Panelists:
Nike Anani, Lagos, Nigeria
Mitzi Perdue, Maryland, USA
Interviewer:
Dr. Peter Lorange, Zurich, Switzerland
Questions:
Per F. Lorange, Sandefjord, Norway
1) Both panelists highlighted what they see as particularly key for family businesses, based on their own experiences. Here are some of their messages.
It can typically be difficult to live in the shadow of an often more experienced founder. Insightful founders can lean in to give the next generation a voice. Next generation may move to asking why, rather than what. This might allow changes to take place more harmoniously. So, it is a matter of asking questions, rather than questioning. A key reason why family businesses could end up with serious problems, or even go out of business, is family quarrels. A family culture to discourage this is key. Focus on stewardship (Jaffe). Also focus on philanthropy: the family business is indeed part of something bigger.
2) What might be your key insights regarding bridging the generational gap?
“Interference” by the senior generation (micro-management; “can’t let go”) might be dysfunctional. Arrange for senior generation to spend some time away from the business. Share: for example, eat at least five meals together per week. The younger generation should also be involved in such sharing of values and approaches. Also, family members should make statements to be shared by all regarding topics of particular interest – to increase understanding regarding family’s interests and capacities. Strive for keeping a balance between founding generation (entrepreneurial) and next generation (relatively more risk averse); from being the boss (older generation) to being a family member – be hands on, but also give space. Be intuitive and analytical/data minded. Therefore, adopt a collaboration culture, spanning the generations.
3) What are some of the key features regarding succession planning, as you see it?
To plan a harmonious succession process is paramount. The older generation should gradually change its focus, from being the key “driver” to guide/support/prepare the younger generation. An advisory board can play a useful role in this process.
Governance is also important! Formalize the investment process, in such a way that all key family stakeholders are comfortable. In order for all key stakeholders to see the clear benefit of sticking together – it must be fair and balanced! Rules, procedures and systems must be known to all. Good consultants might also be useful here.
To make a harmonious succession process more doable, it may be now and then necessary to “prune” the family tree, so as to end up with a relatively smaller group of stakeholders to address upcoming succession challenges.
There may be disagreements, but these should be kept within the family circle, no newspaper dialogue! No lawsuits! No aggressive lawyers!
4) What is the role of non-family members?
In some family businesses, family members may be entitled to a job. But, if they turn out to be not qualified for the role, they should also be ready to be fired. In many family firms, the Chairman is often from the owning family, while the President is non-family.
5) Technology
Emerging communication technology has made it easier to operate globally. And the possibility to have good transparency has been enhanced through specialized family business software.
6) Do you see any particularly promising emerging business principles or technologies?
A key challenge is to train the next generation to become more entrepreneurial. He or she must show a strong interest in developing the business further.
Start new business activities within the context of the family firm.
Obtain financial backing from the family firm to such initiatives.
A key provision: the new venture should be given the best possible opportunity to succeed, i.e. no hinderance from the rest of the family firm!
It may be that the new owners might also be invited to invest in a given venture. This is a way to bring in “fresh blood”.
Therefore, venturing is key for stimulating, renewing, adding new value to a family firm, including for the family firm to stake our new directions.
There may now increasingly be an “MBA-type” culture coming into the managerial suites of family firms. A more entrepreneurial culture might have been dominant before. It is key that these two cultures complement each other!
Questions from participants:
What are some examples of well-run families?
Rockefeller; DuPont
Keys: A clear culture, pride and identity.
What are women’s roles?
A family business may often be more open to finding key roles for women executives. It is key that female family members are given the opportunity to choose what they see as meaningful roles for themselves, e.g. philanthropy.
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