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Family Governance: From Filaments to LED’s

Family Governance: From Filaments to LED’s

When it comes to “Family Governance”, there aren’t many bigger fans than me.

I’ve written several blog posts specifically on the subject on this site, and there’s even a chapter in my book, Shift your Family Business, titled “Governance, Ugh!”

That exclamation –ugh- makes it seem like I don’t like governance, but in the book’s context, it’s clear that I do.

For any family to have a realistic chance of their wealth surviving over generations, they’ll absolutely require some form of governance.

 

Family Constitution? Yes, but…

The form and structure of that governance, as well as how it evolves over time, is where all the many important questions and decisions come into play, of course.

My advice is to always start small and take it slowly.

You’re looking for a durable “solution” to last generations, so there should be no reason to rush something through in weeks or even months.

One place that I would almost never choose to

begin is with the writing of a family constitution.

And that’s especially true if it’s one dictated by the wealth creator and patriarch, by himself, without consulting any other family members.

 

Misguided Ideas

One of the peer groups in which I participate with other family business and wealth advisors recently tackled such a case.

Here’s a bit of the background provided by a colleague I’ll call Nelly.

A family patriarch, “Jack”, who was also the wealth creator, was approaching his 80th birthday, and one of his financial advisors had spoken to him about succession and transition planning.

Somehow the idea of a “family constitution” came up and Jack loved it. He then sat down and began to draft it by himself.

 

How’s That Working Out For You?

As Jack shared his progress with family members, he began to become concerned with their lack of enthusiasm.

The financial advisor who initially mentioned the idea of the constitution was way out of his league to be of use to Jack now, but thankfully, he called in Nelly’s firm for help.

As Nelly shared with our peer group, she was slowly encouraging him to involve other family members in the creation of their constitution.

After several repeated suggestions, he actually started to warm up to the idea.

As Nelly shared with us, there was a light bulb going off from time to time, maybe with only “one or two filaments flashing”, but she was starting to get through to him.

 

Input from the Rising Generations

Of course, a couple of filaments do provide some light, which is better than complete darkness.

But it’s 2018, and those bulbs harken back to Thomas Edison and aren’t exactly “current” anymore.

I pointed out that perhaps what they needed here was some LED lighting, not more filaments.

Jack was preparing to leave his wealth to his children and grandchildren, but he was missing out on the opportunity to have them involved at this key stage of planning.

 

For the Family, By the Family

I’m not sure what became of Nelly’s work with Jack and his family, although I suspect it’s ongoing.

I’m not saying that involving the family is simple or easy, because it’s not.

But I am saying that it’s more than

worth the effort when done right.

Jack created the wealth, so he can technically do what he wants with it, and even give it all away to charity.

But he has expressed a desire to pass it on to his family. So what he’s actually trying to do is transform his personal wealth into family wealth.

The best way to do that, is to create some form of governance, for the family, by the family.

 

And What IF He Does It “His” Way?

If Jack rejects Nelly’s ideas and simply ploughs ahead with authoring the constitution himself, I predict one of two results will occur after Jack dies.

If the family gets along and the wealth is structured rather flexibly, the family will make whatever changes they see fit, using his constitution as a mere guideline, which will fade away over time.

Or, more likely, if the family does not get along well, or if the structures are very rigid, the family squabbles will begin right after Jack’s funeral.

Jack has a choice, but I sure hope he listens to Nelly.

Grandpa’s filaments won’t be quite as useful in his grandkids’ world of LED’s.

 

Family Business Perspective

When Family Business Leaders Die

When Family Business Leaders Die

Fact: Every person who ever founded or led a family business has either already died, or will die someday.

There’s a certain segment of the population who believe that they’ll be the first exception to this rule.

Successful entrepreneurs seem to make up a disproportionate percentage of this segment.

 

No Two Are Alike

Of course, every family is different, every business is different, every founder is different and every leader is different.

But I try to make this blog relevant to every family, every business, every founder, and every leader.

This isn’t necessarily an easy task, but let’s give it a shot.

Let’s start by looking at a couple of types of family business leader deaths.

 

Early Surprise Deaths

Every now and then, due to an accident or illness, the leader of a business will die at a relatively early age.

These cases are tragic, and everyone can understand that the family and the business will face some tough sledding in the weeks, months, and years ahead.

The story of Karl-Erivan Haub of Germany is a recent case in point.

See: SUDDEN DEATH SUCCESSION PLANNING URGED IN WAKE OF HAUB LOSS.

That story from CampdenFB features some interesting takes from various family business experts, including yours truly. 

 

“Long Life, Well-Lived” Deaths

At the other end of the spectrum are cases where a family business founder passes away after a long and satisfying life.

The business has by then been left in great hands, either within the family or not.

The family is in good shape as well, thanks to some great parenting, thoughtful transition and legacy planning, and a little bit of luck (or maybe a LOT of luck) along the way.

After the death, life goes on for the family, as well as for the business. But the family can grieve the person without worrying about the fate of the business.

 

Most Are In Between 

In reality, most situations fall somewhere in between these extremes.

Besides the luck, what can you do to move along the spectrum towards the “life well-lived” end?

First off, I think that we need to acknowledge how much of a role luck actually plays in everything.

Too many people spend too much time and effort trying to control too many things that are actually way beyond their control.

Alas, that’s likely another subject for another blog. Or maybe I just hit the nail on the head.

 

Is It All About Control?

I mentioned that people often “try to control” things that are “beyond our control”.

I accidentally repeated the word “control” within the same sentence, which a good editor surely would’ve changed.

But this isn’t a book, it’s just my blog, where I act as my own lowly editor, so I’ll just use this as a sign that it’s important.

 

So, What CAN You Really Control?

Since few of us can really control when we are ultimately going to die, we should probably focus on the things over which we actually exercise some true influence.

Like what?

Well, like preparing for the fact that someday, sooner, or, hopefully, much later, we’ll no longer be around.

Our luck, so to speak, will run out.

We will all eventually become nothing more than fertilizer for the flowers that someone has (hopefully) planted above our grave.

 

The Three Key Transitions

Let’s go back to the trusted Three Circle Model.

See: Three Circles + Seven Sectors = One A-Ha Moment

Every family business leader should focus on the three main areas where they play or played a role: the Family, the Business, and the Ownership.

They do overlap, but are each very different.

– What areas of your family leadership will someone else need to assume after you are gone?

– What areas of your business leadership will need to be assumed by others?

– And let’s not forget the ownership.

This can be the stickiest area, and should probably be worked on much earlier than most people think.

Unresolved ownership issues cause the biggest problems after a death.

 

The Ideal Scenario

A leader who can exit their business and ownership roles long before they die will have achieved the ultimate triumph.

Your death should mark your exit from the family only.

You should have exited the business and ownership in advance, otherwise the family’s grief will be more complex than it needs to be.

See also: Striving for a Succession Non-Event

Fireworks in a blue night sky

Limits to your Sphere of Influence

Limits to your Sphere of Influence

Most strong leaders exhibit a great ability to influence others. This is true in many areas of life, and it certainly is often found in family businesses.

As society has evolved these past few decades (I’ve been around since the 60’s) the ways that this influence manifests itself has changed quite a bit.

I grew up in a family business and most of the first five decades of my life were very strongly influenced by my father, who was one of those strong leaders.

 

Times Change

As we approach the 10th anniversary of my Dad’s death, because of my work with business families, I’ve been reflecting on the influence that my father had on me over much of my life.

As I wrote a couple of weeks ago in Five FamBiz Strengths to Capitalize On, there is something “magic” about family businesses.

There, I mentioned,

It may just be one of those things that you have

to experience to understand in depth. 

There are aspects to these intangibles that

manifest themselves in good times and in bad.”

The Good Side, and the Bad Side

What I didn’t note there was the fact that there are also positive and negative variations of this. 

And that brings us back to the question of the influence that we have over others.

Some people benefit greatly from positive role models in different aspects of their lives. 

Having a great parent is wonderful, and

so is having a great boss.

When that boss is also the parent,

things can sometimes get tricky.

 

He Wanted a Successor 

I’ve related this story verbally but haven’t written about it until now.  It dates back to my childhood, but only decades later have I been able to see what occurred.

My Dad was an entrepreneur, and I was his only son, and for him, that meant that I must succeed him.  What did I know? 

Well, I did “know” that I was expected to live up to that duty.  There’s that influence thing again. 

Did I ever feel like I had any other choice?

In a word, “No”.

  “You Should Become a Priest”

Meanwhile, my grandmother (on Mom’s side) lived with us until my mid-teens. 

She had become pretty religious in her later years, and she often told me that she thought I should become a priest.

I used to laugh about that.  Nowadays, I look back and appreciate her wisdom.

But her ability to influence my life was much more limited than my father’s.

 

Bowen Theory Training

As I continue my own transformation from a “business circle” specialist to one who prefers to operate in the “family circle”, Bowen Family Systems Theory has been one of my major influences.

And wouldn’t you know it, quite of few of the other trainees at Georgetown’s Bowen Center for the Study of the Family just happen to be from the clergy.

Is my grandmother smiling down at me now?  Is my father shaking his head?

I don’t know.

 

How About “Self” Influence?

I do know that as a parent, I have tried very hard to NOT overly influence my children.  I prefer to allow them to make most of their own choices, and I try to simply “stay out of their way”.

I just dreamed up the term “self-influence” and did a quick Google search to learn that others have beaten me to the punch here.

Of course, my Bowen colleagues may be shaking their heads now, knowing that the concept of “Differentiation of Self” is the “cornerstone” of Bowen Theory.

 

Limited Sphere of Influence 

I need to tie this back to my title about the “limits” to one’s sphere of influence.

I guess that I was getting at the fact that your influence over others “should be” limited.  The part about the changes in society gets at that a little.

But the other limit is temporal.

 

Your Time, My Time

Family business leaders tend to believe that their influence will outlast them. Many of them end up being quite wrong about that.

If you “over influence” people in ways that don’t truly resonate with them and satisfy them intrinsically, that influence will dissipate quickly; as in “right after your funeral”.

If, however, you work on your family legacy, concentrating on each family member’s human capital, you’ve got a much better chance.

P.S. I’m glad that I didn’t become a priest! (Sorry Oma).

Family Business Strength

Five FamBiz Strengths to Capitalize On

Five FamBiz Strengths to Capitalize On

It’s been a couple of months since my last “5 Things…” post, so it’s time to pull that framework out again.

This time the emphasis is on the positive, though, as we look at the bright side of family businesses.

 

Here we go with 5 FamBiz strengths to capitalize on:

 

  1. Long-term view

Most family business leaders are much more concerned with the very long-term success of the company than they are about the short term.

Managers of publicly traded companies are typically much more focused on their next quarterly financial report.

For a business owned by a family, the month-to-month, quarter-to-quarter and even year-to-year fluctuations are far less important.

When you’re trying to build something for your family, that could hopefully include not only your children but also your grandchildren, a long-term view just comes naturally.

Smart family businesses capitalize on that strength by constantly building their staying power, and not getting sidetracked by having to look good every quarter.

 

  1. Trust

One of the main reasons people choose to hire family members is because they trust them.

It’s natural to trust those you know well more than those you do not and those who come from the same background as you do.

Hiring family members ticks both those boxes quite well.

Of course, there are exceptions, where knowing someone well simply confirms that you cannot trust them, and those scenarios arise in far too many families.

But in terms of strengths that family businesses can capitalize on, the ability to put people into a position to succeed by empowering them is something that built-in trust allows them to do quite readily.

 

  1. Brand

There was a time when calling yourself a family business was seen as quaint and somehow admitting to being less good than “real” businesses.

That pendulum has swung back pretty strongly in last decade or so. I’m not sure exactly what’s behind it, but it certainly feels very real.

There have been plenty of surveys done in recent years that confirm that customers often prefer to deal with family businesses whenever possible.

Part of it is surely the “buy local” phenomenon, to help keep neighbourhood businesses thriving, but even large-scale businesses are no longer shying away from self-identifying as family businesses.

Not many have actually incorporated this fact into their branding per se, but S.C. Johnson certainly has.

They’ve even recently kicked it up a notch, changing their slogan from “A Family Company” to “A Family Company at Work for a Better World”.

 

  1. Work Ethic

You may want to lump this one in with Trust, but I like to talk about it separately. The person who started and grew the business is usually a hard worker, and that hard work surely contributes to the company’s success.

When their children or other family members come on board, that work ethic is usually contagious. Most offspring will exhibit similar tendencies to their parents.

Of course, as with trust, there are exceptions. We have all seen them and heard about them. I maintain that there are far more good examples that we never hear about, than bad examples that make the news.

Good parenting and leading by example are a huge part of this, and the exceptions noted above are often related more to shortcomings as a parent as opposed to business leadership.

 

  1. Magic (Intangibles)

I will forgive readers who have never actually worked for a family business for not understanding this point about “magic”.

It may just be one of those things that you have to experience to understand in depth.

There are aspects to these intangibles that manifest themselves in good times and in bad.

Successful family businesses usually feel a bit like a family even for those who are not related to the family that owns the company.

Celebrating successes with family members is usually a much richer experience. And maybe part of that is having come through some of the setbacks together as a team.

 

Capitalizing on these Strengths

Sometimes we don’t recognize what we have until someone from the outside points it out to us. Most fish love water, but they probably don’t really know that.

So if you are part of a family business, I hope you will look at this list and recognize some of these as strengths, and hopefully capitalize on them, even more, going forward.

A picture of the journey

There is No Destination

There is No Destination

The inspiration for this week’s post comes from a great quote that I saw on Twitter a couple of weeks ago. It’s from Marie Forleo, a life coach and motivational speaker.

I started following her on Twitter a few months ago, after catching an interview that she’d done with Brené Brown, about Brown’s book, Braving the Wilderness.

(Watch it on Youtube)

Here’s my verbatim recollection of her Tweet:

There is no destination.  

It’s ALL journey. All. Of. It.

Wow, I’ve been a big fan of the whole “life is a journey” mentality for a while, but I’d never heard anyone say it so clearly and emphatically.

 

Family Business Versions 

It’s pretty easy to get seduced by “destinations” in life, and family businesses are no strangers to this phenomenon.

“If we can just get to $X,000,000 in sales, then we will have made it. “ (Where X can be 1, 10, 100…)

Another good one is “I can’t wait to take over from Dad as President.”

Okay, a nice goal to have, but not really a great destination in and of itself, as that’s when the real work begins.

(I can think of a prominent example of someone wanting to become President, but then being less than thrilled with actually having to do the job, but alas, I try to avoid discussing politics in this space.)

 

Interim Stopping Points

Don’t get me wrong, I’m not against setting goals, such as annual sales figures, or promotions to key positions.

Studies show that people who don’t write down their goals are much less likely to achieve them, and that makes perfect sense.

In fact, setting goals for your department, team, or the whole company, is also something that everyone should be doing, but you want to make sure that those are simply seen as interim stopping points along the way.

Hit the goal, savour it, celebrate it, and then move on to the next goal. Remember: It is not a destination.

 

Enjoy the Ride

For me, the biggest takeaway here is that we are always on our way somewhere, so we may as well enjoy it.

In fact, if we are NOT enjoying it, we should really consider finding another journey to take.

Find a journey that you will enjoy.

There are plenty of people who are doing things that they don’t enjoy, and guess what, some of them even work in their own family’s business.

Many of those are likely deluding themselves into thinking that things will magically improve, you know, once they reach the “destination”.

If you believe that, I invite you to re-read the title of this blog post.

 

Personal Perspective

We all have our own perspective on this subject and I’d like to share mine. No, this won’t be a “just do what I did” story because that isn’t generally how I roll.

Actually, it’s more of a “don’t do what I did” lesson, that I hope some people will benefit from.

And by the end of this, I may even partially contradict my major premise here, but here goes.

 

Early Liquidity Event

In 1991, with a freshly minted MBA degree in my pocket, I returned to our family business, expecting to be groomed to eventually take over.

This had been Dad’s plan since my birth. Notice I did not say it was MY plan.

Instead, within 6 months of my return, we (he) sold the operations of the company, and we went from 250 employees to 4, and eventually 3.

I then spent the following 2 decades running our small family office, doing what needed to be done.

 

No Destination, Not Even a Journey

I wasn’t until 2013 that I finally had my calling, to do the family business work that now drives me in everything I do.

For over 20 years, I did what I thought I was supposed to do, acting as the “dutiful son”.

I know other rising generation family members who are following similar paths, and while it is a path, if it isn’t a journey that you enjoy, it doesn’t make for much of an enjoyable career.

 

“My” Journey

Everyone deserves an opportunity to find and do something that drives them to be able to enjoy the journey of life.

So glad I found mine, better late than never!

What’s yours? What’s in your way?

Family Dog

Honouring FamBiz System Exits

Honouring FamBiz System Exits

I was born into a family business system over five decades ago, and I’ve been working in and writing about the FamBiz space for over five years now.

The fact that a family is actually a “system” is one of the important realizations that I’ve come to, yet not necessarily one that I’ve shared much about here.

There have been some blogs relating to Bowen Family Systems Theory (A Systematic Business Family?) (My Beliefs on Family Legacy Advice) and I have shared with many people the fact that I’m beginning to work on my next book, which will be all about the intersection of BFST and the world of FamBiz.

But there have been a couple of events in the last little while that made me want to address the subject of “systems exits”, i.e. situations where someone who has been a part of a system is suddenly no longer around, and some of the consequences.

 

A Matriarch’s Retirement

The first situation draws on an annual meeting with a family business client of mine, where the matriarch of the family made the sudden announcement that she would be retiring from the business, effective immediately.

I took her at her word, and after she left the meeting, I mentioned to her children and nephews that they should begin to find a way to honour her service and announce this news to all the employees.

They looked at me with curious expressions, which I eventually realized were caused by the fact that few of them believed that she was serious.

Well, that was over three months ago, and she has been true to her word, and they have yet to do anything in line with what I had suggested.

 

Leaving a Door Open

My idea for announcing the retirement decision stemmed from my view that clarity is of utmost importance in any family business.

There are so many ambiguities that are inherent in systems where family and business overlap, that it behooves everyone to work extra hard to be clear on as many things as possible.

By not announcing the retirement of the matriarch, a proverbial door was being left open for her return, and that leaves the situation more open to confusion among the ranks of the employees.

 

Losing Man’s Best Friend

The second situation regarding a systems exit was not about the exit of a human, but it was about the loss of a member of the family.

The photo accompanying this post is the last one we have of Caedmon, our companion for the last nine years.

He had an interesting life during his time with us, and I’ve got enough stories about his adventures to last the rest of my life.

I wrote about one of them a few years ago (Sharing my Warmth Goes to the Dogs) and then that story was followed by another interesting turn of events that even got us on the news, first locally and then nationally. (Go Labs go! (Don’t worry) Carey Price gets his dogs back)

 

Honouring Those Who Have Left

You may think that this is a bit of a stretch (and I’d have a hard time arguing against you if you do) but I’m trying to honour this family member by writing about him here.

When we first got Caedmon, we jokingly referred to him as “Bosco’s dog”, because we got him to keep Bosco company after Rufus went to doggy heaven.

Bosco was the subject of a blog post in 2014 when he followed his “brother” Rufus to the pearly gates (R.I.P. my Old Friend)

 

Don’t Pretend They Weren’t There

I get some interesting looks from people sometimes when I refer to people who have died when we have family gatherings.

It’s so easy to not bring people’s names up because we don’t want anyone to feel bad about the absence of those who are no longer with us, but I like to buck that trend.

At funerals, we usually hear that we are there not to mourn, but to celebrate the life of the dearly departed.

That can be difficult when it is still so fresh and when the person was important to us. But after years have passed, I hate to act like the person never existed.

 

It Is Better to Have Loved and Lost…

When someone has exited the system, you can mourn them, honour them, grieve them, and celebrate them.

Just please don’t forget them, act like they were never there, or write them out of the story.

Family Heritage

What is your “True Family Legacy”?

What is your “True Family Legacy”?

The term “Family Legacy” can conjure up different images and thoughts in anyone who hears it, depending on their age, wealth, and life circumstances.

This subject comes up a lot in my work, but I haven’t necessarily written about it much, and I feel a need to share more thoughts on it.

 

Twitter Chat

I recently took part in the monthly #FamBizChat on Twitter, where a bunch of my colleagues tackle a subject for an hour on that social media platform.

The subject this time was “Legacy”, and I naturally went to my view of legacy as being much more of a “family” thing than a “business” thing.

What struck me is that I felt pretty alone in that perspective.

Maybe most of the others were advisors who worked more on the business side of things, and less with the family, I’m not sure.

But it stayed with me, so I thought a blog on the subject would be timely and useful.

 

Business Card Title

The title on my business card is “Family Legacy Advisor”, which hints at my bias.

It used to say Family Business Advisor, but because I really prefer to minimize my interactions with the business, in favour of those with the family, I made the change a couple of years ago.

Admittedly, I usually answer “family business consultant” when I’m asked what I do for a living in some circumstances like going through customs.

 

Whose Legacy Is It?

But my bias is to concentrate on the family legacy versus the business legacy, although in truth, they certainly can and do co-exist together, often for decades at a time.

In a multi-generational family business though, at some point they can bifurcate.

Family involvement in the ownership and/or management of the company eventually changes, and the family eventually diversifies its focus to other endeavours.

 

Who Takes the Lead?

A business has many resources at its disposal, and they’re necessarily organized into functioning groups of people with more or less clear roles and responsibilities.

So ensuring that the business legacy is captured can actually become part of the job of a person or group. It will often fall under marketing because the business legacy is closely attached to the company’s brand.

And so of course the corresponding person whose job it is to ensure the family legacy is, um, well, of course it must be, um, well, uh, I’m not sure…(?)

“Sorry, our family doesn’t have a marketing department”.

 

Why Did You Work So Hard?

Most business founders work hard because they want to support their family, and as their wealth grows thanks to those efforts, they continue to work hard so that their wealth can serve the next generations of their family.

Many of those people, however, will fail to properly transition that wealth to their family, and that goal will never be reached.

Research shows that about 60% of the failures can be attributed to a breakdown in family communication.

 

Family Governance and Alignment

The exceptions, the ones who manage to keep their wealth in the family for multiple generations, are the ones who actually put in the work to establish some family governance.

That word, “governance”, scares some families, and I get that.

See:

It doesn’t have to be that complicated, especially when you are just starting down this road.

What it does require is some intention, which begins with a decision, normally from the top, that it’s important enough to direct some time and effort to this task.

 

True Family Legacy

Your “true” family legacy is one that’s custom tailored to your family. No other family resembles yours, so why even pretend that this work can come ready-made, off-the-shelf?

Two expressions capture this whole question rather well, and I’ve been known to use both of these:

  • Instead of concentrating on preparing the family assets for the heirs, make the effort to prepare the heirs for the assets
  • Don’t just concentrate on transferring the family’s valuables, work on preserving the family’s values

If you’re the person in your family who recognizes the need for this, you already know you can’t do this alone.

Maybe this can get you moving in the right direction:

The Exponential Magic of Family Collaboration

Also note the photo above this post: “Heritage”.

That’s much more about Family Legacy than any business the family happens to own.

 

Related posts:

My Beliefs on Family Legacy Advice

The Languages of Family Legacy

Brainstorming your Family Legacy

Family of adults and kids sitting together

Realistic Family Governance Goals

Realistic Family Governance Goals

I recently spent a day in New York City at the second annual conference of the Institute for Family Governance.

It wasn’t only interesting, but in some ways inspiring. But upon further reflection over the following days, I almost felt like it might’ve been a bit too inspiring.

I’ll get back to that part later.

 

Generative Families

The opening speaker was Dennis Jaffe, who didn’t disappoint, as usual. His presentation was titled “Do you need a different mindset to create a fortune than to hold onto one?”

I love that title because it’s a question that answers itself, with an “of course” as soon as you read it.

Jaffe went on to talk about what he terms “generative families”, which others call “legacy families” and still others dub “enterprising families”.

Generative families, according to Jaffe, see themselves as a “collective entity”, who’ve decided to develop into a “great family”.

 

Great “Family” vs. Great “Business”

This reminded me of a line that some people like to use with successful business people, to convince them to shift their focus.

“You’ve already created a great business;

now, why don’t you create a great family?”

It also fits nicely with the question that served as the title of his presentation.

Jaffe has studied dozens of such generative families who’ve been successful at transitioning their wealth over several generations.

 

Examples and Role Models

The rest of the day continued with examples of families who’ve figured out that family governance is the key to having a great family.

Simply put, without any governance, a family’s legacy has virtually no chance to survive over generations.

In the past few decades, people like Jaffe have done the work of learning what these families do, and have written about it so that other people can follow these role models.

 

Too Inspiring

So here’s why I think that in some ways the examples we heard about might actually be “too good”.

I’m willing to bet that none of those families made the decision to create a governance model on one day, and then had created and implemented it successfully within a year.

I bet most of them still had lots of work to do even after a decade. This work takes lots of time and effort, over many years.

 

Family Culture

Mitzi Perdue was our closing keynote speaker and she talked about family culture, which includes the answers to questions like “who we are” and “how we do things”.

She also correctly noted that these things don’t just happen by chance.

This stuff takes lots of work, and it takes lots of time.

And it takes a different mindset.

 

Family Alignment and Vision

I know that in order for a family to be receptive to putting any sort of governance into place, they need to be aligned, and have a similar vision of what’s possible.

Regular readers of mine also know this to be true (assuming they’re drinking the KoolAid).

But I feel like many of the attendees at this conference might have had the impression that some of the examples we heard about possibly seemed “too perfect”.

Advisors to families, and families themselves, who’ve never heard of family governance often need time to grasp everything that’s involved in this work.

Likewise, the entire family will rarely buy in all at once; there usually needs to be an “early adopter” or “family champion” who “gets it” first, and then leads the way.

 

Ironman Inspiration to Get Off the Couch

I love analogies, and I think of these great generative, legacy families that are the role models, as if they were champion Ironman Triathletes.

They’re awesome and inspirational, and that’s why they’re on TV.

Most people will never get to that level, and if they choose to stay on the couch because they know they’ll never be an Ironman, then that’s a missed opportunity.

Lots of families could benefit from getting off the couch and just going for a walk or a jog.

 

One Step, One Person, One Family at a Time

Family Governance starts with a mindset, and a group of people who are aligned.

It takes lots of time and effort to get there.

The good news is that it’s very incremental in nature.

Start small, get another person on board, and grow slowly.

Don’t compare yourselves to the best and get discouraged.

It can be done, and it is so worth it.

 

Shifting FamBiz Time Horizons

Shifting FamBiz Time Horizons

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

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

 

How Fixed Is a Time Horizon?

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

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

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

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

Things change…

 

Time Flies

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

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

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

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

 

Teens, Seniors and the Sandwich

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

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

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

 

Family Life Cycle

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

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

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

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

 

Legacy Families 

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

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

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

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

 

My 100-Year View

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

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

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

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

 

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

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

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

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

2 kids on a side walk sharing a red apple.

“Sharing”: My Theme Word for 2018

“Sharing”: My Theme Word for 2018

Happy New Year 2018

The fact that this blog would be going out to subscribers on Monday, January 1, helped spark the idea for this post.

I’ve been working with a coach for a long time now, and I recently had my last Skype of the year with her. As usual for this time of year, she asked me some questions about my accomplishments in 2017, as well as my intentions for 2018.

Her final request is for one single word that will be my theme for the coming year. I thought about it for over a day (she had sent the questions to me in advance, from her blog) and I came up with “sharing”.

 

“Spreading the Gospel”

Back in 2013, when I was actually just starting to discover this field, I wrote a blog entitled Spreading the Gospel vs. Cornering the Market and my feeling about this subject has only become stronger.

Not only has my belief in the importance of sharing grown, thankfully my ability to share useful ideas has also increased.

Just today I was involved with two separate groups of colleagues on calls as we prepare to submit proposals for the 2018 conferences of some of the major organizations in the family business/legacy space.

 

Content Creation and Dissemination

I’ve developed a bit of a reputation as a content creation machine in this space and I wear that badge with pride.

So I recognize that “sharing” may not seem like a new theme for me, but there are a few other things I have planned going forward to hopefully “kick it up a notch”.

In addition to possibly presenting at some of the conferences that I attend regularly, I’m now looking at other ways to get in front of other advisors in the family business space to share some of my ideas and tools as well.

This is still in the embryonic stage for now, so I’ll just leave this here as a bit of a tease, but there are some other aspects of sharing that I’d like to highlight here too.

These thoughts about sharing are directed at the enterprising families themselves.

 

Business Families Should Share More

Most business families could also stand to share more too. You may think that I’m talking about being more philanthropic, but that’s not my angle here.

The more I learn about the subject of philanthropy, the more I realize to what extent business families are already among the leading givers in our society.

No, I’m talking about sharing internally, family member to family member. So what kinds of things should they be sharing?

I put these into two major categories; Past and Future. Those labels are pretty good for conceptualizing the differences, but aren’t very descriptive.

How about “History” and “Dreams”?

 

FamBiz History Lessons

Leaders of a family business often take for granted that because they lived the beginning of the company and its growth, and came home every night and shared their day with the family around the dinner table, well, everyone already knows the company “story”.

But most of the key events from 20 years ago will be lost today on those who were teenagers at the time. An occasional sharing of how we got to where we are today can be helpful.

Naturally, it’s nice when the audience plays along and is in an accepting mood to hear the stories, so don’t forget the word “occasional” I used above.

 

Dreams of What’s Possible

Having family members share their dreams is also something most business families could stand to do more of from time to time.

The rising generation may not be enthralled by the particular business that Mom or Grandpa started, and they may have their own entrepreneurial dreams.

Asking them to share those in a safe space can be very enlightening, and provide future growth paths for the family to invest in.

 

Family Interdependence

I’ll end here with a word on “interdependence”, which I might suggest any business family use as their “Theme word for 2018”.

The “NextGen” and the “NowGen” depend on each other for different things, and the balance of that equation changes over time.

Realize this, share the history, share the dreams, and build the future together.

The balance will shift some day, if only due to ageing. Sharing nicely now will beget sharing nicely later.