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Social Capital in the FamBiz World

Social Capital in the FamBiz World

The Human Need for Connection

Sometimes I surprise myself with a blog topic that feels like I’ve written about before, but discover that it’s still virgin territory.  

This is one such post.

Given that most of my coaching sessions with clients is spent on their relationships with other people, usually family members, and that my latest book is specifically about family systems theory, I’m actually a bit shocked that I haven’t yet addressed the subject of “social capital” in my blog.

Maybe it’s just a term whose time has come.

 

My Personal Social Capital “A-Ha”

Last week in An Uplifting Week, at Sea Level, we looked at the recent RendeZoom I had attended with a few hundred colleagues, who I affectionately called “my tribe”.

And even though this annual event was held virtually this year, I still felt very close to many of the people who attended with me.

That whole experience put the idea of “social capital” onto my radar, and yet I wasn’t sure that the term was well understood. 

I mentioned it to my coach, and even she wasn’t sure what I meant when I noted that I felt I had lots of social capital.

Sometimes you find inspiration in unexpected places, and when I searched Shutterstock for an image to accompany this post, entering “social capital” as the search term, I got a nice surprise; clearly I was not the only person who ever considered this term.

A Whole List of Sub-Topics

The image I chose contains a slew of ideas that make it pretty easy to get what I’m driving at: 

                    Belonging, Network, Participation, Trust, 

                    Engagement, Reciprocity, Values-Norms.

I think it’s simple enough to understand how in a large group of professional colleagues, especially in a “horizontal” field where many disciplines are represented, social capital can be important in maximizing what one can get out of being a member.

But where I really want to go with this is into individual families and their social capital, because there’s some good stuff to look at there too.

 

External Social Capital in Enterprising Families

Family business leaders, by virtue of their status and accumulated experience, naturally develop networks of people with whom they interact on a regular basis over the years.

These relationships are often based on trust, and that trust can and should be transitioned from one generation of the family to the next. 

This becomes one of the important assets that a family enterprise has, and smart, proactive families leverage this social capital, which often becomes one of the key advantages that family businesses have.

 

What About WITHIN the Family?

But as much as this social capital, from the family to the outside world, can be something worth cultivating, I want to talk about an often neglected area of “social capital”, namely the relationships within the family itself.

Not every family member is cut out for this role, but this field now has enough research behind it to make it clear that a “family champion” is almost always present in families who manage to keep the family together over a series of generations.

There’s a certain amount of intentional effort that must be given to the roles of engaging the whole family in the constant, long-term pursuit of its longevity as a cohesive unit.

 

Different Leadership Styles Come into Play

When you think about family businesses and their leadership, it’s natural to think about the person at the head of the business.  

The leaders I’m talking about here are different, but at some points in the evolution of the family the roles can both be held by one person.

The “Family Leader” is the one who undertakes the role of connecting with the family members, whether or not they are involved in the operations of the business.

Their concern spans areas like Belonging, Participation, and Engagement, and these leaders are constantly building Trust along the way.

 

Proactive, Intentional Steps, Over and Over

Such family leaders are very much like a “team captain” in sports, often demonstrating quiet leadership as much thanks to “who they are” as to “what they do”.

But what they do, while often hard to describe because there are so many intangibles, is keep the family working together, because they know deep down how important that is for the greater good of everyone.

A family’s legacy is as much about people as it is about assets, after all.  See Is Your Continuity PAL in Danger?

And that’s all about social capital.

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An Uplifting Week, at Sea Level

Every summer since 2014 around this time, I get to write one of my favourite and yet most difficult blog posts.

That’s because in late July every year, the Purposeful Planning Institute holds it annual conference, called Rendez Vous.

As you probably guessed, there was no “in person” version this year, so instead, I’m now coming down off the high of “RendeZoom”!

The experience was different, of course, as I didn’t have to fly to Denver this time, and instead got to enjoy it from my cottage near the Northumberland Strait in New Brunswick.

 

So Much Great Content

What makes this particular blog so hard to write is that there’s just WAY too much great content that I want to share, and even though we weren’t physically together this time, that didn’t change.

We also had a lot of the same “magnetic PPI vibe” that attendees are familiar with, but that is sometimes hard to describe to those who have yet to experience it.

There were some new ways to interact that were designed to replicate the in-person feelings, which is tough to do, but in many ways the experience was even richer in other ways, so on balance, there was not much lost in the “translation” to the virtual world.

 

A Random Highlight Reel

One way to overcome the difficulty in capturing a week’s worth of learning is to just look over my notes and share some of the things that stuck with me and that I think are worth sharing here.

It’s a lot more “random” than most of my blogs, yet it still feels useful and is definitely heartfelt.

Speaking of heartfelt, I’d invite anyone whose path I crossed during RendeZoom to please follow up with me to deepen our connection, as I’d love to chat more over a one-on-one Zoom call.

The week gave me a new appreciation for my “social capital” and I’m trying to find even more ways to keep “sharpening that saw” of mine.

Likewise, if you’ve never attended, and are intrigued by what PPI has going on, please reach out for a call too.

Balloon in the sky

Steve’s Top 7 Take-Aways

  • Motivational Interviewing

I knew very little about the area of “motivational interviewing”, so the breakout session on the subject was something I approached with intrigue. 

What I discovered is that it feels like a close cousin of coaching and that there are skills and techniques I can learn from it that will make me an even better listener, coach, and facilitator.

  • Inspired by Gandhi 

My friend Jamie Forbes shared some very personal stories about his life and I applaud his courage for doing so (and he was from alone in this regard!).

But I need to thank him for reminding me of this Gandhi quote:

“Happiness is when what you think, what you say, and what you do are in harmony”

Amen.

  • Facilitation from Many Angles

Matt Wesley capped off the week with a discussion about the many facets of facilitation, many of which resonated with me and how I see myself in that role.

From being the one who brings calm, to integrating the family’s stories, to connecting the dots for them, there are many ways we help bring out their best.

  • How to “Move Forward”

Ian McDermott once again graces my list this year, for simply reminding me that just trying to figure out how to “move forward” is often the best way to look at a challenging situation, whether personally or when working with clients.

  • Made for “These Times” 

I don’t remember whom to credit for this one, but thanks for the question “How are you MADE for these times as a _______?”

Still reflecting on this one…

  • From Entitlement to Expectations

In a discussion around the theme of entitlement, we ended up switching things around and instead focused on the parents and their need to clarify their expectations.

  • Building Bridges, or Building Boats

Matt Wesley again to close…

Sometimes it’s time to build a bridge, and sometimes it’s time to build a boat.

Thanks Matt, and everyone else who inspired me once again, it was another Rendez Vous to be remembered.

 

Rendez Vous 2021 – Somehow, Somewhere

It’s too early to say for sure that we’ll be back together in person in Denver next year, and I sure hope that will be realistic. 

No matter how or where, though, I know I will be back, and I’m looking forward to spending more quality time with my tribe.

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From Concentric to Non-Concentric Circles in FamBiz

A Story about Distributed Leadership

So many family businesses face similar issues, especially when they’re faced with the challenge of moving from the founding generation to “G2”.

The stories are never identical, but the idea of going from one person who loves to control everything, to a group of people working together is something that trips up many families.

And sometimes when the resulting business is very successful and it becomes a very large entity, the problems this creates can become huge too.

A Case Shared with a Peer Group

I’m privileged to belong to a number of peer groups where we talk about cases together, so we can learn from each other and sometimes get ideas when we’re stuck.

This week’s blog is about one such case, or maybe it was two (?)

Well, it was one such episode of sharing, that happened to cover two family business situations, that shared many similarities.

This was a few months ago, so the details aren’t necessarily “fresh”, but since I wouldn’t want to divulge too much, it’s better that way.

Also, the point about the “non-concentric circles” is the one I want to make, so the particular case details aren’t really that germane.

 

Replacing One Dominant Central Leader

The case(s) featured one main founder who had a family of successors, none of whom had anywhere near the potential to succeed their father in all of his success, which isn’t at all uncommon.

As noted, when the success is really rapid (within one adult lifetime) and large (thousands of employees, global presence) it’s almost impossible to expect that any one of the offspring will be able to simply step into the founder’s shoes.

It would likely be a recipe for failure in both the business, and then also the family, if they even tried.

In the case we were presented, that founder was the main leader in all three circles: Business, Family, and Ownership.

See Three Circles + Seven Sectors = One A-Ha Moment (from 7 years ago)

 

Leadership Doesn’t Show Up “Overnight”

The rising generation, who were all adults when Dad passed away suddenly, were all involved somewhere in the businesses, but none of them had the experience or the gravitas to take the helm, or helms, that their father held.

My colleague who presented the case had been involved in getting things on track so that the company would thrive and the family could remain successful in owning the business for the long term.

For the business, there were already lots of qualified non-family leaders in many places, so the business did not suffer much.

The ownership was also pretty clear, in terms of who rightfully owned what percentages of the shares, and it was relatively simple.

How about the family?

The Family Circle: A “Left-Over” Concern?

If you have any experience with family businesses, you’ll likely know that the family is often the last concern, because everybody loves each other and so let’s just concentrate on making money and they’ll all be happy.

I hope readers recognize that much of that last sentence was written in jest.

A better way to put it is that the family is never a problem, until it is.  And then it’s usually a huge problem.

Thankfully this family brought in some top advisors to work with them to make sure that the family problems remained at bay.

 

Many Opportunities for Many Leaders

Over the months and years that the consultants worked with the family, they ended up developing a number of opportunities for a handful of family members to step up into leadership roles.

They formed a family council, and a number of committees emerged from that structure, with different family members assuming key roles.

An “ownership council” was also created, resulting in the rising generation of the family learning how to work together in a variety of new ways.

Whereas their father was at the center of all of these circles during his lifetime, the next generation converted that to a series of different circles, with different people taking leadership roles.

Ultimately, this results in a much more stable structure for the family, the ownership, and the businesses that they own.

Serendipitous Timing

As I’ve noted previously, my social media posting is done by a third party, so I never know the timing of the content that I’ve produced showing up on my feeds.

Last week a post promoting my latest book appeared, reading:

 

The business system likely has strong leaders

For a family to successfully transition its wealth to following generations, the family system needs strong leadership too

 

Good timing!

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From Upstream to Downstream in the FamBiz

From Paddling Hard to Going with the Flow

Summer is in full swing and with it come some activities that we look forward to because we haven’t been able to do them for a while.

For me, one of those is kayaking on the tidal river at my cottage in New Brunswick, where I get in touch with nature while lazily paddling around looking at the sky in search of the occasional bald eagle.

Having recently arrived here, I received a text message from a friend asking me if I was enjoying myself, “floating downstream” on my kayak.

Regular readers won’t be surprised that something so simple would become the inspiration for a blog post.

 

Tidal Rivers and Delayed Gratification

While I’m no expert in tidal rivers, I can tell you that sometimes this river flows towards the ocean about a kilometer away, and then a few hours later it will flow in the other direction.

When heading out from the dock for a kayaking excursion, I always make sure to go into the flow of the current, so that I can coast back home, going “downstream”.

My wife and I learned this lesson the hard way years ago, when we went rollerblading, not realizing that we had the wind at our backs, only to turn around to go back home and quickly realize our misfortune of having a strong headwind to deal with.

It’s a simple example of delayed gratification, which I love to preach. See Marshmallows and Filet Mignon

 

Climbing the Hill and Coasting Back Down

The flowing river metaphor is similar to the uphill / downhill one that we hear about when talking about where people are in their life cycle.

Older people are described as “over the hill” while the younger ones are continually “climbing” towards the top.  Getting to the top and remaining there are the goal, we’re led to believe, and in many ways that makes sense.

But in the same way that I like to save the coasting part of my kayak trips to the end, why don’t we look at life the same way?

And if we’re part of a business family, isn’t there a way that one generation’s trip down the other side of the hill can serve as a boost to the next generation’s rise?

 

Capitalizing on the Strengths of Each Generation

The “rising generation”, as people like me have been referring to them for some time now, typically have more energy to devote to building their lives and careers, while their elders will normally have more experience.

Similarly, the younger members of a family will be more comfortable with technology, while the senior family members will often have a lot more contacts and long-standing important relationships that they can leverage.

Smart families figure out how to make the most of these complementary strengths, which takes a certain amount of self-knowledge and understanding, along with the ability to set egos aside for the common good of the family.

 

Stepping Away from the Top Spot

The ego component varies from one family to the next, but seems to be rather prevalent in cases where it’s the business founder who wants to remain in charge well past the point where their leadership is what’s best for the business.

Somehow once we get past that first generation transitioning to the second, it’s less of an issue when going from G2 to G3, and then G3 to G4 and so on.

Playing with this hill metaphor in my head, I’m picturing someone stepping off the top of the hill while pulling on a rope, which in turn is helping someone make their way to the top.

I guess there’d need to be some sort of pulley or rappelling device at the top for this to make sense.

 

Many Years in the Making

I don’t want to give the impression that generational transitions should take place quickly.  In fact, properly planned and executed changes in leadership will often take years.

That’s because while we think of these situations as singular events, there are actually transitions happening at several different levels.

There needs to be a lot of coordination to properly transfer all of the knowledge of the retiring leader, as well as the authority, which all takes time, and we haven’t even begun to talk about ownership.

So it’s best to get started early, and be sure to check which way the water’s flowing before you take off.

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Developing Capacity in your Business Family

Capacity vs. Capability

Sometimes when two words start with the same few letters, people get them mixed up, not noticing the nuances in their meanings.

A couple of words that certainly fall into that category are “capability” and “capacity”.

This week I want to explore them a bit, from a business family perspective.

 

From Ability to Capability

Before we even get to “capability”, we should probably back up a bit and start with “ability”, to make sure we grasp that simpler concept first.

Ability is about what you can do, which you know that you can do because you’ve already done it, at least once. 

Capability is more about potential to do something, and as we all know, even though you once were able to do something, that doesn’t mean that you’re still capable of doing it again now.

 

Ready, Willing, and Able

In some ways, capability can be summed up by the expression, “ready, willing, and able”. If I’m ready and willing to do something, plus I feel like I can muster the ability, then I at least believe that I have the capability to do that something now.

So if you know how to do something and you add some effort to that ability you’re now essentially ready to test out your capability, and can hopefully demonstrate that you can accomplish a task with a certain regularity.

With practice, you can hopefully get pretty good at it, to the point where others recognize that capability in you.  You’re off to the races, right?

 

What About Capacity?

I think that there’s another level that you’ll want to get to that’s higher than simply developing capability, and that’s to increase your capacity to do important things.

The part of the definition of the word “capacity” that I think we should concentrate on when thinking about this is the “volume” aspect.

When talking about a container, whether it’s an aquarium, an airplane, or a football stadium, we can ask about what its capacity is, when we want to know how much it can hold when full.

 

From Capability to Capacity

So if we go back to the capability discussion, we were getting good at doing something over and over, and now we want to see how much of it we can do.

But we don’t want to do this for everything, we really need to pick our spots and develop our capacity for doing things that are truly important.

And when we’re talking about business families, what’s more important than everyone knowing how to get along and work together?

Families who have succeeded in growing their businesses and wealth AND in transitioning them to the next generation have almost always developed that capacity to work together somewhere along the line, whether they realized that that was what they were doing or not.

 

Contagious Capability Grows to Family Capacity

The great thing about a family is that every member has different skills and abilities. 

It might not always be obvious how some family members can contribute to the business family, but if there are family members who are ready and willing, there should always be some effort made into finding a place for their abilities to contribute.

When you take the individual abilities, work on them so they become true capabilities, and then bring the people together with the right attitude to collaborate, you can develop the capacity for long term success.

The overall capacity of a family comes from the combination of all of its members’ capabilities, and that capacity can be way more than the sum of its parts.

 

Practice, Resilience, Guidance

Families who have succeeded at this almost never just stumble into that success.  Working together with family members can be wonderful, and it can be frustrating too.

It takes effort, and plenty of practice to get it all right.

There will be plenty of trial and error along the way, so the family will need to develop its resilience.

And, importantly, few families get this right all by themselves; they will almost always have someone from outside the family to guide them, especially at key stages.

Whether it’s a family business consultant, a facilitator or coach, it really doesn’t matter, and ideally it’s someone who combines these skills.

Successful multigenerational families have all developed their capacity to work together over time.

Can you?

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Key Prepositions for Business Families

By, For, With

Most people don’t give much thought to prepositions as they go through their day-to-day lives.

Of course, I’m not “most people”, and neither are you!

I recently noticed some places where these short words actually carry a lot of weight in the world of business families, and so I thought I’d share them here.

 

For the Family

Regular readers know that when I talk about family businesses, I typically move quickly over to the point of view of the business family, where “family” is the noun, and carries more importance.

So don’t be surprised that I lean towards thinking about doing things “for” the family.

 

By the Family

The main thing I typically emphasize when talking about doing things for the family, is that it always helps when those things are also done by the family.

Now just to be clear, there are actually two distinct important parts to my “by the family” mantra.

The first one is that something for the family ideally comes from within the family as opposed to coming from outside. Not that I have anything against families hiring outsiders to do some of the work with them.

As long as the outsiders aren’t doing that work for them, meaning that the outsider does it instead of them doing it themselves.

The second aspect is that it’s better when the work isn’t just done by one family member, but rather by a group.

If one person does all the work, you can’t really say it was done by the family.

 

Who Is the Outside Advisor there FOR?

Let’s get back to the idea of bringing in an outside person to work with you as a resource for some of this important and complex work.

You really all need to figure out who that advisor is there for.

If they were hired by one person, ostensibly to work for the family, there can be some difficulties going forward.

If they are working with the family, they need to be working for the family.

Some advisors really get this, in their brain and in their heart and in their spirit. Some others, well, not so much.

Please be on the lookout for this.

 

Can an Advisor Work for Just One Person?

Now we’re getting to a slightly different question. In the context we’ve been discussing, my thoughts are pretty clear as outlined above.

And, I’d also like to share with you some recent experiences where I have been successfully working with one single person from a business family.

The work I began a little over a year ago to get my coaching certification led me on a path to find some one-on-one clients to satisfy the minimum coaching hours for the program.

This also led to some eye-opening for me, about the power of this kind of relationship.

 

Changing a System

One of the first things we need to understand is that for a system, such as a family, to change, the change may very well come from a change in just one person, at the outset.

A single person who is a part of a system of people, can change the system, if they make a change and hold to their new way of being with the other members of that system.

Holding to that change can sometimes be difficult, because the other members of that system will try to force that person back to their old ways, in order to maintain the previous homeostasis, or equilibrium.

One way for a person to gain the strength to make and hold such changes, is for them to work with an outside coach.

 

Some Caveats

I’m sure you can see that this can get tricky, and can really only work well if both the coach and the individual client agree at the outset that they would be satisfied if their relationship never progressed further, such that the coach would eventually work with the entire family group.

If it’s seen as a “foot in the door” to a larger eventual arrangement, there’s a risk that the important work they can do will be rushed or not be done seriously.

 

With You, For You, For your Family

Getting back to our prepositions, a coach is such situations is there “with you” and “for you”.

The underlying assumption is that you are doing what you are doing “for your family”.

 

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