Lessons from the Cornell Families in Business Conference

We recently concluded the 3rd Anual Families in Business Conference at Cornell. The event brought together over 175 family business owners, Cornell alumni, and students for three days of exploration on the theme of “The Future of Family Business.” 

I was pleased to receive this email shortly after the conference, from Bruce Werner, Managing Director of Kona Advisors LLC, and a member of the Werner Ladder family business. With his permission, I share it with you:  

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I have been told that getting to Cornell is difficult, but it is beautiful once you get there. That is certainly true. Here are a few thoughts I brought back from the Smith Family Business Initiative Conference.

The lessons of family business are timeless, but each family needs to learn for themselves. Being on campus, it reminded me of the freshman introductory courses. The same textbook is used every year,  but it is still new material for each class.

Like physics, the principles are universal, but what matters is how you apply this knowledge. I was in a discussion with two people. One recently sold a $1B business, while the other was the owner of a $250K business. Everyone was engaged in debating the issues, but they will use what they learned differently.

Managing conflict is everything. Good family governance allows owners to manage family conflict, which allows them to run a successful business. For obvious reasons, these issues don’t exist in public companies.

Money changes almost everything: expectations, effort, risk/reward appetite. How you deal with these changes likely determines your happiness. You can be successful, but not happy.

While these topics were discussed in the context of running family businesses, much of it equally applies to privately owned businesses.

Thank you for sharing Bruce. 

 

 

Smith Family Business Initiative creates connections across Cornell’s ecosystem

 

Daniel G. Van Der Vliet is the John and Dyan Smith Executive Director of Family Business at Johnson. We caught up with him recently for an update on the Smith Family Business Initiative.

Tell us about the Smith Family Business Initiative (SFBI).

We’ve tried to create a portal for all things family business—for students, for alumni, and for those who are within our network for any of our programs and offerings. Globally, family businesses represent as much as 90 percent of all firms, so it’s a significant slice of the world economy. Members of family businesses often have many opportunities coupled with complex challenges to figure out—whether to return to the business or not, whether to innovate and change or stick with what’s worked for generations.

At SFBI, we connect students who come from family businesses with alumni and business leaders who want to remain engaged with Cornell and see this as a much-needed resource. It’s exciting, because we get to work with businesses from across the economic spectrum, from the corner store and entrepreneurs just getting started, to some significant global players and iconic brands.

2016 Families in Business ConferenceNick Matt, MBA ’73. CEO and Chairman of FX Matt

Johnson just hired Margarita Tsoutsoura, associate professor and the first John and Dyan Smith Professor of Management and Family Business. What impact will this hire have on SFBI and Cornell?

Professor Tsoutsoura comes to us from the Chicago Booth School of Business, and she is a rising scholar in the family business field. Family business is still emerging as a research space, so the body of literature is rapidly being formed. Tsoutsoura brings added capacity for the initiative to increase family business–related curriculum across Cornell, and she is considered a genuine thought leader in this area of study.

Tsoutsoura will help elevate the field and get more family business articles published in top-tier journals. We hope she will also inspire other faculty, here at Cornell, but also in her own network, to engage in top-level family business–related research.

SFBI is expanding its course offerings this year. What information can you share about the new classes?

Professor Tsoutsoura is currently developing two new courses. The first will be an undergraduate course covering the basics of family business—call it a “Family Business 101.”

The second course will be graduate level. Tsoutsoura’s training is in finance, so this course will be more technical in nature, dealing with how money flows in and out of the family and the business. The graduate course will likely appeal to those working in, or potentially with, family businesses. We’re finding that many of our students end up in consulting, investment banking, and other fields where, unbeknownst to them, they will find themselves working with many of these families.

We expect the undergraduate course to be delivered in spring of 2018, and we hope the graduate course will be ready by then as well.

What role does SFBI play within the SC Johnson College of Business?

Having a program like SFBI with academic as well as programmatic capacity, embedded within a university like Cornell that has such great breadth and depth of expertise across many different academic areas, really helps to differentiate not just the College of Business but all of Cornell, at both the undergraduate and graduate levels.

We are beginning to see students choose Cornell because of the family business program. As SFBI continues to develop and the network and academic offerings grow, it will only help to further differentiate the college.

There are so few schools that embrace family business wholeheartedly. Particularly among our peer schools, very few have comprehensive programs. If Cornell continues in this direction, it bodes well for the future.

What are SFBI’s long-term goals?

In entrepreneurial terms, we’re just getting started. Eventually, SFBI needs to grow into a center, meaning cross-disciplinary, cross-college activity at the undergraduate and graduate levels, with multiple faculty members engaged in research and as practitioners.

That’s going to require additional funding for research and additional staff and faculty lines. Because of the SC Johnson gift, with its challenge component, we’ve already started to see some gifts coming in benefiting family business, and we hope that will continue.

Whether you are a student, a member of a family business, or someone seeking resources to help you work with family businesses, I see Cornell becoming the global resource for family business.

2016 Families in Business Conference
L-R Jessica Gerson, 15, VP, Gerson & Gerson, Marisa Sergi, 15, CEO, Redhead Wines, Pablo Borquez Schwarzbeck (MBA 15), CEO, Produce Pay

How can people connect with SFBI?

There are numerous opportunities for alumni to come back to campus and participate in a conference, be a panelist, or be a supporter. In 2018, there will be more opportunities to connect in New York City as well. Because we’re still young, it’s all about growing the network. I encourage alumni to reach out and get added to our list, since we are actively trying to connect students, alumni, and businesses in the Cornell ecosystem.

The 2017 Families in Business Conference, “The Future of Family Business” will be held October 25–27, 2017, at the Statler Hotel in Ithaca.

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.