It’s About Identity…

During the 2016 Global Emerging Leaders in Family Enterprise program, we invited Sharna Goldseker of 21/64 to help us explore “Family, Wealth and Values.” In closing, she shared this, which has continued to resonate with me.

“I used to believe the important things for the next generation to learn were how to manage money or to be entrepreneurial in business. Ultimately what I learned is it’s about identity; considering upon whose shoulders am I standing, what is my legacy? And then adding in, who am I, what do I value? Then adding those two elements together to consider what can I do to think about making a difference in the world, to make change? Those are the components of identity and the important building blocks to learn in order to live with purpose.”

Sharna Goldseker, Executive Director, 21/64

Registration for the 2017 Global Emerging Leaders in Family Enterprise program is now open.

The Biggest Threat To Family Businesses?

ropesAt Cornell’s second annual Families in Business Conference, we were excited to hear from Cornell alumnus and founding partner of Continuity Family Business Consulting Doug Baumoel (’78). Doug discussed his book, Deconstructing Conflict: Understanding Family Business, Shared Wealth and Power, as well as participated in a panel on cybersecurity threats to the structure of a family business. Below, Doug shares his insights:

“Family businesses get a raw deal. Often viewed as the poor cousin to ‘real’ businesses, most everyone I meet has a story of the disastrous end of a family business – replete with the family war over the business. Researchers point out that most family businesses ‘fail’ to pass to the next generation. With all these strikes against them, you would be justified in thinking that family business is dysfunctional business.

The truth is that family businesses are not dysfunctional; they’re just different. 

The family business system is the oldest and most widely employed type of business.  When compared to non-family enterprise, the family business is actually more robust. (After all, fully 80% of the Fortune 500 companies are no longer around). They face the same risks as other businesses, answer to the same market forces and still need good business plans and ample capital. And because many family businesses are small businesses that have an inherently higher failure rate due to thin capitalization, statistics against them may seem over-weighted.

So why do we single out family firms for their failure rate?

Just because a family business ‘fails’ to transition to the next generation doesn’t mean that it has indeed ‘failed’.  Many family businesses do not make it to the next generation for good reason.  Like their non-family owned counterparts, they may have been sold for a good price, enabling the family to redeploy their assets in new and creative ways.

Not surprising, however, the biggest threat unique to family business is poorly managed conflict.  These struggles stem from the high degree of interdependence among family stakeholders that is inherent in family businesses. With family members potentially active in so many roles (such as employee, shareholder, director), overlapping and competing interests abound.  The potential for conflict is woven into the very fabric of the family business.

What makes stakeholder conflict even more of a threat to the family business is that when conflict arises, it is rarely a simple dispute over something simple and negotiable. Roles in a family business often connect strongly to identity or sense of self. A stakeholder may believe that he/she was groomed for the top-slot at the firm or that ownership in the family business is an essential part of who they are. If these roles are threatened, stakeholders will go to great lengths to defend them.

Recently, Cornell and the Smith Family Business Initiative held their annual Cornell Families in Business conference.  I was honored to be a sponsor and moderator of a panel on the Implications of Trust, Fraud and Cybersecurity for Family Business.  While all businesses face these threats, they take on a whole new dimension when coupled with family stakeholders.  In addition to security threats from outside the company, family businesses are subject to security threats from the inside; from family members fighting over control, position and wealth.  When family members feel that their role in the business is threatened they routinely snoop on each other’s email and hack into each other’s computers in an attempt to further their own agenda.  The panel explored both common and unique security threats that family businesses face and the panelists provided helpful tips, such as the use of Password Vaults, on how these threats can be managed.

Understanding the nature of conflict in family business and developing the ability to avoid, manage and recover from conflict is often the most important factor in achieving family business success. “

 

Honesty is such a lonely word

 

Honesty is such a lonely word. Everyone is so untrue.   Billy JoelHonesty

Maybe not everyone is “so untrue”, but I think we can all relate. Billy Joel has penned many memorable lyrics, and while these may not be among my personal favorite of his, they still remain true. In family business, honesty may be the one trait that trumps all other skills in determining success, as well as perhaps happiness or some measure of it.

 Question: What do the most successful family business do?

Answer: They are brutally honest.

By my last official count, there were 2, 679 books on family business that proclaimed to share the “secrets” of family business success (that count might not be entirely honest on my part, sorry). Sift through any search of recent book titles and there is no shortage of experts proffering their secrets. It’s catchy, and we all want to be in the know, especially if it leads to success and untold riches. The cat’s out of the bag however and I am not entirely sure there are many secrets left to reveal. Honesty breeds trust, trusts yields communication and communication leads to ____________________________ (fill in the blank).

Question: And how do those businesses achieve such honesty?

Answer: Communication

This is where it gets a little sticky. Very few people, let alone business leaders would admit to being poor communicators. It’s a blind spot that afflicts many of us. What are the signs of good communication in a family business, any business?

  • Conflict – Not necessarily a lack of conflict, but conflict that is met head on and not left unresolved.
  • Meetings – While meetings may be the bane of many of a business, best to not confuse unproductive meetings with efficient and effective meetings.
  • Written policies – In particular when it comes to guidelines for family employment and succession planning.
  • Technology – Using technology that works, not only for the business but for the family as well. Think private Facebook for family members, secure intranet.
  • Creativity – Innovation does not materialize in a vacuum, yet when openness and trust abound.

Question: But where do we allow this communication to thrive?

Answer: Everywhere, but start with good governance.

Most families are built on generations of implicit knowledge. Much remains unspoken but known. In the family owned business, this can be perilous. Family roles that conflict with business roles, assumptions vary with an individual’s perspective, and what will happen when the CEO gets run over by the proverbial bus?

Where I have witnessed the most successful businesses, thrive, it is often because of good communication carried out through good governance in all three circles; family, business and ownership. While governance is not the cure for all ills, it can be a conduit for effective communication, conflict resolution and well thought out succession planning. Start now, be patient, involve others.

Honesty is hardly ever heard, and mostly what I need from you.

Winning, Losing, Living.

The Super Bowl. So much hinges on a game. The legacy of Bill Belichick and Tom Brady as “best ever.” The emergence of the Seahawks as the new dynasty. Sports pundits exist to perpetuate the discussion around who are the winners and who are the losers despite what the final score may read in any given contest or any storied career.Source: www.foxsports.com

Seahawks coach Pete Carroll was instantly questioned for what should have been the most obvious, risk-averse call with a hand-off to “Beast-Mode” Marshawn Lynch at the 1-yard line. Instead, a pass into tight goal line coverage that resulted in a game-clinching touchdown for the Patriots. Until that moment, it looked like Bill Belichick and Tom Brady would lose their third straight Super Bowl and perhaps tarnish their nearly unparalleled resume. Until that moment, the Seahawks were the team of destiny poised for back-to-back championships.

So much often hinges on just one play. Belichick’s and Brady’s own fate might have been different had David Tyree not pulled off the helmet catch in Super Bowl XLII or Mario Manningham had not snagged his own piece of Super Bowl history in XLVI. Pete Carroll would not have even had to make his ill-fated play call if not for Jevon Kearse having football fortune fall into his lap just two plays earlier.

Each play, every decision, dissected, analyzed and questioned with the aid of hind-sight and HD multi-angle slow-motion video. Should any one of us face such scrutiny for the myriad of choices we make every waking second, we would undoubtedly be determined a failure and relieved of our daily responsibilities. Chips instead of carrots? Facebook over financials?  Rest rather than run? Imagine having to answer to your Board for each debatable call you make in the course of a day.

Duke men’s basketball coach Mike Krzyzewski (aka Coach 1K), recently won his 1000th game, the most by any Division I coach. Three years into his tenure at Duke, his record was under .500 and fans and alumni began calling for his dismissal. Reflecting on this accomplishment, players from his 1986 team shared that his approach never lagged and he insisted they were headed in the right direction. “A missed shot is not a mistake. Stay aggressive,” he would tell his players.  His favorite play is always the “next play.” He coaches players from the inside out. And they have been wining ever since.

Pete Carroll’s comments after the Super Bowl echoed this. The decision was his, the failure was not Russell Wilson’s. This was one game, one play, in an otherwise remarkable year. Losing would not define those players nor the team. “We can throw a touchdown pass, we win the game; we had great match-ups the other way.” At the end of the first half, Carroll took the risk of an end zone pass rather than a safe field goal with time expiring. It paid off, and Carroll is a play-calling wizard. Until the fourth quarter.

Ernie Banks passed away in the week leading up to Super Bowl XLIX. Having spent his entire career with the Chicago Cubs, Mr. Banks experienced more than his fair share of losing moments. There was not one post-season moment in his 19 year Hall of Fame career to rest success or hang failure on. Perhaps he was cursed? Or maybe blessed. Playing during the era of Mays and Mantle and Aaron, many considered him to be one of the best players of all time. No one questions Mr. Cub’s legacy nor his contributions to the game of baseball, the city of Chicago or the social fabric of the nation. Having never won the World Series let alone a playoff game, Ernie Banks is forever a winner, deemed a success for the approach he took to every game, every day.

Leadership is defined by the totality of our actions, threaded together by a string of successes and failures. Passes are completed and some sail away. We strive to win more than we lose and hope we rarely face the scrutiny we see applied to those we admonish in professional sports after a big game.   Coach K reached 1000 wins with a million small steps. Ernie Banks’ mantra was “Let’s play two today!” even though it seemed likely the Cubs would lose both games.  Our own success should be attained by the same measure of approaching life by living it, fearless of mistakes and secure in the knowledge we make our team better every day. So much hinges on every day.

What Would You Do With an Extra Day?

ImageA traffic ticket. First one in 12 years. And with a car full of kids. Humiliating. This after an early morning wake-up call from a neighbor who needed to be taken to the hospital. The kids finished up school and one is on the precipice of high school. Vacation looms, deadlines persist, meetings await. Can I get that extra day now?

With so much good happening, often the negative tends to be amplified. I’ve skipped two runs this week and have yet to get out on my bike this year. I am not complaining, just observing how difficult those good habits can be to establish.

Consider the proverbial bar stool with four legs to support it. Remove one of those legs, and while it may feel off-kilter, you’d likely find a way to keep your balance. With only two legs remaining, you would need to compensate by employing one or two of your feet to stabilize your seat. With only one leg remaining, now even the wood will be stressed to the point of breaking.

As each leg of the bar stool is removed, you may choose to maintain a positive outlook and proclaim you are still comfortable. However, ignoring the reality of your situation only delays the inevitable – you need fixing!

Your brain only represents 2% of your body weight yet consumes up to 20% of its resources. When blood flow is compromised due to poor health, external stress or lack of exercise, you remove one of those legs to the bar-stool. Which each additional stressor or lack of some good vigorous neural transmitter firing (release that serotonin and dopamine – the happy drugs!) your body works against you. You dumb down, slow down and grow down. The glass is half full and leaking gravely.

Porter Knight, founding partner of Productivity Vermont recommends the following to combat the daily battle for your productivity and sanity.

  1. Get organized – remain calm and eliminate unnecessary clutter.
  2. Refuel – Thinking requires internal resources and every decision requires more resources. How many times have you actually let your car run out of gas? You know when to refuel and you always do. Do the same for your body. Food, water and oxygen – and the greatest of these is oxygen. Go for walks, use the stairs, and plant a garden. Breathe more fresh air.
  3. Decide – Make your choice (a well-defined goal) and execute!
  4. Stop Multi-tasking! – In reality, there is no such thing as multi-tasking. It’s really “duel-task interfacing.” Your brain can only hold up to 5 simultaneous actions, but can only perform one (effectively) at a time. The mental exhaustion caused by duel-task interfacing actually results in 43% more mental exhaustion. Focus 90 minutes of your day on that which is critically important for your success. Studies show those that do are 58% more productive.
  5. Schedule – Map out your day and prioritize. Stephen Covey calls this moving the “big rocks” first. Go (portion control) Grow (90 minute focus) and Glow (feel centered and refreshed).
  6. Connect – Surround yourself with those that will energize you. Find time to break away from routine and meet others that will challenge you mentally (attend a FBI@UVM forum!). And look for new people to stimulate you.

Abe Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” And, we made a movie about him, plus a few monuments as well. Lincoln applied many of the above steps and I have no doubts that that tree was no match for Mr. Lincoln.

Your extra day awaits – what will you do with it?