For many people, the words “family business” conjure the image of a corner store or something equally local and small. In reality, says Cornell business professor Daniel Van Der Vliet, MEd, family businesses are pervasive throughout the entire global economy. Ford, Cargill, Walmart—some of the top companies in the country, if not the world—are family-owned, controlled, or influenced. Even when companies have publicly available stock, one family may have an underlying influence on what happens to the business at a stock level. In fact, it is likely that at some point virtually every college student will work in, for, or with a family business.
It is because of this that Van Der Vliet, the John and Dyan Smith Executive Director of the Smith Family Business Initiative at Cornell University, created a seminar titled Leaders in Family Enterprise: In Practice and Theory. This course is an exploration of the challenges and opportunities that face family-owned businesses, taking into consideration both business research and theory and—in a twist that makes Van Der Vliet’s class unique—firsthand accounts from family business owners.
Below, he shares more of the philosophy behind his approach and how it helps set up students for future success, whether that is in their own business, their family’s business, or elsewhere.
Family businesses face unique challenges
Family businesses present unique challenges—often centered on interpersonal conflicts over business decisions or employee performance. “Families are not always rational,” Van Der Vliet says. “When a family gets along well and loves each other, it manifests into a healthy business with solid decisions. But when there are familial conflict or disagreements, the results can be less than optimal.”
Arguments can spiral into much larger problems, sometimes even coming to blows. Family relationships may prevent key players from taking the steps needed to keep the business healthy. And, of course, it is never easy to fire family. Van Der Vliet’s challenge is to help students understand the dynamics behind such issues and learn how to work through them.
Invite guest speakers to bring theory to life
To give his students a true behind-the-scenes peek at what happens when families run companies together, Van Der Vliet schedules a variety of guest lecturers throughout the semester. They deliver real-life stories about their family-business experiences, providing insights beyond those that students could gain from a textbook or lecture.
“I come from a place where I know these topics in theory, but I can’t teach them as well as someone who lived it,” Van Der Vliet says. “The more perspectives students have, the more they can see the importance of things like gaining outside experience, earning respect, and being realistic about the expectations of their role within the business.”
“The more perspectives students have, the more they can see the importance of things like gaining outside experience, earning respect, and being realistic about their expectations of their role within the business.”
— DANIEL G. VAN DER VLIET, MED
Course description: Family businesses are the predominant form of business organizations in the world contributing an estimated 70-90% of the global GDP. In the United States, family enterprises contribute over 64% of GDP and generate 62% of employment. The greatest part of American wealth lies with family-controlled firms. These firms are distinguished from other enterprises by the significant influence of the controlling family on the creation, continuity, mode, and extent of growth, and exit of a business. This course aims to prepare students to work effectively and professionally, in and with family firms, to launch and create cross-generational value and wealth in family firms.
How Van Der Vliet guides guest lectures
While anyone can benefit from this eye-opening course, Van Der Vliet says that the ideal participant is one whose family expects them to join (or run) their business at some point. For these students, Van Der Vliet can help paint a more realistic picture of what this means and help them determine what role they may eventually want to play. The course is also popular among students from the human resources and business consulting spaces. These groups realize there is a good chance they may one day join a family business and want a behind-the-scenes look at what to expect and how to navigate these new waters.
Here are a few ways he ensures that all students gain as much as possible from the guest-lecturer visits:
Start by creating a safe space
Van Der Vliet sees his class as a safe space where his students can divulge family issues that they would not feel comfortable talking about in other business classes. “Sometimes it’s almost like family therapy,” he jokes. But he is on to something. His students respond well to a class full of others who are empathetic because they understand what it is like to have your last name on the company stationery. During the opening lecture, students are addressed on the need for privacy, confidentiality, and empathy. As many students themselves are from a family business, this aspect of the course is often readily understood. Students are also provided with interview protocols—which questions to ask and how to ask them.
There are some remarkable revelations that come to light for many students. For those from a family business, they begin to find they are not as alone as they may have previously considered themselves to be. In many cases, small steps and positive signs of change are evident: “As a direct result of this class, and the emphasis that so many of the speakers put on firmly setting succession planning, having open and frank conversations with your family and having clear and stated roles within any family business, I plan to set up a meeting with my aunt over the summer to do exactly that,” one student noted. Of course, some also begin to see that the path ahead remains muddled: “After going through all of the assigned readings prior to class, I am convinced I now want to quit my family business.”
Link guest speeches to textbook theory
In family-business scenarios, experts (including Van Der Vliet) talk about the Three-Circle Model, with the three circles being ownership (who owns the company), business (who runs the company or works for it), and family (relatives not directly involved in the company). Family cannot really be altered, but changes to the other two circles can often lead to problems—ones unique to this niche. Van Der Vliet seeks guests who can provide a comprehensive look at the dynamics of each circle, how they overlap, and what problems can arise.
Accentuate the positives
While negatives may be compelling and front of mind, Van Der Vliet asks his guests to show the positive side of family businesses. “They have all gone through similar challenges and have come out the other side without having followed one set pathway,” he says. “The only similarity lies in the fact that they all embraced the family business at some level, and it had a positive impact on them.” Most guests in the class hail from family businesses that have successfully navigated more than two succession events. This lends itself to the fact that the family has put into practice successful habits and is proactive about managing the pathway forward.
For example, Van Der Vliet feels it is important for his guests to reinforce the idea of innovation in a family business. “Most businesses cannot get away with doing what they’ve always done,” he says. “A great idea used to last a family three generations; now it’s the case that each generation needs to generate three great ideas.” Looking to the future—and knowing that they may play a role in making the business better—can be a strong motivator. Guests speakers truly are “leaders” in family enterprise.
Provide ample time to make connections
Van Der Vliet does not skimp on the time spent on these guest-speaker sessions: “I want students to gain as much access as possible to world-class talent, so we often build a whole day around the visit,” he says. He also encourages interaction outside of class time: Students get one-on-one mentoring by the business owners before class, and Van Der Vliet also hosts an after-class dinner where students get additional time with the speaker. Van Der Vliet loves to see his students stay in contact with these guests, and he knows that some have even reached out for specific advice well after the class has ended.
Van Der Vliet knows he teaches a different type of business class. In fact, the course evaluation comment he gets most often is that his class is unlike any other. The combination of theoretical learning, real-life stories, and a dash of oversharing allows students to delve into the emotional side of the family business in particular—something most business courses do not do. At the end of the semester, students for whom this is a likely future can breathe a sigh of relief knowing that they are in good company—and their future can indeed be bright. “One of the most encouraging comments I ever received,” shares Van Der Vliet, “was from a graduating MBA student who stated, ‘I shared with the assistant dean how important this course was and that we need more courses like this; it was immediately applicable and completely different than any other course I have taken thus far at Cornell.’ That was pretty powerful to read.”