Shifting FamBiz Time Horizons

Shifting FamBiz Time Horizons

Family businesses are known for looking at things from a much longer time perspective than larger, publicly traded companies.

They aren’t concerned with how their decisions will affect their next quarterly earnings release, and instead focus on how things will look in a quarter century.


How Fixed Is a Time Horizon?

The long-term view can stay the same for decades, but sometimes events occur that make changes desirable over a much shorter timeframe.

One of my continuing roles in managing our family office is handling the asset allocation to various professional outside investment managers.

We recently decided to divest one position and I was surprised to learn that there would be an early withdrawal penalty for not having held it for the 5-year minimum.

Hmmm, I wondered, why had I not noticed that back then (it’s been over four years)? Simple, at the time it did not seem like it could ever be an issue.

Things change…


Time Flies

In another sphere of my life, a couple of years ago I was in Boston with the family, and we went to the Harvard bookstore to look at their swag.

I curiously asked my kids if they’d ever thought of attending that school.

I’ve since done campus tours at most of the Ivy League schools, plus a bunch more, with both of them, and yet in a few months that important chapter of my life will also be behind me.

How could my focus change so quickly? It feels like just yesterday we were looking at daycares.


Teens, Seniors and the Sandwich

Maybe it’s just that I’m part of the sandwich generation, with two teens and an octagenarian mother who depend on me.

During those life stages, a few short years can change many aspects of one’s life.

But every family has people at various ages and life stages, and that’s part of why business families are so complex.


Family Life Cycle

If you read some of the books around family wealth and making it last over generations, you’ll surely come across authors who talk about “100 years” as a timeframe to consider.

I have to admit, when I first saw this a few years ago, I thought it would be difficult for most people to grasp.

Heck, I was working in this space, and I was having trouble wrapping my mind around it.

I’m pretty sure I “get it” now, but I’m not sure if it’s because I’ve become used to hearing it, because I’m a few years older myself, or because I’ve “matured” into a different life view.


Legacy Families 

If you want to learn from families who’ve been successful in transitioning wealth from one generation to the next, and done so more than just once, well, you almost have no choice but to look at those who have lasted a century or more.

At the recent Institute for Family Governance conference, one speaker mentioned that a 20-year investment time horizon for a family might be considered “short term”, and I agree.

But if I want to look at things that way, first I need to almost be able to remove myself from the equation.

I now realize that maybe the investment we were divesting shouldn’t ever have been made because it did not fit such a long time horizon.


My 100-Year View

Or maybe for my family, a 100-year horizon isn’t appropriate, because our family never quite reached the wealth level necessary to become a “legacy family”

Maybe another lesson here is that it’s easier to help some other family deal with these questions than it can ever be to look at this for your own family.

It’s really difficult to look at these kinds of multi-generational issues when you and your life are part of the equation.

It’s much easier for me to draw out your expected lifespan and matter-of-factly talk about how things will look decades later. Doing that for me, um, not so much.


Not Fun? Doesn’t Mean You Don’t Need to Do It!

Realizing that things are complex and potentially not fun does not absolve you of the responsibility to actually take care of important things, though.

Thinking about the importance of this is the first step to getting started. Now go and find someone who can keep you on track.

Then together you can take the steps needed for a true 100-year plan.

Even If It Hurts

Even If It Hurts

Last week, in The 3 R’s: Finding a “Responsive Reliable Resource”, while writing about people who are “Reliable”, I stumbled upon an idea that I promised to revisit in a future blog.

As I put it then, As I write these words, I’m realizing that there’s a whole other blog that I’ll need to write, to expound upon this question”.

So expound I will.


Hurting Me, Hurting You

The key point at the root of my “eureka” moment came from this sentence:

“I want to be able to rely on someone to tell me the truth,

even if it hurts me, AND, even if it hurts them.”

These are two completely separate points, yet I’ve never seen them addressed together. That’s what made it so compelling for me to look at this again this week.


Tell Me the Truth, I Can Take It

One of the biggest problems that people at the top always face, no matter what kind of organisation they’re in, is having people tell them things that they “don’t want to hear”.

The CEO of a company will not always hear the truth from their underlings, not because those people are liars, but because most people have an aversion to telling their boss things that are not pleasant to relate.

The interesting part about this is that more often than not, they actually DO want to hear those things.

In fact, good leaders don’t want to be surrounded by “Yes-Men”.


How Long Will It Hurt? 

The reality is that hearing the truth, if it’s something that you really do need to know and you really cannot see yourself, only hurts for a very short time.

Strong leaders realize that they’re not in a popularity contest, and that sometimes you need to hear things that hurt.

In order to make progress, a reality check is often needed, and folks at the top actually need to have MORE people who aren’t afraid to tell it like it is.

It’s great if you have people upon whom you can rely to play that role.


Despite My Self-Interest

That was one side of the “hurting” question, now let’s get to the even trickier part.

The “even if it hurts them” aspect can best be summed up in one word, “self-interest”. Not sure if a compound word really counts as one word, but I’ll use my “editorial license” to make it so here.

If you aren’t familiar with the “Trust Equation” or the “Trust Quotient”, I suggest you visit this site:  so that you don’t just think I’m making this stuff up.

The denominator of the Trust Equation is “Self-Orientation” as they put it. “Self-interest” and “self-orientation” may not be identical twins, but they are most definitely close siblings.


Not Placing Blame

Business families are served by a variety of professionals from different industries, including legal, accounting, insurance, investment management and banking to name a few of the major ones.

Every person naturally brings their own perspective to the family’s situation, and that perspective is naturally rooted in their professional training, background and orientation.

It’s next to impossible for a banker to look at your family business from any other perspective than that of a banker, and likewise difficult for your attorney to look at things from a viewpoint other than that of your legal counsel.

I believe these things to be true in general in just about every profession, even though there are exceptions in all of them.


So What?

Well, if you’re looking for “reliable resources” you can count on, you really have to understand that getting 100% unbiased advice, especially if it might go against their own interest, will almost never happen.

And I’m not saying that any of your advisors are unethical or crooked in any way. They very likely believe that everything that they suggest to you is actually best for you.


What Are You Paying Them For?

Unfortunately for leaders of business families, most of the professionals upon whom they rely are paid for certain products and services that these people sell them.

Those who truly have their client’s interest as their top concern and only interest, are few and far between.

There aren’t many people who play that role but if you can find one, keep them!

Finding a reliable person you pay only for their counsel can be done.

The 3 R’s: Finding a “Responsive Reliable Resource”

The 3 R’s: Finding a “Responsive Reliable Resource”

The 3 R’s: Finding a “Responsive Reliable Resource”

There are plenty of qualities we look for in people we want to work with. A few weeks ago I had an interaction that made me realize that there are 3 I find to be near the top of my list.

I was working on a project and needed some feedback from a potential partner, “Tom”, who hadn’t responded to my email request for almost a week.

So I emailed Tom’s colleague, “Nicky”, asking if the email address I had for Tom was current.

I got a reply within an hour, with a new email address for Tom, plus an explanation as to why Tom wasn’t checking that old email address very often anymore.

I replied to Nicky with a “thank you”, noting that I appreciated her being a “Responsive Reliable Resource”.

Hmmm, I thought, this could be a blog post!


Three Distinct Qualities

The three qualities all begin with the letter “R”, and there are also definitely some overlaps.

But today, I want to look at each of them separately, because there are aspects of each that are important enough to emphasize individually.



Let’s start with “responsive”. This one has everything to do with timeliness in getting back to you.

In today’s world, things move more quickly than ever, so a timely reply when you need something can be extra important.

Sometimes even after just a few hours, the usefulness of whatever you were asking for has disappeared.

In my example above, I’d already been in limbo for a few days, so a quick reply was what I was hoping for, and what I got.



Reliability is a kind of “catch-all” word, often encompassing the responsiveness mentioned above.

But I want to talk strictly about the quality of what people can deliver, without attaching the timeliness of it.

Not that the time element isn’t important, but because it is, it deserves to be looked at separately.

When I think about reliable people, I’m usually assessing them based on whether or not I can count on them.


Count on them for What? 

So let’s think about what it is that we’re counting on people for, besides, of course, responding in a timely fashion.

Well, first off, I want to believe that whatever I ask of them, they’ll tell me the truth, even if it hurts.

That works both ways, by the way. I want to be able to rely on someone to tell me the truth,

even if it hurts me, AND, even if it hurts them.

As I write these words, I’m realizing that there’s a whole other blog that I’ll need to write, to expound upon this question.



The third of my 3 R’s is “resource”. Here’s a quick definition I just Googled:

       a stock or supply of money, materials, staff, and other assets that can be drawn on by a person or    organization in order to function effectively

I’ve gotta admit I don’t love it, because the main thing that most people I deal with are looking for in resources, would have to fall under “other assets”.

I love the part about “that can be drawn on”, because that fits nicely. I’m usually looking for information and/or direction, often to other resources.


A “Resource” as distinct from a “Helper”

While doing some of my personal work with coaches over the years, I’ve begun to try to remove the word “help” from my vocabulary.

This arose once when working with Amie, my Bowen Family Systems Theory coach, when I mentioned wanting to “help my wife” with something.

Her reply was simple, “What if you were just a resource to her, instead of trying to help her?”

“A-Ha”, I thought.


What’s the Difference?

I hope some readers will get this instinctively and quickly, but I assume many won’t, so here’s my view on the difference.

A resource is there for you, to be drawn upon, if and when you need it.

A helper is there to help, but it often turns out that the help they’re bringing isn’t the help needed, and comes on their terms.

It also puts the helper in a “one up” position to the “helpee”, which has its own negative consequences.

We all need “Responsive Reliable Resources”.

And in a family business, it’s great to have at least one who isn’t related.

2 angry men facing opposite directions

Avoiding the “60% Problem”

Avoiding the “60% Problem”

A few weeks ago one of my “tweeps” (Twitter peeps) shared a news article about family business that quoted an interesting statistic.

The field of family business as a specific “unit” of study still being relatively new, there aren’t necessarily lots of stats to choose from when someone sits down to write such an article.

It seems like the same studies, usually decades old, have their stats recycled and re-used over and over again. But that’s a problem for another day.

Sixty Percent of FamBiz Failures

Here is a quote about the main stat from the story:


“Sixty percent of the failures were due to breakdowns in

trust and communication within the family unit”


I’d like to address the 60%, but first I need to fill in some of the context. The sentence before the one quoted above read: “A comprehensive study identified reasons why family businesses don’t last.”

If we wanted to add to the list of things that “don’t last”, we could add businesses in general, and of course, people, because we will all eventually die.

Okay, now that I dealt with my pet peeve on how family business stats are thrown around by some writers, let’s get to the good stuff.


Breakdowns in What?

Let’s look at the “problems” with family business that were mentioned as being the most prevalent, i.e. 60%.

“Breakdowns in trust and communications” is how it was worded, and I take that to mean “breakdowns in trust” and “breakdowns in communications”.

Of course one could make the argument that “trust and communications” are so intertwined that they are actually inseparable in this context, and I would not argue against that either.

The fact that they were “lumped together” in the first place sort of makes that point already. But just for this exercise, let’s begin by looking at them separately.


Breakdowns in Trust

In order for there to be a “breakdown” in trust, there needs to have been some trust to begin with.

Here is the presumed scenario: 1. There was trust; 2. It broke down; and 3. Eventually the family business was no more.

Presumably, if the trust had remained strong and not broken down, the business would still be around.

It would be really interesting to look at the details around the trust breakdowns, because I have some theories I’d like to check out if we could see the actual data.

I’d be willing to bet that the trust level between individual pairs of people did not change very much over time, because in my experience it usually stays pretty constant.

However, changes, over time, in the make-up of the overall group running the business, can certainly result in a trust level that gets worse.


Breakdowns in Communications

Communications breakdowns are often easier to see than trust issues. That’s because when the issue is trust, that fact tends to be kept mum.

When we picture communication problems, we may be inclined to think about screaming matches and altercations that people in the office can see and hear.

I’ve known some family businesses that are no strangers to these types of scenes.

But I think that the kinds of communications breakdowns that are at the root of family business failures are more often the silent type.

Sometimes the screaming doesn’t happen anymore, because nobody is even talking to anyone else anymore.


Reasons and Opportunities to Talk

The good news is that trust and communications issues don’t usually just show up one day. They are usually gradual. Why is that good news? Good question.

To me, if a situation is slowly degrading, there is an opportunity to address it and try to rectify it. Of course there does need to be a willingness to actually work on it.

Family members who are involved in owning and/or managing a business together have plenty of reasons why they need to be in regular communication with each other.

Sometimes they don’t create enough opportunities to talk.


Regular Meetings

My best advice for families that are worried about these “trust and communications breakdowns” is to schedule regular meetings to talk about working ON their business.

Usually at least once per quarter, key family members need to come together and air things out, so that things don’t get worse.

If you need a “referee”, find one. But please do it.


Link: Family Business: When business is personal – Smart Business Magazine