Opinions on Business

  • Some readers may recall my interest in family businesses, their principles of successful long-term ownership and the common causes of their remarkably high failure rate inside three generations. (e.g. see April 2011, where I leaned on McKinsey, and May 2011 where I reflected your responses).

    Recently I participated in a funeral and wake to celebrate the life of a very old lady whose three generations of descendants were present in number.

    These people impressed by their vivacity, warmth, character and smarts. And while this particular family has no great heirloom business, I set to speculating how it would succeed in sharing the ownership, governance and long-run development of a hypothetical large enterprise.

    Since my previous reading, obviously new studies have emerged. I found a most appealing piece of research  developed into a useful model by Professor Kenyon-Rouvinez of IMD Switzerland – The Secrets of Success in Long-lasting Family Firms (well worth clicking through).

    She proposes 25 Secrets of Success in her model: –

     

     

     

     

    Here I want to focus on the Green Quadrant, being the seven Family Principles which she espouses: –

    • Pride
    • Mutual Support
    • Strong Values
    • Social Engagement
    • Fairness
    • Ability to Handle Conflict
    • Strength in Unity

    Perhaps the toughest of these is the Ability to Handle Conflict. “Emotions can run high……So the ability to discuss such issues in an open and rational manner, to come to a negotiated or democratic decision and to attend to the feelings of those who lost the argument, becomes crucial.”

    In discussing Fairness, she confronts resentment and jealousy, and advocates courageous, respectful and honest conversations to address such very human feelings.

    Mutual Support and Strength in Unity are tricky too; this cannot preclude purposeful, even passionate debate. It rather means that, post-decision, all need to get behind it.

    She puts strong community-based Values alongside Social Engagement and philanthropy. To be so grounded in the home city makes sense, to maintain the good name and legitimize the company within the community.

    The Pride principle jars a little, till the good professor explains that a quiet self-confidence without arrogance or a sense of entitlement is her meaning.

     

    As to my speculation, I saw in this family the raw ingredients of EQ, character and mutual affection. However I doubt whether any family could successfully exhibit capability across these seven principles right off the bat. To develop this co-operation, wisdom, culture and values would take years of practice.

    Oh, to be so fortunate as to have the opportunity to try!