wisdom of all the members of the committee.

As the head of the group, an important part of my role was to set the right tone and pace for our deliberations. 

Weighing many interdependent considerations and allowing everyone to share their inputs was more important than the somewhat arbitrary deadlines that could have distracted us.

 

Getting a Family to Take Their Time

The practice I got from working with that group set me up nicely for a new client situation where I’ve used some of those lessons to good effect.

This sibling group is getting used to some new realities and are learning to work under a more democratic decision-making framework than they were used to.

That kind of adjustment takes time, not only in terms of minutes and hours spent together, but in the days and weeks that are needed for new realities and understandings to sink in to each person’s thinking.

When you combine that with a severe “information asymmetry” between insiders who’ve always played key roles, and those who have spent their lives on the outside looking in, it’s key to set a pace that allows everyone not only to be a part of the process, but to feel like they’re part of the process, on relatively equal footing.

 

That methodology isn’t the most efficient, but wasn’t it the tortoise who won the race?

Which One Is More Appropriate in a FamBiz?

During a recent board meeting for a local charity, the Executive Director asked us for guidance around a situation that was troubling her. The answer I gave her reminded me of advice my Dad shared with me decades ago.

Since Dad was the first Family Business owner I ever knew, and still the one upon whose wisdom I typically rely most, this incident provided a nice opportunity to share it here.

While Dad didn’t have a specific FamBiz application, because he concentrated on his own business, I do think about other people’s businesses, so I will adapt it to that situation.

 

Pandemic Safety or Easy Cash

The non-profit on whose board I serve has a large hall we rent out on occasion. Since our province has been on “essential services only” lockdown, that rental income really dried up.

Our government has allowed TV and Film production to qualify as essential, which, while being a bit of a headscratcher, became and opportunity for us.

We were approached by production crews to rent our hall for their people to take breaks and have their meals.

“Should we accept these rentals?”, was the question from our E.D.  “With so many government regulations because of our food bank, maybe we should ask first.

“How much do these rentals pay?”, came the first question.

 

Some Things Are “No-Brainers”

When I heard the answer, which was a decent sum, I replied that it was better to go ahead and do it, and ask for forgiveness later, if we got into trouble.

It seemed inadvisable to me to wait and ask for permission first. And that brought back memories from my father.

With Dad, it was typically when he wanted to build something that might require a permit.  He would “play dumb” and go ahead and build, figuring that asking for permission would cause undue delay and possible extra costs.

In our charity example, it was a no-brainer.

But what about in a family business, when you’re a rising generation “future leader”, does this advice also work?

 

All About Seizing Opportunities to Lead

There’s a plethora of potential examples that cover a wide swath of situations where this could apply, and the answer will of course vary depending on the context.

The message I want share here is that when there’s a doubt, oftentimes making the leap, and taking action, will be perceived as the better option.

When I work with different generations of a business family, I notice that some rising generation family members will defer to their elders on too many decisions, for far too long.

Yes, I understand the attitude of “But if I screw up, Dad will be mad”; been there, done that.

 

Act as If I Weren’t Here; What Would You Do?

As I wrote those words, I actually had a flashback to the 1980’s, when I once asked for Dad’s direction on a decision.  I don’t recall any details, but I do distinctly remember his words.

                     “What would you do if I wasn’t here?”

Interesting, I thought. And from that point on, for issues and decisions that were not critical, and for which a timely response was important, I began to make more of the decisions in my sphere of influence than previously.

Naturally it was better for both of us that way.

And, importantly, this began an ever-increasing responsibility load that I was able to successfully take on for myself. Another Win-Win.

 

They’re Probably Secretly Waiting for It

There are certainly some exceptions, but for the most part, parents are actually pleased, relieved, and proud when their offspring are able to take on more important roles, responsibilities, and decisions.

They’ll usually forgive you if you make a mistake, too.

Asking for permission on too many minor questions, for too long, is only going to delay the important transitions of knowledge, experience, and decision-making that are key to making a family business succession successful.

 

A Gradual, Iterative Process (Like So Many Others)

These transitions are a long time in the making, and tend to evolve gradually. They’re also iterative, meaning that you do something, learn from it, maybe take a step back, evaluate, and try again.

Over time, you make progress in the desired direction

Eventually, because a family is truly interdependent, especially over the long term, you may get to the point where you resemble a family discussed in Asking for Permission in a Family Business.

Eventually, the shoe gets to be on the other foot!

 

Different Things Drive Different People

It’s fascinating the things one can learn by listening to “real people” talking about their lived experiences.  Too often our learning comes from reading more theoretical ideas that, even though they come from smart people, can lack in true substance.

In some other instances we may spend time with colleagues or other peers, exchanging stories, ideas, and learnings, but those too sometimes lack the “oomph” that we can get when we have the chance to hear from those who are actually in the middle of living through an experience.

So when I recently had the opportunity to listen to a panel of rising generation members of local family enterprises share their stories, I was all ears.


Sharing Viewpoints On What We Heard

Of course I absolutely love opportunities to share with peers too, and when that sharing follows a panel of real-world experience sharing, it’s the best of both worlds.

And therein lies the genesis of this week’s post: comments about this panel of young people assuming important roles in businesses owned and run by earlier generations of their families.

One member of our group marvelled at the “thirst for knowledge” that all the panelists shared.  “Hmmm… she’s right”, I thought, as I reflected on what I’d heard.

It was true that each of the three panelists did seem to share that part of their journey involved wanting to always learn more and more and finding a variety of ways to continue that path.

But is a thirst for learning enough, I wondered.

Thirst for Knowledge VS. Hunger for Growth

Just a couple of weeks ago, in Sibling Compatibility Is Not Sufficient, we looked at how important it is that those expecting to take over the reins of any family business be competent, and not simply know how to get along well with each other.

Inherent in that competence, at least in my mind, is a willingness to take risks in order to continue to grow the business.

And another way to express that could be to talk about one’s hunger.

So when my colleague noted the thirst for knowledge that we had witnessed during the panel, my mind went to hunger. (Okay, it was also getting close to lunch time).

One Without the Other Is Asking for Trouble

So when we think about the attributes we’d like to see in rising generation family members who will someday take on key roles in the family enterprise, ideally they will have both a thirst for knowledge and a hunger for growth.

Let’s look at what you’d have if you only had one, without the other.

If you have the thirst for knowledge, you’ll have people who are curious and always wanting to learn more. There’s nothing wrong with that, of course. But, without at least some hunger to drive them to take risks, they could easily succumb to “analysis paralysis” that could certainly lead to stagnation.

On the other hand, if all you have is someone willing to take risks, but without the curiosity and desire to inform themselves in advance, you could have a lot of reckless behaviour that could quickly sink the business too.

A Look in the Mirror for Me

When I do some self-reflection, I realize that one of those situations I just described actually fits me pretty well.

Whenever I do any kind of assessment like Strengthfinder, I always score very high on “learning”.  I’m constantly looking for any opportunity to learn more.

But if I were to assess my willingness to bear risk, I’d score at the other end of the scale.

I’m guessing that deep down inside, when my father decided to sell the operations of our family business, that he had started before I was born, he also realized that handing the reins to me might not work out as well as he might have originally hoped.

No Regrets and Back in the Family Business Game

As his only son, I recall from my earliest days being told that my duty was to eventually take over the business from him.

And for the first four and a half decades of my life, that was the direction I took.

Now that I am back in the family business game, working with other families, my goal is to not have any family members need to take so long to find their rightful place.

There is room for the thirsty and the hungry, and both, in every family.

University of Vermont Case Competition

Every January for the last several years, the college town of Burlington Vermont has become the center of attention for people from around the globe.

Okay, so maybe it isn’t (yet) a worldwide phenomenon, but, for students learning about Family Enterprise, this is the one place that hosts the annual Schlesinger Global Family Enterprise Case Competition (SG-FECC).

The University of Vermont (UVM) has been doing this for a few years (this was the 8th edition) and they have it down to a science.

This year it was held virtually, for reasons that don’t require much explanation, and that could have caused all sorts of challenges (and likely did) but you never would’ve noticed.

 

An Impressive Bunch of Young Leaders

The second part of my title references a movie featuring one of my favourite rock bands of my childhood, The Who, so perhaps I’m dating myself here.

But I really wanted to properly frame the “A-Ha moment” that I had this year, similar to the one I’ve had every time I’ve participated as a judge. If I’m not mistaken, this was my 6th time.

You may think that I’m talking about the competitors, who come from schools all over the world, every year.  And you’d be right, the students who compete in the Case Competition have impressed me every year.

 

It’s really nice to see the social aspect of the competition when it’s done in person, noticing that some of these undergraduate and graduate students are seeing snow for the first time in their lives.

 

A Huge Volunteer Undertaking by UVM Students

But it’s much bigger than just the competitors, it’s the entire organizing committee, which is composed of a few dozen students, who take care of everything from A to Z.

Yes, they are led by a few paid “adults” who work for UVM in various capacities, all of whom fall under the watchful eye of the brainchild and fearless leader of this project since Day 1, Pramodita Sharma.

But what impresses me every year is just how mature, competent, professional and diligent these young people are, and what they’re able to pull off, with only minimal supervision.

What they do have is structure and people who have done the job in previous years.

Come to think of it, this is a lot like many family businesses, and that’s where we’ll turn now.

 

Motivated and Aligned Young People

The young people of today, who many label as Generation Z, are so impressive to me, in so many ways.

I know that many business families can be hesitant to incorporate these youngsters into important roles, but from my vantage point, many of them are way more ready than the young 20-somethings of decades past.

They also benefit from having grown up with the latest technology, and with school systems that do a much better job of giving them practice at working together on projects from a young age.

Many also seem to be much better than their elders at harnessing the collective wisdom of the groups to which they belong.

They typically have plenty of motivation, so if you already have some structure and some vision, they can often handle way more than you might expect. 

 

Great Examples Abound

The recent Presidential Inauguration gave us another great display, as Amanda Gorman, a 22-year-old Poet Laureate knocked my socks off with her poem.

My own kids are 19 and 21, and I see so much promise in them and their friends too.  I see it in my clients’ rising generations and at SG-FECC every year too.

With the recent passing of Hank Aaron, I happened to hear his Baseball Hall of Fame speech, in which he said “A man’s ability is limited only by his lack of opportunity”

Amen.

 

Many Winners, Especially Wilfrid-Laurier and ESADE

There were many winners at SG-FECC this year, especially those from Wilfrid-Laurier University (Canada), who won the undergraduate competition, and ESADE (Spain) who took top spot in the graduate category.

I look forward to being back in Burlington for the next “in person” version, whenever that is possible.

Meantime, like so many other areas of life these past few months, we’re all adapting and realizing how much we can all still accomplish even in these sub-optimal conditions.

And with these promising young people taking on bigger roles all the time, the future is bright.

 

 

 

Family Harmony Is Very Important, But…

One subject that I harp on a lot is family harmony and making sure that everyone gets along together.  

This is important for families who want to ensure that the business they built, or the wealth they’ve accumulated, will be able to continue after the next intergenerational transition.

And while harmony really is something that families need to work on if they don’t already have it, in many cases it will not be sufficient.

I came across something recently that made me think about this and how I may not have been doing justice to some other key considerations in this space.

This week, I want to address a couple of them here.

 

If You Aren’t Growing, You’re Shrinking

The first thing many families ignore at their peril is the importance of competence.  

Of course this can take many forms, but bottom line, if no family members are competent in managing the business or the wealth, dissipation will often be the result.

I’ve noticed a lot more being written in this field about the importance of having an entrepreneurial spirit in families, so that with each generation, there is some renewal of activity to maintain and hopefully grow the family wealth.

In cases where there isn’t anyone with the inspiration and ability to at the very least maintain the family wealth level, some choices around how to manage things and what the next generation family members can expect to pass on to their offspring will need to be made.

If you just take a look at how many households are being supported by a business in the first generation, and then extend that down even two generations further, the geometric expansion in that number will be difficult to match without an equally rapid progression of the family’s wealth.

So if all you have is “one big happy family”, but nobody willing and able to drive the amount of wealth forward, it becomes a matter of time before dissipation will kick in.

 

Complementary Roles for Family Members

Besides competence, another area that becomes important in many families is the existence of complementary skills in the sibling or cousin group who will be taking on leadership roles after the next generational transition.

If everyone is good at the same thing, and there are areas where nobody has any skill or desire to take on leadership, there could problems.

Having too many cooks can cause unneeded conflicts, and having skill gaps can lead to being blindsided in certain areas.

Of course when a family attains a certain wealth level there are some benefits that are easy to see, such as having an ability to find roles for just about any interested and motivated family member.

And when they have skill gaps, a family with enough resources can typically hire outsiders to fill such roles.

 

Competent + Compatible = Complementary

As I was writing this I got to thinking that maybe complementarity is the intersection of competence and compatibility. Let’s work through this and see if it holds up.

If you have people who are competent, i.e. good at something, and then you get to the point where the group of people get along, i.e. are compatible, can you not then ascertain that they are complementary?

It feels almost like this fits with one of my favourite ways of pointing out synergy, which is to say that “One Plus One Equals Three”.

Earlier I mentioned the geometric growth of the family and now I just opined on synergy, I guess this is a good place to link to The Exponential Magic of Family Collaboration.

 

So Strive for a Complementary Team

This may be a stretch, but perhaps either competence or compatibility are scalar, while putting them together gives you complementarity, which is a vector quantity.

I just flashed back to my High School Physics class there, and since that was over 40 years ago, I admit that I needed to Google this to get the terms right.

As Mr. Henry used to say, “velocity is speed with a direction”.

So if you strive for a complementary team in your sibling or cousin group, you’ll be able to combine everyone’s ability to get along with a direction and a purpose.

This isn’t to be confused with complimentary, although if they also develop the habit of saying nice things to each other, that’s OK too!

It’s More Than Just About Family and Business

There are some subjects I cover pretty often in these blogs, because much of the work I do revolves around areas where families have predictable challenges that I try to help them work through.

Regular readers know that I’ll often return to such staples as communication, governance, family meetings, harmony and working together.

Well lately I’ve been seeing and hearing much more about the subject of ownership, so that’s where we’ll turn now.

 

The Forgotten Circle?

I can’t believe it’s been over three years since I wrote Ownership: The Forgotten Circle of Family Business. I guess that at that time I was noting an absence of discussion on this topic, so it seems that may no longer be the case.

A few months before that, I penned Pruning the FamBiz Ownership Tree, in which we looked at the issues that arise over generations where ownership of a business ends up coming down to family branches with different involvement in the business, and how those issues need to be dealt with somehow.

But today I want to look at a specific area around ownership, and that is the way that the feeling of ownership is so important for families to recognize, if they are expecting their following generations to maintain their family legacy.

 

The Ownership – Legacy Connection

I typically make one similar assumption when I begin working with any family, which I normally end up validating early on. That assumption is that the leading generation of the family, the ones I sometimes label the “NowGen”, have at least some interest in creating a lasting legacy.

Those words mean different things to different people, so let’s look at this more. For me, a lasting legacy is one where even after the NowGen has left this earth, there is some continuity of what that generation built, grew, and/or stewarded, by the “NextGen”.

Let’s look at the opposite of that, which sometimes occurs, and which is also fine if that’s what makes the most sense for that family.

If the family wealth is to be split among the descendants and then they will all each go their own way, then there will be little or no legacy left.

In most families in what some call the 99%, this is standard practice.

 

That Feeling of Ownership

When a family attains a certain level of wealth, the idea of maintaining some sort of legacy will often come up.

Such families will then typically consult a number of professionals who are experts in the area of protecting that wealth so that it may then be preserved for future generations of the family.

One of the details that gets dealt with at that time is the ownership of the assets that make up the financial wealth, and this is where some important considerations sometimes get lost along the way.

“Family specialists” like me who work with the family members on how they will govern the family wealth often walk into situations after most or all of the ownership details have been cast in concrete.

And in situations like that, we typically note that there were some opportunities to make the future owners actually feel like owners.

 

Just Trust Me On This, Kids

Of course when the offspring are still children, it is normal for their parents to make important decisions for them. The problem comes up when those children become adults, and yet their parents continue to treat them as children.

I always encourage parents to work on having adult-to-adult relationships with their offspring, because a “one-up, one-down” framing can be crippling to the development of the rising generation.

Growing up in my family, I had legal papers put in front of me and was told to just “trust me, sign this”, and many others went through the same thing too.

 

Feeling Like You Actually Own It

Getting back to those experts who prepared legal documents about the wealth, they understand the differences between legal ownership and beneficial ownership for assets in a trust, and my point here is that at some point those beneficiaries need to have this explained to them as well.

Who will share ownership of what, and when those changes are expected to happen are also key.

To preserve a family’s legacy, feeling like you own it cannot be overlooked.

If the debate is to share this information now or later, my advice is that sooner is always better.