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You Want an X-Ray? I’ve Got an MRI!

You Want an X-Ray? I’ve Got an MRI!

I pride myself on finding interesting topics to write about here weekly.  While the major thrust of my message targets the world of family business and family wealth transitions, the inspiration for my blogs can come from just about anywhere.

This week’s post simply comes from my everyday real life. I always keep my antennae tuned to things that are a bit out of the ordinary or counterintuitive.

These stories can then be artfully turned into useful metaphors, or at least that’s what I’m trying to do.

A Real Pain in the _______

My knees have been an issue for almost as long as I can remember.  My Dad had both knees replaced in his 60’s, so I suppose that’s something else I inherited from him.

Of course the “misspent” years of my youth when I played baseball and was usually the catcher surely didn’t help me preserve whatever parts of my meniscus that were there to begin with.

I had arthroscopic surgery a few years ago and it helped, but relief was only temporary.  My exercise options are now limited, and lately even riding a stationary bike results in pain after only short stints.

My doctor tells me that I should lose weight and that will help, and of course he’s right.  But I can’t help think that there may be something they can easily “fix” in my joint, to minimize the pain of exercise, which should help with the weight loss.

I know, I’ll get an MRI!

What’s Covered, What’s Not

In Canada, our health care system is run and paid for by the government, and it’s generally very good.  But not everything is covered, so sometimes when you want special services, you need to pay for them out of pocket.

No big deal, I think, I can afford the MRI, because this is what I need to allow the doctors to really see what’s wrong with my knee, and then devise a treatment solution.

Where’s the X-Ray?

Imagine my surprise when the orthopedic surgeon looks at the MRI and asks me “Where’s the X-Ray?”

WTF?  Is he joking, I wonder?  I feel like I sent an email attachment and was then asked to send a fax instead.  Are we going backwards?

Evidently not.

So I ended up going back to the same place I had the MRI done again, and instead of paying $500, this time it was “free” with the simple presentation of my Medicare card.

The Family Harmony and Governance Angle

The first metaphor that comes to mind when I put on my family business consultant hat is one that I touched on a while back, in Behind the Flawed Family Constitution.

The essence of that post was that some families who are unsure of what to do, but who know that they should do something, (and they can afford to do whatever it takes) will often overdo it and decide that what they need is a full-fledged family constitution.

Some of the biggest, most successful families do it that way, so we will do it too.

It’s actually a pretty good sentiment, but it shows a fundamental misunderstanding of how those successful families went about it.

Start Early, Start Small, Start Slowly

There is nothing wrong with having a family constitution. But, and it’s a big “but”, it is not the place to begin.

Families who decide that they need to institute some form of governance should instead follow the steps I outlined in a 2017 blog post, Start Cleaning Up your M.E.S.S.

The acronym “MESS” was something I came up with almost by accident.  But I think it’s a useful way to remember things about “getting started” with big changes, such as instituting governance.

The letters in MESS each follow the word “Start”, as in “start moving”, “start early”, “start small” and “start slowly”.

Start with the X-Ray, Then the MRI

In the same way I went straight to the MRI, many families think that they can take a shortcut, and get someone to help them write up a family constitution, and then all will be right with the world.

But just like the clinic that gladly took my money for an MRI I probably didn’t need, there are plenty of people out there who will take your money and write you a family constitution.

A family constitution needs to be done BY the family, FOR the family.

There are no exceptions.

Conversation between family members

Conversations: Does “Uncomfortable” = “Productive”?

Conversations: Does “Uncomfortable” = “Productive”?

This week’s post was inspired by a recent Zoom call that I was on with a group of like-minded colleagues.  The group consists of people trained in Bowen Family Systems Theory (BFST), which became an interest of mine about five years ago.

Actually, I was more than just “interested” in BFST; I recently published a book about how it illuminates the field of intergenerational wealth transitions. (See Interdependent Wealth)

In the book, I also share my journey of learning and discovery of the fascinating world of BFST.

 

“Uncomfortable Conversations”

On that call, one colleague related a story about a recent meeting that she had had at her workplace, where some “uncomfortable conversations” took place.

She shared her reaction to the conversations, and how she was able to maintain objectivity towards the subject, not allowing her emotions to derail her thinking, thanks to her understanding of, and training in, Bowen Theory.

During the ensuing discussion, someone referred to that conversation, and dubbed it a “productive conversation”.

And suddenly in my head, there it was, “A-Ha!”, there’s definitely a blog post in this idea. 

I know that lots of business families face these issues around “tough” conversations all the time.

 

Of Productivity and Discomfort

In the example from above, that conversation was deemed uncomfortable, and also productive. My understanding of the productive aspect is that it likely resulted in an ability to move forward on some important matter(s).

If I frame this question around just the area of conversations, I might ask, “Does every productive conversation have to be uncomfortable?”

Or, turning it around, “Is every uncomfortable conversation productive?”

I think everyone would agree that the answer to both questions is a resounding “No”.

 

Avoiding the Tough Conversations

So if we’ve determined that “uncomfortable” and “productive” are simply two adjectives that can be used to describe conversations, and that even though there is some overlap of these groups, it is not a perfect overlap, what is this really about?

My guess is that it’s really about the fact that even though we know a conversation could be productive, it will often be avoided if it is expected to also be uncomfortable.

I know there’s no rocket science in that last sentence.

 

Necessary Conversations

In my notes to capture this as a blog topic that morning, I included the word “necessary”, because that word also came up for me as I considered the idea.

How many “necessary conversations” are being avoided, simply because they’re expected to be uncomfortable for someone?

Probably way too many to even begin to count.

 

Preparation and Culture

I want to share a few ways that we can have more productive conversations, that won’t necessarily be “comfortable”, but will at least be less “uncomfortable”.

First off, when people are prepared for a conversation, they can be more ready to hear things that they don’t always like to hear. When you can brace yourself before you fall, you won’t get hurt as badly as when you can’t.

Another important element that you can work on, is creating the proper culture for these conversations.  If you can be in the habit of creating a safe and supportive space, that can certainly help with the comfort issue.  

The more often you get together with people, raising some difficult issues and dealing with them positively, the more this can become a habit, and eventually part of your culture.

 

Make It a Regular Forum

In fact, one of the recommendations I typically make to families who say they really want to get serious about their planning for their eventual intergenerational wealth transition, is to begin to have regular family meetings.

These meetings don’t necessarily need to be held frequently (monthly or quarterly) but there should be at least one or two a year.

The important thing is to make sure that everyone knows that there will be an opportunity to have important conversations, around matters that will affect the whole family, over the very long term.

 

Start Slow, Add “Big” Topics Later

The initial few meetings can be used to get the attitude and culture right, hopefully dealing with simpler issues at the outset.

With time, some of the more sensitive topics will typically be added to the agenda, as people will have become used to working on important aspects around how things will evolve.

Hopefully, you can be productive, without being uncomfortable.

 

Rocky Mountains

Rocky Mountain High: Best Is Yet to Come

Notes from my 6th PPI Rendez Vous

As I write these words, I’m returning from Denver, after attending my favourite event of the year, the Rendez Vous of the Purposeful Planning Institute

During my first, in 2014, I vowed to return each year if at all possible, and I’m grateful that I’ve been able to keep my streak perfect thus far.

As I’ve shared with anyone who’ll listen, this is where I go each July to “fill up” my proverbial tank, hanging out with like-minded peers who all also “get” the importance of putting family members at the heart of the work that goes into intergenerational wealth transitions.

While I fully recognize that a vast majority of the activities that go into the world of “family wealth preservation” are still comprised of “structural solutions”, I can tell you that more and more professionals are seeing the light and recognizing the many shortcomings of those methods.

All those who want to meet, share and collaborate with others who recognize that this planning should be purposeful in nature, i.e. centered around the family’s purpose, please plan to join us next year (July 21-23, 2020).

 

Too Many Highlights to Mention

No blog post could ever do justice to all the great sessions and learnings from any single Rendez Vous, but I’ll try to report on some parts that I personally found special.  

I also know that each attendee will have their own list, and most of those will surely be pretty long.

When PPI founder and head John A. Warnick took the stage to talk about the state of the organization, one of his Powerpoint slides had the phrase “The Best Is Yet to Come” on it, and I found it quite powerful and pertinent.

Indeed, it feels like the best IS yet to come, for PPI, for the field of of professionals serving ultra high net worth families, and even for me personally.

 

Podcasts: THE Big “New” Content Format (?)

A theme that seems to be emerging in the professional space in general is the appearance of more and more podcasts. 

At dinner one evening, I sat next to two podcast hosts who have had me on as a guest recently (Family Business Podcast ep.59) and (Crafting Solutions to Conflict, upcoming episode), and the evening before I was invited to be a guest on a future episode of the Business Sustainability Radio Show.

I guess it helps when you have a new book out that you want to talk about, and when you like to talk about the important work being done in an emerging profession.

The book was central to many conversations I had with colleagues and friends (new and old) while there.  I wrote the book to fill a gap in the literature and based on what people told me, it does that. 

Some who had purchased copies, brought them for me to sign, which I was honoured to do.

I also gave several copies to people who seemed likely to follow up my gift with an Amazon review, of which I’m hoping some will be forthcoming.

Some More Random Highlights

 

  • Wolf Packs

I honestly can’t recall which mainstage presenter mentioned it, but the expression “The Strength of the Wolf is the Pack; and the Strength of the Pack is the Wolf” was mentioned.

I can think of few expressions that better capture what it means to be part of a family who’ve agreed to continue to work together, so I always welcome any opportunity to share it.

 

  • Meditating Vs. Sleeping

Perennial presenter Ian McDermott had us run through a cool exercise on conversations, in triads, but not before leaving me with a great sentence that I noted because it captures something that’s also become a habit in my life.

As he described his daily ritual, he noted “I wake up and then I meditate. People ask ‘why do you meditate, you were just sleeping?’ And I say ‘Yes, but meditating isn’t the same as sleeping’”. 

Amen, Ian, thanks for putting it so simply.

 

  • Mentor Mixer

Kudos to Amanda Koplin for instigating the first ever PPI Mentor Mixer. I’m pleased to have found a match in a young woman who is older than my daughter (but not by much) with whom I’m certain future exchanges will prove mutually beneficial.

 

Until PPI Rendez Vous 2020

Having reconnected with many colleagues, I am once again “full”, and ready to continue spreading the purposeful news for the next 51 weeks. A la prochaine!

Family Getting together

“We’re Here to Improve, Not to Impress”

“We’re Here to Improve, Not to Impress”

Each week in this space I write about subjects relating to families who work together for their long term benefit.

This can be in a family business, a family office, a family foundation, or any combination of these and other scenarios.

But when individual family members work together on these matters, they aren’t always coming in with the same goals or attitudes.

 

Blogging About Enterprising Families

The idea for this particular post, which I used in the title, comes from a situation that has nothing to do with families at all, but rather from a real life experience of mine that I recently noted.

Of course I needed to find a way to take that message, tell that story as background, and then relate it to the world of enterprising families.

I’m pretty sure that I found a way to do it, but I will leave it to readers to evaluate my success.  

 

Coach Training Example

Those of you who also read my monthly newsletter (and care enough to pay attention to the details of my life that I sometimes relate therein) may know that I began a coaching certification program in April, with CTI.

During our very first session with our CPL (Certification Pod Leader), he made a statement that I wrote down and vowed to keep in mind throughout the program, and beyond.

He asked all nine of us to remember that we were there “to improve, NOT to impress”.

I’m pleased to report that it has stuck with me, and I’ve repeated it to myself, and others in our group, on a few occasions.

 

What About Family Members?

So where can we use this idea when working with family members? I’m glad you asked.

I think that the best way to begin to look at this, is to actually think about the expression in reverse.  Wait, what?

Well not really in reverse, but let’s think about the “here to impress” part of it first.

I have seen my share of family businesses, and in many of them, there are certain family members who expend a lot of effort and energy trying to impress others.

Now this might be fine if all these efforts were being made in order to impress outsiders, like customers, suppliers, bankers, etc.

But when they spend so much of their time and effort trying to impress their parents and their siblings, that always leaves me feeling at least slightly disappointed.

 

Poorly Focused Efforts

That disappointment arises mostly because it feels to me like many of these efforts would be better put to use for the common good of the family.

Instead, they often have at their core a need for certain family members to boost their own worth within their family.

When people feel the need to act this way, it is usually disappointing to me.  

But this isn’t about me, it’s about the families. So let’s look at it from their viewpoint.

 

How About Improving Together Instead?

Now I want to go back to the expression in the title, and examine the first part. “We’re here to improve”.

Imagine that instead of certain family members attempting to bolster their personal superiority over others, they would simply act first and foremost as team players, concerned with the success of the entire group.

Every group of people who work together, in whatever form, will have people with varying levels of abilities in different areas.

It is rare to find a group in which one single person is the best person in that group at every task they undertake.

 

Going Far, Going Together

As I wrote that last line, I flashed back to a blog from 2016, which remains one of my favourites.

Going Far? Go Together, was inspired by an African proverb that reads, 

“If you want to go FAST, go alone. If you want to go FAR, go together”

As someone who writes regularly about families who work together, and who has admitted repeatedly to having a “family first bias”, I hope you can see why this proverb is close to my heart.

 

Improving Together Impresses the Outsiders

When families can keep their focus on making things better for the whole group, they will actually end up impressing many outsiders.

While that may not be their goal (and probably shouldn’t be) it is a nice side effect.

Hopefully other families can then watch and learn!

 

Three Pillars of Family Governance from a Pro

Some regular readers may be getting a bit sick of reading my take on the subject of Family Governance.  Well this week I’m going to revisit this important subject, but with the help of someone who has decades more experience with the matter.

I always want to share more on Family Governance, but this time I’ve got the wisdom of Barbara Hauser on my side, so you can all benefit from her work with families on several continents.

The source of the background for this post is an article I saw online in March, from CampdenFB.com, written by Hauser.  It, in turn, is an excerpt from a chapter that she wrote in the recent book, Wealth of Wisdom, which I also highly recommend.

Making Decisions Together

What are the best ways for a family to make decisions together?

Great question, isn’t it?  I think so. It’s also the title that Hauser chose for her post, and Chapter 28 of Wealth of Wisdom, which was her contribution to the book.

My readers will hopefully recognize the aspect of decision-making that I typically cite as one of the three main components of Family Governance (along with communications, and problem-solving). See Family Governance – Do It Yourself?

Go Read It for Yourself

I will come right out and recommend not only that you read the CampdenFB.com story I linked above, as well as the entire Wealth of Wisdom book.  

But now I need to segue this post into the “three universal principles” of good governance that she outlines for families to follow that I teased in my blog title.

Let me list them here first, and then I’ll give you my take on them one-by-one.

Hauser states that three key elements you’ll want to ensure you have are:        

Transparency, Accountability, and Participation.

Transparency: Everything Above Board, Please

Family governance is all about how things are taken care of for the larger family group, and typically involves smaller groups of people doing much of the work and making many of the day-to-day decisions on their behalf.

These situations always result in what I like to call an “Information Asymmetry” i.e. a few people know A LOT about what’s going on, while many people know VERY LITTLE.

The most important thing to keep in mind is that this asymmetry can make those on the “I know very little” end of things uncomfortable and perhaps even suspicious.

As an antidote to suspicion, it behooves those on the “I know a lot” side to be overly transparent in everything they do.

Better to “overshare” to the point where they feel like you are bombarding them with detail, than to “undershare” and have them think you are hiding anything.

Accountability: Do What You Promised (Or Else!)

Being accountable to the group is the next key principle that follows on perfectly to transparency.  Not only do those who are taking care of things need to be upfront and above board with the things that they are doing on behalf of the other family members, they actually need to be held to account for the results.

If certain people are being trusted by others to represent them, there needs to be an occasional “accounting” of their performance.

If results are sub-optimal, explanations are warranted, and continued underperformance should naturally raise possible questions of fitness for the task.

As long as group members can see what those at the helm are doing, and that there are opportunities to discuss results, things typically run smoothly.

Participation: Hey, I Want in On That Too

Hauser’s third principle of Family Governance is Participation.  Again, it flows nicely from the previous one.

Imagine a scenario where performance is not up to expectations.  Other family members might rightly want to be able to be involved at a deeper level, if they feel that they have a contribution to make.

Of course this principle involves more than simply having a line form to take the place of those at the helm.

Simply being invited to take part in any discussions around transparency and accountability also count towards participation.

Start Small, Let Things Evolve

I really don’t like to scare people when I talk about the importance of Family Governance.  It doesn’t need to start out as a big deal. Put a few elements in place, and allow things to evolve slowly form there.

That reminds me, you may also want to read The Evolution of Family Governance!

guy riding a bike in ireland in the late afternoon

Riding a Bike: Assumptions and Promises

Readers who also get my monthly newsletter are possibly aware of a recent professional development program that I’ve signed on to in order to up my one-on-one coaching skills.

I’m now a little over month into the 6-month long professional coaching certification program with CTI, and loving every minute of it.

Included in the work, in addition to time spent coaching clients, is a regular weekly Zoom call with the other 8 coaches in my “pod”, with our course leader.

In preparation for our first call, we were asked to prepare a response to two queries about our expectations for the program.

What Are Your Assumptions?

The first thing we were to consider and expound on was our assumptions about the journey on which we were embarking.

Now my particular situation was quite a bit different from that of the average participant, because a long time had elapsed from when I took all of the prerequisite courses to when I began the certification program.

I completed those in 2014, and a five-year gap is far from standard.

So my response to the assumptions question was that it would be like riding a bike, meaning that despite the time lag, the coaching would all come back to me quite quickly.

 

What Promises Are You Making?

The next question was completely different, but I felt compelled to tie my answers together.

We were asked what promises we were making to ourselves about our participation in the program.

I thought about that one for a while, before being sparked into jotting down: “If I fall off my bike, I’ll get right back on and keep riding”.

I felt so clever in the moment, and I was pumped to share my answers the next day.

 

Change of Plans

Now imagine my disappointment when we actually began our introductory call and our leader went off script and asked two different questions instead!  Ah, crap!

I managed to answer his prompts on the spot, but my replies weren’t nearly as memorable as the ones I’d prepared.  Oh well.

But then, in my regular session with my own coach, Melissa, I relayed the story to her.

“Hmmm.  You seem excited about this subject.  Maybe there’s a blog in there for you?”

And here we are.

 

The Family Business Angle

You all know that I love to relate stories, and now the trick is to turn this into something worthwhile for families who are planning an eventual intergenerational wealth transition.

So let’s start with Assumptions and then move on to Promises.

 

Assumptions in an Enterprising Family

This part is actually pretty simple for me, because assumptions are at the heart of many of the key issues that families face.

In fact, a large part of the role that I play when working with families is to have them recognize the assumptions that they hardly even realize they are making.

Once they recognize them, they can start to deal with them.  And by deal with them, I mean that as a coach, I will challenge them to actually verify that their assumptions are in fact valid.

girl and guy riding a bike

My Kingdom for a Forum

The main reason that assumptions persist in not being “aired out” is that families don’t have a forum in which to have the important discussions necessary to clarify that everyone has a common view on important matters.

I talk a lot about the importance of family meetings, and the key is always to have a series of meetings, where the date of the next meeting is always set before the end of the current meeting.

Please See: 5 Things you Need to Know: Family Meetings

 

Promises in an Enterprising Family

The idea of promises in an enterprising family is a bit less clear to me.  Obviously when working with family, we often feel much closer to each other and there’s an inherent promise to do what is best for the group as opposed to ourselves.

But I think that my “take home message” on this should go along with what I wrote about assumptions.

While you are meeting and clarifying everyone’s assumptions about the future of your family enterprise, why not also make it a point to also enunciate the promises that you’re all making to each other?

 

Get Back On the Bike!

In closing, I recognize that some families start these meetings and then lose momentum.

To them my message is simple: Just get back on the bike and ride again!

 

Doing Better than the 4 D’s

Doing Better than the 4 D’s

This week I want to talk about the “4 D model” that I’ve heard David York speak about on a few occasions.

Now, lest you think that the word “model” is being used here in a positive sense, as in “a model that you should follow” or “role model”, please erase those thoughts immediately.

And furthermore, if you think that I’ll be arguing against York’s views, again, that ain’t it either.

York coined the term “4 D Model” to describe what has been going on for far too long, and we are in full agreement that there is a better way to go.

 

Background and Context

I first met David York in Denver a few years ago, at the annual Rendez Vous of the Purposeful Planning Institute (PPI).

Regular readers know that PPI is one of my absolute favourite organizations and that the Rendez Vous in July each year is the one gathering each year that I never miss.

I personally see York as one of the rising young stars in this field and love the way he conveys his important message.  This TED Talk of his is a great example.  His books are great too.

 

Traditional Estate Planning

York has long described the traditional “4 D Model” as follows:

Dump, Divide, Defer and Dissipate.

He’s also well aware that many of his estate planning attorney colleagues continue to follow this model.  Let’s look at the 4 D’s one by one.

DUMP

This is the part where the assets of the parents are transferred to their offspring upon death, usually after the second parent has died.   Little is done to transition any wealth while the parents are still alive, because that might require some real thought.

DIVIDE

This refers to the fact that upon death, those assets will be automatically divided equally between the offspring, regardless of any other circumstances, like ability, needs, etc.

DEFER

The deferring is mostly about trying to avoid paying any taxes until absolutely necessary.  So delaying any transfers of assets is part of that strategy too, because if you can’t avoid paying taxes, deferring them as far off into the future is the next best thing.

DISSIPATE

The final D is mostly about the results, as the family’s wealth dissipates after applying the first three D’s.

When the wealth has been treated in this way, with financial wealth as the sole issue of concern, and where no effort was ever made to involve those who would inherit it, it shouldn’t be surprising to learn that in many instances, that financial wealth will be handled by the inheritors in ways that could be described as sub-optimal at best.

 

More Purpose, Please

So far we’ve spent lots of time on how NOT to do the work necessary to transition wealth from one generation of a family to the next, and now it’s time to look at some positive moves a family could make to do a better job.

Notice that I said “moves a FAMILY could make” because ultimately the onus is on the family to do what is right for them.

Unfortunately, most families rely on outside experts to help them with this important work, and if a majority of advisors are stuck in the “old ways”, it can be very difficult for families to get the kind of help they really need.

Truck dumping grabbage

Involving More Parties – Inside and Outside

If the Four D model has survived this long, it’s largely because it’s very efficient.  It’s quick and relatively easy.

Making purposeful plans involves a lot more people so it naturally takes more time.

The first group of extra people are the other family members.  How can you make important plans for the next generation without involving them?

I don’t know, but most families have done it that way.

 

Multidisciplinary Advisors

The other group of extra people that need to be part of the solution are the advisors.

Every great plan will need to include input from a variety of outside specialists.  Ideally they will collaborate for the good of the family.

But most importantly, most of them should only be brought in after the family has figured out the most important questions around how they want the wealth to serve the following generations of the family, not before.

Rendez Vous 2019 will feature a breakout session featuring David York as well as one featuring Steve Legler and Joshua Nacht.  We all hope to see you there.

5 Ways to Invest in your Enterprising FAMILY

5 Ways to Invest in your Enterprising FAMILY

Each week in this space I write about business families and families of wealth, and I usually prefer to emphasize the family and its members, over the business and its assets.

This is in sharp contrast to much of the focus, not only by the professional advisors to such families, but often too many of the family members themselves.

Today I’m going back to a format used pretty frequently in the past, the old “Five things you should know…”, by looking at 5 Ways to Invest in your Enterprising Family.

 

  1. Formal Education

Post-secondary education is certainly one simple way for families to invest in their rising generation members.  As my grandfather liked to say, anything that you can put between your two ears, nobody can ever take away from you.

Some families have an urge to get their kids into key roles in the business ASAP, with the attitude that they don’t “need” to go to school any longer, because they’ll learn everything they need to know at work.

My bias is to look at everything with the longest time lens possible, so while encouraging young family members to go to college may delay their entry into the business, they will bring much more to the table, including more self-confidence, with a university degree a few years later.

 

  1. Family Retreat

When looking for ways to invest in the family as a whole, organizing a family retreat can be an interesting option.  Getting the whole family together at a different location (not at the office, and not at home or the cottage) can be done in many ways.

The important things to remember are to make sure that the activities and subjects covered will vary, and will certainly not be “all business”, and to make sure that many voices will be heard over the course of the retreat.

If the plan is just to have the parents download information and their wishes onto the next generation, you may as well not do it.

Please see Geography 101: “Where” Matters for more on this.

 

  1. A Series of Family Meetings

Even better than a single retreat would be to begin to hold family meetings on a regular basis.  This could be done annually, more frequently or even less often, depending on the size of the family and other matters around complexity.

These meetings can take place at a home or office, but ideally would be done in “neutral” locations most of the time.

The central reason for holding these meetings is to “force” the family to come together to talk about important matters that would otherwise not get discussed.

Presumably not everyone works in the family’s operations and these meetings are a great opportunity to share what’s going on, even with those who you may not think really care. (Hint: they actually DO).

 

  1. Family Business Conference

Families ready to take the “next step” can look for family business conferences where they can learn from other families facing similar circumstances.

I can almost guarantee that many family members who attend one of these types of conferences for the first time will have the following reaction: “Wow, I never realized that so many other people are experiencing the same issues as we are.  It’s nice to know we aren’t alone”.

 

  1. Hire a Family Facilitator

Now you may see me coming when I suggest that a family may want to hire an outsider to guide them down the road to figuring out all the issues relating to their alignment and governance development, but I already know that very few families will ever go this far.

As mentioned in My Notes from a Great Keynote a small percentage of business families do actually hire an outside consultant, and it is analogous to hiring someone to give you private lessons.

This blog is about investing in your family, and hiring this person will cost you some money of course, but the real investment will need to be each family member’s time in the meetings and other activities that you all undertake together.

The facilitator you hire can become the architect or project manager of the family’s journey to creating and implementing their family governance plans.

 

Logical Progression?

As it turns out, the five ways I’ve outlined above actually flow in a more or less logical progression. You don’t need to follow them in order though, just get started anywhere!

Roles and Rules for Enterprising Families

Back in January after the Institute for Family Governance’s third annual conference, I noted in Family Governance: One Step at a Time that that one day would end up being the source for a number of future blog posts.

I’ve officially lost count already, and here’s another one.

Its inspiration was the second presentation of the day, by John Ambrecht and Michael Whitty, entitled “Governance Structures that Actually Fit a Psychological Model of Human Behavior”.

Looking over their 75-page slide deck some 10 weeks later, there was a LOT of information in their talk.

 

From Roles to Rules ©

The psychological model they referred to is detailed in a 2004 paper that was published in the California Trusts and Estates Quarterly titled “FROM ROLES TO RULES©:† A NEW MODEL FOR MANAGING FAMILY DYNAMICS IN THE ESTATE PLANNING PROCESS”

I’ll leave it to the most curious readers to examine this in more depth, and I’ll simply talk about family business roles and the importance of eventually making rules that everyone needs to learn to abide by.

 

In the Beginning…

When family businesses start, things are usually rather informal, with few real rules and with poorly defined rules, if any.

As the business grows, the division of work necessitates that roles become clarified, and many family companies have some difficulty even with this roles component.

When that man tells me what to do, is he my boss, or is he my Dad?  (Of course the answer to that question is “Yes”)

Role Clarity and Making Rules

You may be thinking that in order to properly define each person’s role, making some rules around things would make a lot of sense. And I think you’d be correct.

While Ambrecht and Whitty suggest that there’s an evolution “from roles to rules”, they certainly don’t mean that you finish with roles completely and then arrive at the rules stage.

It’s more of a change in emphasis as the family business matures.

 

Formality is your Friend

Regular readers will recognize the expression “formality is your friend” as one I return to from time to time, and this is another such occasion.

Both roles, when they are well defined, and rules, when they are clear and are actually enforced, certainly help out with formality.

I hope that you noticed that I just added some conditions to both roles and rules there.

If the roles are poorly defined, they won’t do much good, and if the rules aren’t clear, or worse, if they aren’t enforced, it may be worse than not having any rules at all.

 

Rules Lead to Governance

Sticking with the formality, that feels like it fits really well with the rules idea.  And as a family makes more formal rules, they can (hopefully) eventually end up in the wonderful world of family governance.

Recall that this post began with a mention of a conference devoted to the subject of family governance.

As I wrote a couple of years ago in Family Governance, Aaaah!, my personal views and feelings around the “G-Word” have evolved.

Families will often have a negative view of governance because it sounds way more formal that what they are ready for and for what they think they need.  And they are often right about that.

 

How Are We Going To…..

When someone explains to them that family governance doesn’t have to be that complicated, and that it really involves answering three simple questions, people can get on board more easily.

Those questions are:

  • How are we going to make decisions together?
  • How are we going to communicate?
  • How are we going to solve problems together?

Three questions that can have some pretty long answers, agreed, but still only three categories to worry about.  And the third one is really mostly a repeat of the first one, but with an added emphasis on trickier situations.

 

Back to the Roles and the Rules

While governance feels like it’s more about rules, it is also very much about roles too.

All those decisions that need to be made will be made by people, and the bigger and more complex the family’s wealth becomes, the more important it is that they find ways to make those decisions in ways that satisfy the family group.

Business decisions can often appear much simpler than those that affect the family.  Please see The Unsung Role of Family Champions for more on key roles in enterprising families.

As families approach key generational transitions, it becomes especially important to pay close attention to these ideas.

 

family business champion

The Unsung Role of Family Champions

This week I’m introducing a subject I first heard about a few years ago, but that has recently been put back on my “front burner”.

I first heard about the concept of a “Family Champion” about five years ago, which would’ve been right around the time that Joshua Nacht was completing his PhD on the subject.

Nacht’s supervisor was Dennis Jaffe, who is quite well known in the circles of the Family Firm Institute (FFI) and the Purposeful Planning Institute (PPI), both of which I was then just discovering.

 

Like a “Product Champion”?

Decades ago I recall coming across the idea of a “product champion”, while reading some business books.

As I recall, the concept was that you needed to have one really interested and motivated person who really cared about the development of a new product within a company, if it was to have any hope of succeeding.

Later in my career, when our family’s business had successfully licensed one of our patented products to a large company to manufacture and sell in the US, we learned about the importance of a champion, the hard way.

 

Champ Doesn’t Work Here Anymore

The company we licensed was acquired within the first year of our agreement, and both the VP and product manager we had been dealing with soon left for greener pastures.

Our agreement “survived” the acquisition, but without a “product champion” around anymore, the product we were expecting them to make and sell (and pay us a royalty on) soon became their 99th priority.

We ended up cancelling the agreement shortly thereafter.

From that point on, the idea of a “champion”, as someone who cares about something and who will assume a leadership role in making sure things happen, became seared in my memory.

Family Circle Issues and Governance

When we think about a family business, we can safely assume that in the business “circle”, there are a number of champions around, whether they be for a product or a project.

The role is actually most often actually part of someone’s job, and something that someone is specifically paid for.  In fact, if they do it well, they may even get a nice bonus.

But every family business has another key circle, the family circle, where things are often much less clear.

Anyone who reads my blog regularly, knows that I always bring things back to the family and how tricky it can be to make sense of things there.

 

Trophys

 

Momentum and Making Things Happen

Because it isn’t normally part of anyone’s “job”, making sure that things get taken care of in the family circle requires someone to be an instigator and a leader, and this person is often referred to as a “Family Champion”.

Joshua Nacht, who now works with the Family Business Consulting Group, has recently updated some of his PhD work and released a book entitled Family Champions and Champion Families.

In the book, he gives some great examples of who these champions are and the roles that they play.

 

 

The 100-Year Family Businesses Project

I asked Nacht how he came up with the idea for his PhD and he explained that Jaffe was his PhD supervisor.

Because Jaffe had recently launched a years-long project of finding and interviewing 100 family businesses that had each lasted a minimum of 100 years, he employed some of his students to conduct many of the interviews for him.

It was after doing a number of these in-depth interviews that Nacht and Jaffe realized that one of the keys to family business survival was to have someone who is interested, motivated, and capable of making sure that the family circle was never neglected in favour of the business circle.

 

 

Advisors Supporting the Family Champion

As an advisor who typically works with families who are beginning to work on family alignment and family governance, I am always on the lookout for those family members who are most open to the ideas that I bring.

The family champion role is often a lonely one, because many family members are preoccupied with their own lives and those of their nuclear family, rather than that of the extended family.

Outside advisors who learn to team with family champions, the ones with whom their messages resonate the most, are best positioned to create a lasting impact for the family, by supporting one another’s efforts.