Leadership Lessons from a Family Business CEO

Submitted by Ujjval Shah, MBA 18

Imagine being a part of the fourth oldest family-owned brewery in the United States, having brewed beer since 1888. That’s what Nick Matt (MBA 73) came to when he was called upon to lead the then-struggling Matt Brewing Company in 1989. Having been on track to be the CEO of a much larger company – Richardson Vicks (now purchased by P&G) he made the call to leave that job to steward the family business out of troubled waters. Ask him now how he made that decision and he says with a smile “it’s about family, there’s a 100-year-old family run business that might go under and so you’ve got to step up.”

Things weren’t easy for him though. Notwithstanding the multi-million dollars the company was losing year over year, there was also the situation of Nick becoming the chairman by replacing his older brother, who would technically work under him now. Nick describes this shift in power as “awkward”. This is something many family businesses have to go through. Balancing work and family is delicate and Nick says the key is to be sensitive to people and their needs. Moreover, having worked in a major multinational before coming to the family business, Nick came in with a lot of confidence and that he says helped rally his employees and family behind him. Says Nick “I had a lot of sleepless nights but no one knew that. I had this never give up attitude which I think percolated to everyone else.” He also mentioned that to succeed as a leader it’s important that people see you as authentic which is his secret to being comfortable with leadership.

As we got to talking more, the beer flowed and so did time. Nick has this playful, almost childlike, demeanor which immediately makes his audience comfortable. Being the modest individual he is, he accepts the role of serendipity in his success at the brewery. “We decided to put all our resources behind Saranac – a product only responsible for 2% of our sales at the time. It is pure chance it worked out. No one could have predicted how the craft beer market exploded” he says.

Soon it was time to make our 2-hour journey back to Ithaca and we asked him for a parting word of advice for newly minted MBAs like us. He said “Never take business decisions without proper research. Knowing your limitations as an individual as well as a leader is imperative so that you can consult more knowledgeable experts and take the right decisions.” Being eager to learn Johnson MBA’s we did just that and asked for his expert advice on the best freshly brewed beers to take back with us along with our memories.

From left to right: Virginia Dellizzotti (AMBA ’18), Ujjval Shah (AMBA ’18), Nick Matt (MBA ’73), Chris Massari (AMBA ’18)

What To Do When Your Path In Life Is Chosen For You

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I am a typical twenty-three-year-old who just finished my first year in the workforce. I’m adapting (and sometimes struggling with) post-grad life in solidarity with my peers: I’m learning how to cook, I’ve lost at least 40 percent of my sock collection to the laundry, and I’m trying not to screw anything up at work. But what makes me atypical from my contemporaries, who intend to stay at their current jobs for the next two, maybe three years, is that I intend to keep my first job for the next forty-plus years.

When I arrived at work on my first day in the “real world,” and every day since, it was my name on the door in big, bold letters. I wish I could say this is because I have done something extraordinary this year to bring meaning to that name, but its reputation has been built by many Gersons before me, first by my grandfather and now my father. It’s a lot of weight on a twenty-three-year-old shoulders. An eighty-two-year legacy, more than one hundred dependent workers, and an expectation that it will be my responsibility to care for all of it in the decades to come.

Growing up, this duty was met with a lot less trepidation. If asked what I wanted to be when I grew up, I would joyously reply that I knew I was going to be the CEO of Gerson & Gerson, Inc. Perhaps as a result of a childhood shaped as much by family events as the ups and downs of the fashion industry, the business became an integral part of my identity. With the understanding that the name Gerson had meaning beyond my nuclear family—a reputation for ability, integrity, and honesty—I spent most of my childhood trying to achieve these ideals. With each nomination to the class council, captainship of a sports team, citizenship award, and finally an acceptance to an Ivy League university, I continued to crave validation.

The privilege of having a family business is a double-edged sword. The reputation of the next generation’s perceived entitlement is an insecurity I have combatted my entire life. I have long accepted that I would need to work harder than my peers to receive the same recognition of ability for my roles, especially since I belong to a generation that is largely characterized as entitled and narcissistic. At some point, I realized that the notion that I could be recognized purely on my own merit was unrealistic. The reality is that I am in this very extraordinary professional position due to my name, and not my achievements. The best I can hope for is that by virtue of my competence as a student, as well as my dedication and work ethic, that the people around me will view me as worthy of the entitlement.

I graduated college at twenty-two, armed with a business education and a lifetime of industry knowledge. I entered the firm just one month after graduation. Some might call my inexperience an impediment, but I view my ignorance as an asset. I will never know as much as my predecessors do about the business they currently run, but asking disruptive questions and bringing a fresh perspective is often my most valuable contribution. The freedom to ask any question that might seem otherwise embarrassing, without fear, has allowed me to acquire both an understanding of the industry and a chance to make small improvements along the way.

My education had taught me the practical skills of business planning, and I was fully prepared to leave my mark on the company with grand ideas of modernization and branding. I discovered that I was not only stepping into a business, with its operational and industry challenges, but I was also inheriting a culture: a rich company history that has engendered a culture of dedication and honesty but at the same time, inflexibility and entrenchment in a “way to do things.” When an entity has been building momentum for so long, the slightest change in direction is difficult to achieve. This is exasperating to an energetic, entrepreneurial thinker eager to chart a new course. It is also something I have grown to regard as the most precious asset in our firm. The invaluable passion for protecting and maintaining something we have all worked to build must be met with enormous respect. I learned that effecting change within the company must strike a constant balance between honoring tradition, maintaining the culture, and shifting toward a new vision.

Ironically, the legacy that I initially found so daunting has become the most comforting part of this journey. I arrived eager to prove myself and my abilities, spent so long focused on combating an impostor complex, and finally found something much greater. Being third generation to a company is not only my journey; it is the story of the past two generations, the people who work for and with Gerson & Gerson, who have become part of our family along the way, and hopefully the generations who come after me. Letting go of my ego and allowing myself to serve the company and the people connected to this legacy is both my greatest challenge and my most powerful motivation.

My love and dedication to Gerson & Gerson are what has helped me to gain credibility within the firm, to push myself to accept this position at a young age, and to be part of the 13 percent of third generation family businesses that succeed. I strongly subscribe to the notion of following your passions as a means for success, as belonging to a family business goes far beyond seeking financial gain. There are endless ways to work toward particular interests within the company; focusing on branding and innovation in small markets is where I have found my satiation for an entrepreneurial and fast-paced environment. Beyond personal interests, it is also the opportunity to work in a place that is worth fighting to protect. Where a business is more than just business, it is family. I will continue to carry on the Gerson legacy, out of necessity, drive, and passion for this eighty-two-year journey.

Millennials like me were raised in a world where we were constantly told, “chart your own course.” But sometimes you don’t get to choose your own path. Sometimes it is chosen for you, for better or for worse, by your name, a circumstance, or a series of events. It is up to you to decide what you want to do with it, and how to grasp what is both an extraordinary opportunity and an extraordinary challenge.

Jessica Gerson is a 2015 graduate of Cornell University, where she earned a B.S. from the Dyson School of Applied Economics and Management. She is the third generation of her family business, Gerson & Gerson, Inc., which she joined after graduation. Gerson & Gerson, Inc. is a leading design house and manufacturer of children’s clothing and is most known for its brand of girls’ dresses, Bonnie Jean. The company is celebrating its eighty-second year of bringing the joy and beauty of a new dress to girls around the world. Within the company, Jessica focuses on bringing innovation to small markets. She is an advocate for family business, and you can learn about Gerson & Gerson, Inc. at www.Gersonandgerson.com

This excerpt was borrowed with permission from the book 3 Billion Under 30 and its author, Jared Kleinert.

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.

Announcing the Cornell Family Business Fellows and Scholars

The Smith Family Business Initiative is pleased to announce our first cohort of the Cornell Family Business Fellows and Scholars. The SFBI Faculty Fellows represent current Cornell faculty members engaged in research or collaborative projects related to family enterprise. The Academic and Practitioner Scholars are faculty members and practitioners from beyond the Cornell ecosystem. The selection of these scholars recognizes their breadth of experience, knowledge and understanding of family business, family dynamics and business success. Collectively, these individuals are helping to create curriculum, programs and opportunities for our students, alumni and network of global family-owned enterprises.

For a complete listing of the Smith Family Business Initiative Fellows and Scholars, including individual biographies, please visit the SFBI Fellows and Scholars webpage.

 

It’s Not What You Think: Five Myths About Family Business Conflict

All families, and particularly family business will face some level of conflict. While many will avoid conflict at all costs, often facing these challenges will have numerous positive outcomes. Continuity Partners and Deconstructing Conflict Co-Authors, Doug Baumoel (78) and Blair Trippe share some of their recent findings based on years of work in working with family businesses and dispel a few of the myths surrounding conflict.

Myth #1: A Family Business Experiencing Conflict Is “Dysfunctional”

It is only through being challenged by conflict that we learn, grow and advance as individuals, families, companies and societies. Therefore, a healthy family system processes conflict constantly. Well-managed conflict can lead to new approaches, innovative strategies, and resilience. In a family business, it is completely normal for deeply-caring individuals to struggle in coming to consensus over the governance, succession and growth of their enterprise. Sometimes, external factors that are beyond a family’s control can cause stress and conflict in their company. While there are no easy answers, it is absolutely possible for families to learn to manage family business conflict in constructive ways that ensure the success of their families – and their businesses.

Myth #2: A Family Business That Never Has Overt Conflict Is in Optimal Shape

The absence of overt conflict is often a cause for concern since it usually indicates that families are ignoring or avoiding difficult conversations because they worry that they will lead to disagreements. When families spend a lot of energy avoiding conflicts, it can often drain their enterprise of innovation and resilience, leaving them “stuck” in patterns that may no longer serve them well.

A stuck family system will miss valuable opportunities, because paralysis often prevents important decisions from being made (e.g. planning succession to the next generation, growing the business, adapting to new economic circumstances.) Furthermore, a stuck family can ultimately experience more severe strife and infighting than if they had acknowledged their differences earlier on and found ways to manage them.

Myth #3: Conflict at Work is Just About Work

Being family often complicates the management of conflict in business. In addition to managing the substantive business issues at hand, family members are trying to negotiate how they will stay together as a family in the process. Disputes in family enterprises are unique because these continuing relationships matter greatly, and parting ways is usually not an acceptable outcome for most family members.

Emotions run high in every family, and these emotions are amplified when a family experiences conflict over running the business. Sibling rivalry and complex struggles over power-sharing – along with rebellion – are all normal family processes that don’t show up in the average business, but they are common phenomena in family businesses. Ultimately, failing to acknowledge and manage the unique family aspect of these conflicts will lead to greater discord, and the wasting of precious business resources like time, money, human capital and the family’s good name.

Myth #4: Family Members are the Only Ones Suited to Understanding and Handling Their Conflicts

While family members are most-definitely the experts on what is going on in their family business, being stuck usually comes with limited ability to see beyond themselves and find creative ways to move forward. In these situations, a trusted outside party can often offer new ways of analyzing the data and looking at the big picture. Seeking outside help with assessing and managing family conflict can enable stakeholders to gain new understanding and perspectives on their conflicts and work together to find ways to move forward.

Myth #5: Family Business Conflicts Need to Be Severe to Benefit from Conflict Management Guidance

When families gather to brainstorm and problem-solve in less stressful times, they often can discuss more “loaded” topics and better plan how they might handle a situation when it unexpectedly arises. This is a golden opportunity for forward-thinking families to convene and use their strengths and talents to plan for the future. There are many strategies and tools that families can deploy to help them manage unanticipated conflict and ensure that their enterprise will run smoothly.

Reprinted with permission. 

 

 

The Value of a Family Business MBA

Contributed by Christopher Pletcher, Cornell MBA ’16

Over two years ago, I made the decision to pursue a career working with my father-in-law in the family business, an industrial coatings application and testing company. At the same time, I enrolled in the two-year MBA program at the Johnson School at Cornell, knowing that I would be joining the company shortly thereafter. With graduation approaching this weekend, I’ve taken some time to reflect on how this decision to join the family business has impacted me over the course of my degree.

There were three amazing opportunities that came about because I had the foresight of the business in which I would be working after business school. These three areas were especially noteworthy due to their foundational influence on my personal development during school. Each provided a new perspective on the decision I had made.

  1. Focused Academic Interest: Having the knowledge of the industry, company, and role I would be entering after business school allowed me to custom tailor my schoolwork to fit my interests to best prepare me for the next chapter. I focused on finance and strategy, the two areas I thought would be most impactful since I would be heading into a leadership role which would help chart out the next decade of the company’s future.
  2. Immediate Real-World Application: I also found that I could immediately apply the concepts I was learning to a real-world scenario in nearly every class. During my two years, I completed half a dozen projects that contributed to the company, ranging from pricing to strategy to marketing. I (and the company) had the added value of my classmates’ input, as most of these were group projects.
  3. Family Business Resources (SFBI): Having a formal resource center to draw on for how to approach family business governance, managerial best practices, leading research, and networking support was a true advantage. The inaugural Cornell Family Business Conference and the Lectures in Family Enterprise class provided incredible insights into the unique relationships between scores of families and their businesses.

While my MBA program is coming to a close, I am excited to begin the next chapter of life, working within the family business. The educational focus, immediate application, and additional resources I experienced during my program were true bonuses which made my program all the more rewarding and useful. I hope you may also experience the value of a family business MBA!

Christopher Pletcher was President of the Johnson Family Business Club from 2014-2015. As President he helped grow the club to over 100 members, launched the CEO Speaker Series and insured a smooth succession to the current club officers.