Based on an interview with Cornell University’s Smith Family Business Initiative
Working for your family’s business can be a very rewarding experience if it functions well. When it doesn’t, the experience can be extremely challenging.
“When it works, it is an opportunity to create a valuable family legacy and for families to stay connected for generations,” says Doug Baumoel, founder and principal of Continuity Family Business Consulting. “A connected, extended family with significant resources can produce extraordinary opportunities for individuals and have a significant impact on society.”
Working in a family business, he says, differs from working in a non-family business because “your role in the family business is very much connected to your identity.”
“These roles, including all the power, money and relationships involved, are not as negotiable as they would be in a non-family business,” Doug continues. Speaking of his experience in his own family’s business, “The big surprise was how strongly we were each invested in our positions, ideas and roles. When it works it can be great. When it doesn’t, it’s tragic.”
The most challenging aspect of running a family business is managing conflict.
“While large family businesses can be more complex, the issues that smaller family businesses face can often be more urgent for the stakeholders. Stakeholders in smaller family businesses can’t hide within a complex organization or rely on an independent board of directors to help them through an impasse. They are on the front lines, dealing with each other on every issue every day. Emotions and relationships are exposed to potential conflict daily,” he says. “In addition, families of larger family businesses typically have some degree of liquid wealth, perhaps even generational wealth, that can provide a level of security for all stakeholders. Families of smaller businesses are less likely to have such a cushion and, therefore, conflicts and strategic errors can be existential threats to the family and the business.”
While large family businesses can be more complex, the issues that smaller family businesses face can often be more urgent for the stakeholders.
Doug’s experience includes leadership roles in his own family business, another family business, non-family businesses and now, being a consultant to family businesses.
“I come from a small family business. My father started an industrial instrumentation company in the basement of our home in 1963. It grew substantially, and I spent much of my career as the leader of the second-generation in the business,” he recalls. The Baumoel family hired family business consultants to help resolve their conflicts but 20 years ago the field “was still in its infancy.” Doug decided to take the lessons he learned and forge a new career as a family business consultant.
After his experience with family business consultants in an attempt to save a business started by his father, Doug decided to create his own company to advise family businesses, Continuity Family Business Consulting.
“Pure and simple, [conflict] is the core challenge for families that work or own [a business] together. A family that can manage conflict well has a good shot to get everything else right,” Doug says. “If they can’t manage conflict well, they get stuck—or worse. I think of family businesses like a building resting on a foundation made of stone. Each stone is a ‘best practice,’ a policy, or a process. The ability to manage conflict well is the mortar that holds it all together.”
Family businesses are the backbone of our economy . . . yet only recently have leading business schools begun to offer programming and coursework that address family business.
“Family businesses are the backbone of our economy and are even more prevalent throughout the rest of the world. It is the most common of all business structures, yet only recently have leading business schools begun to offer programming and coursework that address family business,” says Doug. “It can really contribute to the success of the family business if stakeholders pursue training opportunities to understand what is unique about the family business and how to navigate its inherent challenges well.” Part of that is knowing how to recognize and manage the complexity of overlapping family, business, and ownership systems.
“Studying engineering at Cornell infused in me an ability to think in systems. I spent several years deconstructing what went wrong for us, and why the family business consultants we hired . . . weren’t able to help,” recalls Doug.
Doug read everything he could find on family businesses and took additional courses to broaden his knowledge of family systems and dispute resolution.
I spent several years deconstructing what went wrong for us, and why the family business consultants we hired . . . weren’t able to help.
“What I came away with was a different way to look at family businesses,” he says. “Over the next few years, I developed this view into a robust methodology that has fueled the growth of my practice.”
Doug says he “could not have made sense” of his experience with his family’s business without the skills he learned studying engineering at Cornell.
“You can’t go through four years of engineering school and not know how to break things down to their component parts and figure out how to put it back together better,” he says. “Although I got my MBA at Wharton, and got a great business education there, it is what I learned at Cornell that really helped me re-engineer [my] approach to family business that formed the [intellectual property] of Continuity Family Business Consulting.”
Doug advises student entrepreneurs who expect to go into a family business to “think multi-generationally.”
“Remember, a family business requires more than just learning about entrepreneurship and business management. It’s also about family dynamics and psychology, wealth management, ownership transition planning, and, especially, conflict management,” says Doug. “An MBA is just the beginning of the journey.”
Doug Baumoel is the Founder of Continuity, LLC and offers an extensive background in family business operations and executive management in his work with clients. He served as a second-generation executive in his own family’s business and has held key executive positions in other family and non-family businesses. Doug is the co-author, with Continuity Managing Partner Blair Trippe, of Deconstructing Conflict: Understanding Family Business, Shared Wealth and Power. Doug earned an MBA from the Wharton School at the University of Pennsylvania and a BS in Electrical Engineering (78) from Cornell University. He is a Cornell Family Business Scholar.