Family Business Change from the Inside Out

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Change for families in business is not optional. It’s also not easy. Consider the founder’s history and personality. Not exactly the timid type. It brings to mind the infamous World War II general, George Patton. Here he is with the U.S. 7th Army about to go into battle. He turns to an eager young officer and says “Son, you take it from here. I’m going out for coffee.” Not likely! General Patton could not stay out of the action. It made him highly successful. It got him into trouble.

Let’s start by taking a look at the business founder. The guy or gal at the helm. (Forgive me, I’ll just use “he” herein.)

He was never Mr. Zen man. He was driven. He had something to prove. Perhaps he didn’t always play well with others. The founder of the family business began with a dream. About six months in, he began to wonder what he had gotten himself into. So did his family. They continued to wonder a long time after he thought he could see the light at the end of the tunnel. Those early years were just dirty hard work. Risk that nobody can understand.

Most didn’t make it, but he did. Somewhere along the way, cash flow turned positive. Starvation began to seem a remote possibility. The hard work and risk continued. He began to have higher-quality problems, but also a higher quantity of them. Everything depended on him. He wore a lot of hats. (And, still does.) The hardest working employee, the CEO, the owner, the chairman of the board, a husband and father.

The powerful programming that kicked him off in the first place, only reinforced itself along the way. Throughout his career, he became afraid, lonely, harassed, secretive, suspicious, controlling, powerful, and unreviewed. Eventually, downright divine!

There is nothing right or wrong in any of this. It is simply who he is. In fact, as we consider the journey, how could he be any other way? The problem is, that internal programming no longer works. Much of it served him to get to this point. However, the conversation he has been having with himself all these years is no longer the right conversation. Not if he wants continued success for himself, his family, his employees, and business.

Good family business consultants help clients figure out what they need to do. There are critical steps that business organizations, owners, and employees must take. One of the obvious ones is to pass management control on to the next generation. I have seen plenty of situations where the founder, perhaps around age 70, had hung on too long. The business had already begun to decline. If “the kid” was any good, he or she had probably already gone elsewhere. In any event, the founder cannot manage the business from within a box six feet under. That transition has to take place. The only question is whether is going to be thoughtfully optimized. Or, happen by default, probably after it’s too late.

Consider those businesses where they have tried to do it right. The family has taken the recommended steps, including passing the mantle to the next generation. However, are they done? Family business consultants, family members, and my own experience, tell me completion of the transition may be an illusion. There is still a problem. It’s a big problem. You see, “Dad” may get it intellectually. He may tell everyone he agrees and is ready. He may resign as President, and instill his son or daughter as successor President. That is wonderful. But, is that enough? In many situations, the answer is “no”.

There are a lot of problems within the problem. The roles are undefined, unclear, misconceived, and/or misunderstood. Even after that’s cleared up, those roles simply aren’t respected. Please hear this! The real problem is inside the founder himself. He is confused. He is powerfully driven by internal programming. Programming that is so close, so familiar, that he can’t see it. We all know psychology comes into play. I am telling you it is a lot more than that. That programming, that conversation we are all having with ourselves, it doesn’t just influence what we do. It’s not merely a factor in the outer world we create and live in. That conversation is “driving the bus”.

What happens if we stop at the implementation level, without creating the essential internal change? It is like one of my former mentors, Dr. Leon’ Danco, used to say. Dad calls it semi-retirement. The kid calls it Dad coming in and messing up the business on a part-time basis. In one situation, the second-generation President told me everything is great 75% of the time. It’s a wonderful business and a wonderful family. But, 25% of the time it doesn’t work. They butt heads hard. They reconcile. They move on.

They don’t need that misery in their lives! They are stuck and can’t move on. The personal cost is immeasurable. The business cost is substantial, no matter how you slice it. The young CEO has his hands full already. He needs everything going for him, and as little as possible distracting him, holding the business back, and creating uncertainty.

75% won’t work. Truly completing the transition is mission-critical. The problems are totally solvable. It just takes a different process, and a different sort of work. The expected outcome would seem to compel the required commitment.

Recommendation #1: Evaluate your family business in the context of the narrative above. Your transitions are either working well, or they aren't. The question is no more complicated than that.

Recommendation #2: Take action. Recognize the cost of status quo is accruing. The personal and business cost of failing to optimize.