How the family Governs the family Business

Putting the “Own” in Ownership

I am a big fan of the three-circle model and I have been since I first learned of its existence a few years ago.

As the story goes, it was actually derived from the two-circle model that preceded it, which was already groundbreaking in its own way because it was an attempt to separate the “family” and the “business” circles, while acknowledging their overlap.

When Renato Tagiuri and John Davis added “ownership” as the third circle, they had created a model that has stood the test of time for three decades now.

Ownership remains the circle that is hardest to grasp for many people, despite the fact that it sounds pretty straightforward on the surface.

People who do not have any relationship to a family business probably have a better grasp on the meaning of the word ownership, because anything that they own is likely pretty clear to them.

This week I attended an event where a woman from the third generation of a business family related that when she became an owner of her family’s business, she was not even informed until a year after the fact.

This reminded me of an event that I lived with my father many years ago. It was back in the 1980’s when CAFÉ was going strong in Montreal, and we attended a workshop together. In preparation, the organisers sent out a questionnaire to all attendees, asking for the percentage ownership in their family business.

My Dad had left this task to me, and I noted that he owned 67% of the company, and I owned 11%. He had set things up with two holdco’s, his, with 2/3 ownership, and his 3 children’s, with 1/3.

During the event, he saw the questionnaire that I had filled out for the first time, and he asked me point blank “What’s this?” I told him essentially what I just noted in the previous paragraph. “Oh, yeah, I guess you are right” was his reply.

Clearly he still considered himself the 100% owner, and I guess my sisters and I did too!

So ownership can be a little nebulous from time to time, and I know of at least one family business advisor who says that he only works with clients on ownership governance matters and avoids working with business founders, who so often have difficulty understanding the three circles.

A couple of weeks ago at the Family Business Summit in Halifax, I participated in an interactive exercise led by Doug Bolger of Learn2, who had the entire room working together and discussing succession matters.

At one point I had another “A-Ha moment”, and I always try to share those in this blog. We were discussing “ownership”, and then someone mentioned members of a younger generation wanting to do their “own” thing.

I had never realized that the word “own”, as in “my own” was part of the word “ownership”. I raised my hand and shared this realization with the group, and based on the reaction, I was not alone.

There is a new initiative being launched by the Business Family Foundation (BFF) this fall that recognizes that members of the rising generation in families seem to be more interested in doing their “own” thing more and more frequently these days.

They have created the “Initiative Intrapreneuriale” which will begin in Montreal in September, in French. As one of their “ambassadors” on this project, I would like to share why I think the idea behind this program is one “whose time has come”.

Intrapreneurship is not a new idea, many companies have benefitted from it, often without even calling it by this name.

What the BFF’s program is designed to do is to help spark business families into intrapreneurship as a way to get younger family members to join their family’s business AND do their own thing.

Enterprising families recognize that businesses have life cycles, and know about the importance of renewal. So why not encourage younger members to come up with their own business, and have it “grow up” within the existing family firm?

Sounds like a win-win proposition to me.



Transition with Purpose

This past week I was in Toronto for a few days, where in addition to meeting with various interesting people, I also attended an event put on by IFEA (Institute of Family Enterprise Advisors – where I gained some insights into a subject that is beginning to affect workplaces and families everywhere.

The presentation was entitled “The Multigenerational Complexities Business Family Succession” which sounded like it was going to be right up my alley, but made me almost feel like I would not be learn much of anything new. I am happy to report that I was wrong on both counts.

The presenter, Lisa Taylor, founder of The Challenge Factory, started off by asking a few questions about retirement age and life expectancy, and as soon as I heard the first few answers, I had a good idea of where this talk was going. But I had no idea how eye-opening it would be.

Let me summarize a bit by saying that when 65 became the “official” retirement age, life expectancy was 62. The fact that many people continue to operate from a paradigm of “65 = retirement” is pretty befuddling in that light.

What ensued was an in-depth discussion about how increased (and increasing) life expectancy has affected workforces everywhere, as many people who are approaching 65 are not interested in retiring, and instead wish to continue working, for a variety of reasons.

Taylor used an analogy of riding up an escalator, and looking up ahead of you, when all of a sudden the person nearing the top decides not to get off, but instead takes a step backwards in order to keep the ride going just a bit longer. (You can watch a brief video of Taylor talking about the escalator analogy on her website at

It does not take long for that one person at the top of the escalator, taking steps backwards, to begin to have adverse and dangerous effects on everyone else trying to ride to the top. This occurs in family businesses all the time, but also in many other kinds of workplaces.

In fact, the talk did not focus much on family business at all, but was actually quite interesting from a societal perspective, as longer life expectancy has created new realities for everyone, even if many people have not really noticed or begun to change their views of work lives.

On one of her slides, Taylor illustrated the difference between a typical career path using the “retire at 65” model that had prevailed through the second half of the past century, and a more recent variation that is becoming more prominent nowadays.

What struck me was her use of the expression “Transition with Purpose” that can occur at a couple of junctures in one’s work life, with a notable one (for me) around age 50. It seems that many people feel the need to make some sort of career transition at this age, and seeing this makes me feel more “normal”, as it really “fits” my reality.

If we had had more time during the discussion, I would have liked to talk about the concept of “Transition with Purpose” as it could benefit many business families.

What I am getting at here is the problem that many family businesses face when the founder keeps stepping backwards on the escalator, which results in many complications for the rest of the family and the business. My feeling is that if more time and effort is made in helping the founder find his or her “Transition with Purpose”, we would go a long way to minimize the number of these situations.

If we look at each of the two main words in the expression, I think that “transition” is the part that most people “get”, as the realities of aging and family life cycle mean that we go from one role to another over the course of a lifetime. But it is the “Purpose” part that seems much more elusive, and therefore requires more effort.

Every effort made to discover a worthwhile purpose is well worth it in the end.


Do Differences Make a Difference in Family Business?

In any Family Business, and in any Business Family, there will always be a lot of agreement and “sameness” but also a great deal of difference. One of the keys to success is to make sure that any difference of opinion does not result in “irreconcilable differences”.

This topic came to me this week as I checked the discussion board of the Governance course that I am currently taking through the Family Firm Institute. There are about a dozen of us enrolled, as part of their Advanced Certificate in Family Business Advising (ACFBA) accreditation program.

Our instructor, Dennis Jaffe, asked us to share some thoughts on whatever topics we wanted to discuss, and I found a post from Krishnan Natarajan from India to be quite interesting. Now the fact that I met Krishnan a few months ago might have had something to do with the fact that his post grabbed my attention, but not necessarily.

Here is an edited version of what he posted:

Some of the family challenges that we face are as follows:

Addressing differences at an early stage. (Non-Alignment if not addressed leads to Differences; if not addressed leads to Conflict; if not addressed leads to Incompatibility)

I took the “extra” repeated words out to simplify it into a better visual, and came up with this:

Non-Alignement => Differences => Conflict => Incompatibility

I thought that it was a good representation of a spectrum, showing how things can flow from small issues, into much bigger ones, if they are not addressed early.

Rather than re-writing my thoughts, here is the cut’n’paste of what I wrote back to Krishnan on the discussion board:

“If you can align people, they will have less difference, less conflict and more compatibility.”

“Conversely, if you have incompatibility, it is likely rooted in some conflict, which, in order to sort through, you need to figure out where the differences come from. Once you find the root of the differences, hopefully you can re-align the people.”

“This is clearly a case of “an ounce of prevention” being far better than “a pound of cure”.”

“If you know you have differences, you can explain to the family the importance of resolving these before they become conflict, and where you have conflict, you can explain to the family the importance of figuring out their differences.”

After writing this on the board, it struck me that this model seemed so well thought out, that perhaps Krishnan had seen it or read it somewhere, and since I planned to write a blog about it, I figured I needed to verify this with him.

It seems that it just came to him during a discussion with a client, as he was attempting to convince them of the importance of dealing with their differences early on.

Allow me to add my customary advice here, about the importance of communication. If you are looking to get everyone aligned, and keep them aligned, it is imperative to keep them “in the loop”, so that they at least have the opportunity to hear what is going on, and why.

It helps, of course, if this communication is truly two-way communication, with the opportunity for questions and clarifications. People can become mis-aligned due to lack of communication about what is going on in the family and the business, but it can be just as bad if there is communication but it only flows in one direction.

If you find yourself in a situation where a family is not getting along, I think that this model at least gives the advisor a way of talking about the situation with the family in a way that clarifies just how far along the spectrum they are, and what areas they need to look into to find a resolution.

I know that I expect to refer to it again, and I will have my friend Krishnan to thank for it. Please feel free to use it yourself with your family or your clients.

University Case Competition: Family Business Style

Last week the place to be was Burlington, Vermont.  I happened to be right in the thick of it for the first couple of days, and my experience was nothing but positive. So what was going on there that was so special?

For the third year in a row, the University of Vermont hosted the Global Family Enterprise Case Competition (#FECC15) at the Burlington Hilton and on their beautiful campus. It is the only competiton of its kind on the planet.

When they say “global”, they are not kidding either. While about half of the teams came from North America (including 4 from Canada and 2 from Mexico) there were competitors on hand from Europe, South America, Malaysia, Saudi Arabia and the UK, and I may have missed some.  Sixteen schools sent Undergraduate teams, and eight schools were represented in the Graduate league.

I have seen many business cases over the years, dozens during my undergrad and hundreds while doing my MBA, but I never read any cases like the ones used in this competition.  I was lucky enough to be a judge on the first two days, and I can say that the cases that the students had to present solutions for were like no business cases I had ever even imagined reading.

The competitors had a full seven days to prepare the first case, so they all had plenty of time to figure out what they were going to propose, how the were going to structure their presentations, and which teammates would be responsible for which sections.

The second and third cases, as well as the final on Saturday, were set up so that each team of three students would only have 4 hours from the time they received the case to the time they were required to present their viewpoints to a panel of “esteemed” judges.

But let me get back to the cases, because it can’t really be a family enterprise case competition if the cases are not situations that only a real family business would face.  I was only privy to the first two cases, but they were both fantastic examples of what successful family businesses face as they go from one generation of managers and owners to the next.

The first case was about a third-generation (G3) family who had been trying to write their family constitution for a few years already, without success, despite hiring a few consultants to help guide them. The four teams in the division that I was judging all came at their solutions in a different way.  Not only that, but each team brought up at least one issue that none of the other three had mentioned.

On day two, the teams were now faced with the time crunch of only having 4 hours to prepare, from the time they received the case until they had to begin their presentation.  But despite the fact that they had very little time, the solutions that I got to see and hear were quite remarkable.

This case involved a group of G4 siblings who were worried that their children (G5) were not showing enough interest in getting involved in the business. During the judges preparation meeting, I pointed out that the average age of the judges was likely close to the ages of the G4’s in the case, while the ages of the G5’s in the case was close to that of the competitors whose solutions we would be hearing.

It was a fantastic experience for me, as well as the judges that I worked with; I can only imagine how great the week was for those who came to compete.

The undergrad finalists included 3 Canadian schools and one from Chile, with Carleton U’s Sprott School of Business taking top spot in the final round over Dalhousie.  The winners of the Graduate section were from Jonkoping Unviversity of Sweden

I hope to take part again next year, at the 4th Annual FECC, in January, 2016.


Family Business Ownership Model

Three Circles + Seven Sectors = One A-Ha Moment

Over the past 8 months or so, I have taken on a renewed interest in family businesses and what makes them different and what makes them tick. I have enrolled in courses that do a great job of teaching what family business is all about and how and why they are special.

The courses have covered some in-depth ideas like having a family mission statement, holding regular family meetings, setting up a board of directors with non-family members, getting advisors from different fields to work together harmoniously, facilitating meetings and helping with conflict resolution.

But the single most important thing that I learned was right at the beginning of each course. And it is still the most powerful place to begin any discussion with a family businessperson. It is called the Three-Circle Model. It is SO simple, yet we kept coming back to it during the courses.

The Three-Circle Model (TCM) has only been around for twenty to twenty-five years or so. I am not sure who gets the credit for it, and I would not be surprised to learn that its exact origin is disputed. I recently read an artice from the 1980s that was still talking about family business from a “Two Systems” point of view, which leads me to believe that the TCM evolved afterwards.

(Note from 2016: Please see for more on the origin of the model)

Without further ado, the 3 circles are, “Family”, “Business”, and “Ownership”. F-B-O, a simple Venn diagram of three overlapping circles.

The premise is this: Most people look at a family business as one thing, one entity, one system. But upon closer inspection, there is a LOT more going on there. So in the 80s they started to look at how the Family and the Business were different, and needed to be looked at separately. Later, it was determined that Ownership was also worth spinning out as its own circle.

So part 1 of my equation above in the title of this post is the TCM. What about the seven sectors? Glad you asked. When you draw the TCM as a Venn diagram, you get seven different sectors. Picture yourself asking a three-year-old with a box of Crayolas to colour each portion with a different crayon; they would need seven of them.

So why is this important to Family Businesses? Well mostly because the people who inhabit some of those sectors aren’t even part of the family business. Some of them are part of the Business Family!

People who are only in one circle (the 3 sectors without any overlap) will look at the family business much differently than those who are in one of the three sectors within a two-cirlce overlap.

And then there are those in the middle sector, who are part of the Family, who work in the Business, AND who are also part of Ownership. They often lament the fact that everyone else doesn’t see things the same way as they do!

People who inhabit different sectors will view things in different ways. It is only natural.

Once you learn to view any family business through the TCM, it is like turning on a floodlight. All of a sudden some things that were difficult to comprehend become more easily understood.

And then when you realize that the four sectors where there are overlaps are the ones you need to really concentrate on, you can start to make a lot of progress. I like to think of this as the “flashlight” stage.

The TCM was the floodlight that allowed us to see many things in a new way. Shining the flashlight into the nooks and crannies of the overlapping sectors will help uncover the key areas that will need to be monitored and worked on going forward.

For a visual perspective on all this, please visit my website: click here

Steve Legler “gets” business families.
He understands the issues that families face, as well as how each family member sees things from their own viewpoint.
He specializes in helping business families navigate the difficult areas where the family and the business overlap, by listening to each person’s concerns and ideas.  He then helps the family work together to bridge gaps by building common goals, based on their shared values and vision.
His background in family business, his experience running his own family office, along with his education and training in coaching, facilitation, and mediation, make him uniquely suited to the role of advising business families and families of wealth.
He is the author of Shift your Family Business (2014), he received his MBA from the Richard  Ivey School of Business (UWO, 1991), is a CFA Charterholder (CFA Institute, 2002), a Family Enterprise Advisor (IFEA 2014), and has received the ACFBA and CFWA accreditations (Family Firm Institute 2014-2015).
He prides himself on his ability to help families create the harmony they need to support the legacy they want. To learn how, start by signing up for his monthly newsletter and weekly blogs here.