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Developing Capacity in your Business Family

Capacity vs. Capability

Sometimes when two words start with the same few letters, people get them mixed up, not noticing the nuances in their meanings.

A couple of words that certainly fall into that category are “capability” and “capacity”.

This week I want to explore them a bit, from a business family perspective.

 

From Ability to Capability

Before we even get to “capability”, we should probably back up a bit and start with “ability”, to make sure we grasp that simpler concept first.

Ability is about what you can do, which you know that you can do because you’ve already done it, at least once. 

Capability is more about potential to do something, and as we all know, even though you once were able to do something, that doesn’t mean that you’re still capable of doing it again now.

 

Ready, Willing, and Able

In some ways, capability can be summed up by the expression, “ready, willing, and able”. If I’m ready and willing to do something, plus I feel like I can muster the ability, then I at least believe that I have the capability to do that something now.

So if you know how to do something and you add some effort to that ability you’re now essentially ready to test out your capability, and can hopefully demonstrate that you can accomplish a task with a certain regularity.

With practice, you can hopefully get pretty good at it, to the point where others recognize that capability in you.  You’re off to the races, right?

 

What About Capacity?

I think that there’s another level that you’ll want to get to that’s higher than simply developing capability, and that’s to increase your capacity to do important things.

The part of the definition of the word “capacity” that I think we should concentrate on when thinking about this is the “volume” aspect.

When talking about a container, whether it’s an aquarium, an airplane, or a football stadium, we can ask about what its capacity is, when we want to know how much it can hold when full.

 

From Capability to Capacity

So if we go back to the capability discussion, we were getting good at doing something over and over, and now we want to see how much of it we can do.

But we don’t want to do this for everything, we really need to pick our spots and develop our capacity for doing things that are truly important.

And when we’re talking about business families, what’s more important than everyone knowing how to get along and work together?

Families who have succeeded in growing their businesses and wealth AND in transitioning them to the next generation have almost always developed that capacity to work together somewhere along the line, whether they realized that that was what they were doing or not.

 

Contagious Capability Grows to Family Capacity

The great thing about a family is that every member has different skills and abilities. 

It might not always be obvious how some family members can contribute to the business family, but if there are family members who are ready and willing, there should always be some effort made into finding a place for their abilities to contribute.

When you take the individual abilities, work on them so they become true capabilities, and then bring the people together with the right attitude to collaborate, you can develop the capacity for long term success.

The overall capacity of a family comes from the combination of all of its members’ capabilities, and that capacity can be way more than the sum of its parts.

 

Practice, Resilience, Guidance

Families who have succeeded at this almost never just stumble into that success.  Working together with family members can be wonderful, and it can be frustrating too.

It takes effort, and plenty of practice to get it all right.

There will be plenty of trial and error along the way, so the family will need to develop its resilience.

And, importantly, few families get this right all by themselves; they will almost always have someone from outside the family to guide them, especially at key stages.

Whether it’s a family business consultant, a facilitator or coach, it really doesn’t matter, and ideally it’s someone who combines these skills.

Successful multigenerational families have all developed their capacity to work together over time.

Can you?

The Art of Conversation: The Key to Family Communication

The Art of Conversation: The Key to Family Communication

When listing problems that business families face, communication is usually one of the first things people mention. 

 

Because it’s seen as a “big” problem, many people think that it requires a “big” solution

I beg to differ.


“100 One-Minute Conversations”

The initial idea for this post came from something I saw online recently, that talked about “100 one-minute conversations”, which in most cases are a better way to go than just having one, long, 100-minute discussion.

I wish I’d saved it so I could credit the source, because Googling it didn’t help me solve the mystery.

In any event, it lines up nicely with some of the other things I’ve talked about before, notably here: The Dimmer Switch vs. the On/Off

 

Clearing Up Any Illusions

My favourite quote about communication is from George Bernard Shaw, “The biggest problem with communication is the illusion that it has taken place”.

Let me spell it out just in case you didn’t get it.  

The biggest problem for people communicating with each other is when the person who says something believes that the receiver heard and understood them, and they’re wrong, but they assume they’re right.

Why did I take the time to spell that out? 

Because if I continued this blog while assuming that you understood what I meant, but you didn’t, then I would have been committing the exact faux pas that I was trying to explain.

The Art of Conversation: The Key to Family Communication

Conversations as a Subset of Communication

Of course communication comprises much more than verbal discussions, which are in fact only a small fraction of the entire communication “platform” that any enterprising family uses.

These families need to share lots of information to remain united enough to properly manage the assets they own together.

But while everyone can see what’s written in a family newsletter or on their Facebook page, I contend that it’s in the smaller groups, and the quicker, more regular conversations, that the most important communication actually happens.

Yes, you need to have the big formal, structural communication platforms, but, and it’s a big but, if that’s all you have, then there’s a lot missing.

 

Heart to Heart

The simplest way to make this point is to consider the expression “Heart to heart”. 

What makes family businesses different from other businesses is the family element.  Plain old communication might be sufficient for “regular companies”, but for a family business, being owned and run by a family, there needs to be a lot more heart.

I don’t think I’ve ever heard anyone talk about “heart to heart communication”, by I know I’ve heard people mention a “heart to heart talk”, or “heart to heart conversation”.

 

The (Lost) Art of Conversation

Speaking of expressions, we’ve all heard about the “art of conversation”, and I contend that in some ways all of the technology we’ve been using to communicate has made conversing together a bit of a lost art.

But here’s the good news, and I even just Googled it to make sure it makes sense.

You can get better at it, with practice. Yes, I just searched “do you practice art” to make sure, and I got plenty of hits.

Whether it’s playing music, or painting, or sculpting, one improves the more one practices their favourite art.

And so it is with conversations.

 

Small Groups, One-on-One

Conversations can happen all the time, mostly in small groups or even simply one-on-one situations.

They don’t necessarily have to be structured, scripted or planned in advance, and in reality, the more natural and free flowing they are, the better.

Sometimes the hardest thing about them is just making them happen, especially now that simply picking up the phone to call someone seems to rarely happen these days.

 

Conversations With Your Coach

One of my favourite ways of actually putting some structure to conversations is to have them be regularly scheduled.

I have a call over Zoom with my coach every week, and I have calls with my coaching clients typically every other week, which seems to work well.

Having things “on the calendar” might be the best way to make sure that you’re staying in touch enough.

 

Seven Years Later

Way back in 2013 I wrote Having Conversations, Not Just Communicating. And I guess it’s still just as valid today as it was back then.

When the “Next Gen” Becomes the “Rising Gen”

This week we’re looking at an issue involving vocabulary because sometimes the particular words we use can have a big impact on how we’re understood.

Regular readers will already be familiar with the term “rising generation”, as I’ve been using it for about five years now, ever since I heard James E. (Jay) Hughes use it during the first PPI Rendez Vous I ever attended, in 2014.  The Rising Generation in Family Business

Hughes had explained that using terms like G1 and G2 (first-generation, and second-generation) was very limited and sometimes confusing, and suggested instead that we in the industry use the expression “rising generation”.

 

Look at the Life Cycle Instead

Here’s a paragraph from that blog from five years ago:

“So here comes the “Rising Generation” to the rescue. Hughes pointed out that when we refer to the rising generation, it helps keep everyone focussed on the fact that every person, and hence every family, and every business, has a life cycle.”

I couldn’t have said it better myself (see what I did there?).

So I started using “rising generation” or “rising gen” about five years ago, after some others like Hughes, but before many who have “caught on” more recently.

The field is evolving and so is its vocabulary, and “better words” can help people make important progress.

My favourite example of this remains “continuity planning”, which is slowly replacing the term “succession planning” which has way too many negative connotations, especially when it comes time to get people to have the conversations that are necessary. See: Continuity Planning: Who’s at the Table 

 

What About on a “Family Basis”?

Okay, enough with the industry vocabulary, let’s get into the more important aspects of this, i.e. in a particular family, when does the “next generation” actually become the “rising generation”?

I’m glad you asked, because it’s an important question.

And in many ways, it’s mostly a question of mindset. The interesting thing about a mindset, though, is that each person has their own mind, and therefore their own mindset.  The trick is to get the entire family to come to share the same mindset.

Let’s look at it from each generation’s perspective first, while recognizing that different people in the same generation will have slightly different mindsets, but that the most glaring contrasts are usually found when comparing the mindsets of the different generations.

 

Mom and Dad’s View of Their Offspring

Let’s start with the “NowGen”, who are the ones currently “in charge” of things, especially in the business, and typically even in the family.

When their offspring are young, little thought is given to their eventual ascendency to key roles in the business family. At some point, though, there comes a mental shift, where ideas about roles that these young ones might one day play, as their “human capital” matures, begin to take form.

But even then, those first thoughts are usually about them as the “next gen”, i.e. as people who will make a contribution “some day”, far in the future.  It’s almost like they are parked there, and one day, their parents will beckon them and they will arrive on cue.

 

The Rising Generation’s View of Themselves

Meanwhile, those offspring have their own views, and they are often more realistic, maybe because they are the main actors in this play.

As those actors think about their lives and potential roles, they are more likely to think of the progress that they have already made and will continue to make, because they are living the “action” of rising.

Their view of the process of the “rising” is truly “first person”.  They will more easily feel like they are on their way somewhere, and are hopefully well on their way to shaking off the label of “children”, which connotes being “stuck” at some age that typically starts with a “1” or worse, is a single digit.

 

When My Mindset Becomes Our Mindset

So here we are, back to the question of the differing mindsets in the family. My premise is that the rising generation’s mindset is the more enlightened one, and that it behooves them to do the work necessary to convince their parents’ generation of its validity.

The two key points there are these:

  1. The onus is on the Rising Generation
  2. It will take work to do it.

It won’t happen overnight, it’s a process. And it’s never too early to begin.

 

The Sledgehammer Versus the Chisel

This week we’re back to an “A vs B” blog, which I love because the format fits so nicely with my way of explaining things and the nature of a weekly blog, where I share quick insights into various aspects of family wealth transitions.

There’s also a cool back story to the genesis of this idea, and, to top it all off, it involves a couple of tools that we don’t use every day.

Let’s get into the way this came up for me first, and go from there.

 

Searching for a Family Champion

About six months ago, I was looking for someone who fit the bill of a “family champion”, as I was planning, along with colleague Joshua Nacht, to lead a breakout session at this summer’s Rendez Vous of the Purposeful Planning Institute.

I should probably direct you to a blog I wrote around that time on the subject of the Family Champion, which is a term that still is not as well known as it should be. 

See The Unsung Role of the Family Champion

It was as a result of our search for someone to join us at the conference to better explain and demonstrate this concept and role that we came upon the perfect specimen.

Because people from business families typically prefer not to be written about in random blogs, I’m going to refer to the young woman we found (and co-opted) simply as “Terry” (not her real name).

 

Champions Are Motivated

It shouldn’t surprise anyone to learn that a family champion, like anyone who wears the title “champion”, not coincidentally, is typically a very motivated person.

When Joshua and I had our first Zoom call with Terry to start planning the details of our session, Terry impressed us both with her story about how she emerged and evolved into the champion role in her business family.

She shared some stories about how when she first began to ask questions of others in her family, and in the business, about how things were set up and how they were being run, she actually had a bit of a “sledgehammer” approach.

I love a great metaphor, so this one really resonated with me, and I made a note of it to make sure that she would mention it during the presentation. (I also made a note about it as a blog topic)

But the metaphor, as I would soon find out, was not yet complete.

 

Evolution to a Calmer Approach

As Terry continued to detail the progress she has made over the years at becoming a more effective family champion, she shared that she had to learn to soften her approach over time.

“Now, I find that the “chisel” can be much more effective than the “sledgehammer”” she said.

That combo metaphor just has to become a blog post, I thought.

Many Tools in Every Toolbox

My love of great metaphors is only enhanced when they also conjure up blog posts from the past, such as this one: The Tradesman and the Toolbox.

That blog was about how the person wielding the tool is usually a more important component in the success of the mission than the tools themselves.  And this is also the case for Terry.

It wasn’t that the chisel she was now deploying was sharper, or better constructed, it was that her approach to the task had her evolve to a place where she now recognized that using a chisel was a more appropriate tool than the sledgehammer that she had chosen at the outset of her journey.

 

One Tool Is Rarely Sufficient

This also brings up the question about the sequence and selection of tools.  Had Terry started out with just a chisel, we can be almost certain that she wouldn’t be where she is now, because at the beginning, the sledgehammer served its purpose.

Likewise, had she continued to swing the sledgehammer and never switched to a softer, more meticulous approach, I have no doubt that she would have run into different problems, and have only herself to blame.

 

Focus on the Process, Not the Content

 

She used different tools along the way, and will certainly need to deploy others going forward for optimal success.

Being proficient with the tools, and knowing when to use each, are more important than many realize.

 

Constitution book

Behind the “Flawed” Family Constitution

Behind the “Flawed” Family Constitution

This week’s post is about the wonderful world of the “Family Constitution”.  I thought about doing a “5 Things to Know…” blog, but decided against it.

There’s a lot to get to, so let’s dive in.

 

Just Who Are “The People”?

As I searched Shutterstock for an image to accompany this post, I entered the word “Constitution” and was amazed (but not surprised) at how many of the pictures featured the words “We the people” at the top of an old document.

Those are of course the first words of the U.S. Constitution, and they really sum up the importance of getting the preamble right to set the context properly in the creation of any important document. 

See: Co-Creation and Values in the FamBiz

It’s not hard to deduce from the expression “Family Constitution” that “the people” here would be “the family”.

 

“The Family”; OK, Thanks, Now It’s Clear. NOT

That’s all fine, of course, until it comes to defining exactly who all the individual people are, especially as definitions of family continue to evolve.

If that were the only issue to resolve, this wouldn’t actually be that difficult.  We’d need to start with the family leaders and then expand the group slowly, and then work together to come up with definitions and rules, and come to a consensus on who’s included.  Surely not an insurmountable problem.

 

Putting the “Con” in “Constitution”

Having a family constitution can be a very useful thing for some families, assuming their governance has sufficiently evolved and the family members have actually been key players in its development.

For every “Pro”, there are also many “Cons”.

The inspiration for this blog came from an article I saw on LinkedIn a few months ago, by Professor Enrique Soriano, who works with families on their governance, mostly in Asia. I’ve never met him, but we have 174 common connections on that network as I write this.

His post, Elements of a Flawed Family Constitution, is essential reading for anyone truly interested in this subject, especially for those who see the Family Constitution as the “be all and end all” of things that every family “must have”. 

The fact that many of those who believe this also peddle their services to families, and offer to create these documents for them, should not be a huge surprise.

 

One Person is NOT “People”

As I wrote last year in Family Governance: From Filaments to LED’s, if one person writes the constitution, alone, without major doses of input from people from different generations of the family, it simply will not work.  

Sure, you can fool yourself that you’ve got something worthwhile, but it won’t last.

Similarly, if the document was largely put together by a consultant, or even a team of consultants, it will not serve its intended purpose.  And this is true even if you hire the best consultants and pay them a lot of money to do this work for you.

As I always say about family governance (of which a family constitution is but one possible component) it really needs to be FOR the Family, BY the Family.

 

Cultural Differences?

Soriano notes at one point that perhaps the phenomenon of “flawed family constitutions” is more prevalent in Asia, where he is based.  That may be the case, as there could be more of an attitude towards the forced creation of a document that everyone is then expected to abide by in those cultures.

But I don’t care what country you are in, unless the family members were heavily involved in its creation and implementation, no family constitution is going to be worth much.

 

My Own Pet Peeve

The one thing that I personally hate about this subject, is that it’s so often based on the assumption that keeping the business and family together forever is desirable and doable.

There may be some cultural biases in this aspect.

If the attitude behind the creation of a constitution is to “force” people to remain in relationships that they otherwise would rather not be part of, then trouble will likely be ahead.

 

My “Family” Bias

My bias is always to make sure that the family relationships survive for generations.  If that means that changes need to be made to the business and ownership, then let’s figure out how to make those and keep the family intact.

If a constitution that reflects that can be created, then great.

Of course any family with that attitude might never think they need one…

2 kids whispering to each other

The Secret to Success for Family Businesses

Family businesses by their very nature are very diverse.  No two families are alike, and the variety of businesses that they own and operate are likewise very different.

So as someone who writes a weekly blog that always comes back to families and how they work together, I think it’s normal that my inspiration for ideas to write about is also “all over the map” and quite eclectic.  

This one comes from something I heard on the radio, but it wasn’t a country song! (Please see Blame it on Cinderella and Humble and Kind for examples of those).

No, this time it was talk radio, on a sports station.  But for some reason, they had Larry King on as a guest.  I guess he was in town for something and he popped into their studio.

 

“You Know What the Secret to this Business Is?”

Larry King was a long-time TV show host on CNN (1985 to 2010) and so he knows a thing or two about the broadcasting business.

He was chatting with the guys who host the afternoon drive show and suddenly he said, “You know what the secret to success is in this business?”

You could almost sense the anticipation as they waited for the punch line in the studio.  As I was driving, I too was intrigued and awaited the next words out of his mouth.

“The secret is”, he continued, finally, “that there is no secret”.

And so it is, dear readers, with those of us who work with family business.

 

What Questions Should I Ask?

When I work with a family business or a family office, I try to steer clear of the business end of things.  I do this not because I’m not qualified to help them there, because if I chose to, I know that I could add value there too.

I just prefer to stick to the area surrounding the family members, because that is where there is typically a crying need for some outside input.

But when I run into other professionals who also work with families, but who concentrate on business matters, they sometimes think that the work I do on family dynamics is something they could easily do as well.

It doesn’t happen that often, but sometimes they will even ask me for some of my “secrets”. 

“So can you just tell me what questions I should ask?”

If only it were that easy.

 

Listen, Ask, Listen Some More

There are no “secret questions” to ask.  It’s much more about being truly curious when you ask whatever question you choose to ask, and then listening to the answers.

It’s about wanting to find out what’s important to the family members, and I’m not just talking about the family member or members with whom you have your business relationship.  

If it truly is a family business, then the other members of the family are also important.  This is true even if there are some family members who don’t work in the business, and even if they are not currently owners of the business.

To truly serve a business family properly, you need to understand the family.  And to understand them, you actually have to meet them, and speak to them, and get to know them.

This can’t be a secret, can it?

 

Regular, Clear, Transparent Communication

I was just talking about advisors who work with families, but what about the families themselves?  Are there any “secrets” to success for them? Once again, I don’t think there are any secrets per se, just lots of common sense.  

And in the same way I was telling advisors that they should take the time and make the effort to learn about the other family members and their thoughts about the business, it’s even more important for the family leaders to do that too.

But they surely already know that, right?

And nothing worthwhile ever happens without some planning and intentional effort.

Making an effort to instill regular, clear and transparent communications within the family group is a great idea, and always worthwhile.

More families should probably do it, and not enough of them do.

So maybe it still IS a secret.  You can start changing that, now.

P.S. That “11-year-old daughter” in the Blaming Cinderella blog just turned 18 and will be off to college in the coming weeks. 

“Professionally Emotional” – A FamBiz Oxy-Moron?

Following up on last week’s post, Three Pillars of Family Governance from a Pro, in which I invoked the wisdom of Barbara Hauser, one of the veteran contributors to the field of family enterprise, I’m going to do something similar this week.

This time I’ve been inspired by Randel Carlock, a professor at INSEAD, who has also been a major contributor to this field for decades.

And whereas last week’s post came about as the result of my reading a piece from CampdenFB, this week it comes from a post I came across  from Tharawat Magazine.

Many of my blogs have their genesis in conferences I attend and interactions with families and colleagues, but these two websites have provided many sparks as well.

(LinkedIn and Twitter are great ways to stay abreast of things in this space, by the way).

 

Professionally Emotional

What struck me was this quote, from A Family Business on the Moon – Lessons from the Author, where Carlock says, “…we encourage families to become professionally emotional, which may seem like an oxymoron, but it works.”

As someone who loves to play with words and gets excited by the potential paradoxes in any oxymoron, this one ticked a few boxes for me.

While many people might feel like “professional” and “emotional” cannot naturally coexist, I think that those who inhabit the world of enterprising families will immediately recognize the possibilities this expression gives rise to.

Let’s take a closer look at what Carlock is driving at.

 

Professional Governance and Strategy

When it comes to the running of a successful business, it’s always important to have a professional approach to the strategy and the governance of the enterprise.  Few people will argue with that.

Of course, too many family businesses continue to operate with less than professional business operations and strategy, but that is a subject for another day.

In terms of running and guiding the company, “professional” is certainly the way to go, or at least something to aspire to.

 

Emotional and Caring Leadership

But family enterprises need to be a bit different than their non-family brethren in how they exercise their leadership.  

When you have several family members involved, and you therefore have more than a simple business relationship with the others around the table, other factors come into play as well.

It is in the leadership of these enterprises that the emotions and the caring need to be present.

So, “Yes” to the professionalism of the “what”, but also “Yes” to the caring about the emotional side of things in the leadership, or the “how”.

Parallel Planning Process

Carlock is encouraging families to work on their business and their family planning in parallel.  In fact, he coined the term “Parallel Planning Process” many years ago, in a book he co-authored with John Ward from the Kellogg School of Management at Northwestern University.

That book, Strategic Planning for the Family Business, details everything quite nicely.

Not only is it important to do planning for the business AND to do planning for the family and its members, a major point is that they are equally important.

And because they are both important, they need to be done in a coordinated and aligned fashion.  They are interdependent, so you need to make sure that they’re both progressing side-by-side.

 

Match the Speed of Evolution

What often occurs is that many plans are made, professionally, concerning the future of the business.  The focus continues to be on making the business strong, and having it continue to grow. The family can be an afterthought.

That’s when things can get out of sync with the family.  When there is business planning without regard to the family members and the human capital that they can offer, many possible contributors can get lost in the shuffle.

The other version can occur too.  How many of us have heard of family businesses that get sold to outsiders, because no family members want to take over?  Typically, the next generation have all become professionals and have great careers going, so coming back to the family business can seem like a step backwards.

All the more reason to try to keep the plans for the family and for the business properly aligned. None of this is necessarily easy to do, it takes effort and diligence.

That doesn’t mean it isn’t worth it though!

Kissing Your Sister: Playing for a Tie in FamBiz

As a lifelong sports fan, there’s been a phenomenon going on that I haven’t heard many people address. When I was a kid, a lot more games seemed to end in ties.

It was as a youngster that I first recall hearing the expression: “A tie is like kissing your sister”.  

As this subject came up as a potential blog post, it struck me that rule changes have been developed and implemented in some sports, notably hockey and soccer, to minimize the number of games that end with this seemingly “sub-optimal” result.

 

Is Family Business the Exception?

If ties are no longer considered something desirable in sports, maybe the world of family business could be the one place they’re still in vogue.  Let me explain.

Back in April, in Roles and Rules for Enterprising Families, I wrote about a presentation from the 2019 Institute for Family Governance Conference, which included an impressive 75-page slide deck.

In that blog, I intentionally chose to not focus on the great slide I noticed on page 50, because I was saving it for its very own post.

Here’s what the slide said:

 

A General Family Business Precept:

In a Family, if you play to Win, you Lose;

In a Family, if you play to Lose, you Lose;

In a Family, if you play to Tie, you Win

Richard Goldwater, MD

Boston, MA

I saw that slide in January, and months later it’s still with me, and rings even truer today.

 

Setting the Proper Context

Of course we need to think about this in the proper context, otherwise this statement can be dismissed as completely nonsensical, and that would be a shame. I think that there’s real wisdom here and I’d hate for it to get lost.

Dr. Goldwater is clearly talking about what goes on “intra-family” here.

Of course every family business, as a business competing with other businesses, should be playing to win, all the time, or else the business will not survive.

His thoughts on this subject are clearly directed at how members of a business family think about and deal with their interactions as members of the same team.

 

Misdirected Efforts

In essence, what I think he’s also talking about is how important it is to present a common front to the outside world, as a united team that is competing with other businesses, playing to win.

However, when some of the team members are busy expending efforts to win at some internal game that they are in effect playing against their siblings, parents, or cousins, then things can begin to fall apart rather quickly.

 

Sad to See in Real Life

Part of me wishes I could say that my only knowledge of these situations is theoretical, because it’s really sad to see things like this go on in the real world.

I have a coaching client who is fighting this kind of battle with their two siblings right now.

It’s so clear to everyone that there’s a power struggle going on.

And when I say “everyone”, I mean everyone.  

Employees see it, customers see it, suppliers see it, outsiders like bankers, accountants and lawyers see it.

brother kissing sister

Accidental Partnerships

The situation with my coaching client is one where the siblings are partners in a business together, but if they had started from scratch, these people would never have agreed to be business partners together.

They just ended up that way, accidentally.  Or, actually, through a lack of any real planning as their parents were transitioning out of the business.

 

Not Every Problem Has a Magic Solution

Unfortunately, there isn’t always a great way out of these situations.  

Various strategies are being looked at so that these partners can each end up in situations in which they are in control of their own destiny, and that their reliance on their sibling partners is minimized.  

We’ll see how it plays out, because there’s lots of complexity to manage, and the “parts” may be worth less than the “whole”.

 

Saving the Family Over the Business?

My bias, in situations like this, is to work on ways to “save” the family, even if that means making drastic changes to the business.

Some advisors prioritize the business.  I rarely do.

 

Kiss and Make Up

Getting back to the title of this post, maybe kissing your sister isn’t so bad?

And maybe it’s all part of a “kiss and make up” strategy.

But please recall that a tie can really be a win.

Continuity Planning: Who’s at the Table?

There are subjects I to return to regularly in this space, and “continuity planning” is certainly one of them.

I still clearly recall first coming across this term, and it was a bit of a head scratcher for me.

Lest your head also feel itchy, allow me to share what I learned when I first asked “Um, what’s ‘continuity planning’?” during the Family Enterprise Advisor (FEA) program in 2013.

 

Goodbye “Succession”, Hello “Continuity”

If the term “continuity planning” sounds new, it’s mostly just a newer, less threatening, and more accurate term for something that family businesses have been doing since, well, forever.  

Only most of them call it “succession planning”.

We were winding down the first module of the FEA program on “Family Dynamics”, looking ahead to the next six multi-day sessions that would take place over the coming months, one of which was called “Continuity Planning”.

The “outspoken” guy from Montreal asked, curiously, “What’s continuity planning?”

 

A More Appropriate Label

While the reply I got was largely that it was a “re-branding” of succession planning, I’ve since come to understand that it’s much more than that.

The biggest issue people have with the term “succession planning” is that it automatically makes one think about a future scenario when the key person or people will no longer be around.

In a non-family business or corporate environment, succession planning takes place all the time in many departments, and the idea is not nearly as “heavy”.

But in a family business, where the idea of “retirement” is somehow less common, that key person’s exit is too often presumed to only occur upon death.

 

What Will Continue, Versus What Will Change

When we substitute the word “continuity” for “succession”, there’s much more focus on what will stay the same, even when some of the people have moved to different seats on the proverbial bus.

The other idea that gets driven home is the longer term nature of the whole exercise.

We aren’t just concerned with the next transition, but also the one after that.  It’s the beginning of a long-running discussion about how to continue to prepare people for increasing responsibility for many years to come.

Setting the Table

If we want to have a good discussion about where everyone fits into the future scenario that we’re envisaging, my bias would be to include as many of these people in the conversation as possible.

What still happens too frequently is that Mom and Dad figure it out themselves and keep it secret.  Sometimes they even go see their accountants and lawyers to draw it all up officially.

And frequently those affected only eventually learn of their fates right after a funeral.  (See #5 in 5 Things you Need to Know: Family Inheritance)

Regular readers will surely recognize that I am not advocating for this strategy.

 

Start with the Family

The family business was likely built and grown for the benefit of the family, in most cases.  

If that’s true, then my belief is that it behooves the family leaders to involve the family in the first stages of continuity planning.

There are too many stories about expert advisors who lead the family down a certain path, for seemingly legitimate reasons (usually around tax minimization), on the assumption that whatever makes sense to them, will automatically also be great for the whole family.

 

Looking for Trouble, Without the Leadership to Solve It

Since this is often about a whole life’s work, there really shouldn’t be a rush to settle everything, just because some of the conversations can be difficult.

This is really important, but it shouldn’t be urgent.

What I’m suggesting is an iterative process, where a preliminary meeting is called to get the family in on the idea that plans for the future are now being worked out.

An invitation is also extended to family members to have their voices heard as to their ideas, hopes, and expectations around how they see things, especially as to what role they may have in things going forward.

 

Growing Into Their Roles

As more meetings are held over the coming months, the future family leaders can grow into their roles slowly over time, as the plans are co-created and become clearer.

After the family’s big picture ideas are clarified, it will then be time to get some outside experts to the table to work on the “how’s”.

Get the family around the table first. The experts get their place after.