Family Business 101 – A Thought Experiment and Upside Down Thinking

Family Business 101 – A Thought Experiment and Upside Down Thinking

Why it Matters When confronted with a situation, engaging the upside down thought experiment has profound insights .... even in family businesses

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Why it Matters

When confronted with a situation, engaging the upside down thought experiment has profound insights …. even in family businesses

As I considered what to share in the blog this week, it occurred to me that though we have explored a few key themes important to family businesses including: succession, governance, next generation development and so on. We have barely touched the surface, and yes, we shall continue this journey with you. However, today, I wish to explore something new …..  I intend to have us explore family businesses from a different angle, in fact ~ upside down ~ something refreshing.

Could we look at family businesses, their challenges and opportunities – the other way round? And what could we learn in so doing?

Family Business Transition – upside down

So, rather than the typical family business life-cycle that starts with the entrepreneurial founder, who passes the enterprise on to his / her children [a sibling group], and then these sisters and brothers passing the business on to their children [a group of cousins], NOW imagine, the process in reverse! A group of cousins passing a business to some siblings [their uncles and aunties]; and then the siblings pass on to their parents …. moving backwards through time

Well, apart from being mischievous, [perhaps even impractical], could there be some insights we could earn from this activity? And which we can apply to the real world of family businesses? Well, a few readily occurred to me…..

Each generation lives within a certain mindset – and this can be hard to shiftMulti-generational family business tips family business advisors and coach

It’s ….. 2018… when we engaged in this imaginary upside-down-family-business with a group of cousins.  Technology plays a pivotal role in their lives, the business systems and processes rely heavily on technology, and so do their relationships with each other.  They keep in touch via SMS, whatsapp, facebook, email and other applications. Their parents, the sibling group, who are to inherit the business in our upside-down-world, are not technologically literate and are calling on the cousins “to keep up with the times” and to adopt the new reality of “telegram, typewriters and “simu ya jamii.”  Do you think, in response to this call, the cousins will easily take this leap, and fling aside their ipads, and whatsapp calls? Well most unlikely, I presume!

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And so …..we are all products of the environment in which we are brought up.  And adopting and changing this is not an easy process.  Therefore, next time, perhaps, when a NextGen member of a family business is clamoring for modernization and change [a common request in family businesses], they should consider how they would feel, if they had to give up their Whatsapp and start using fax!

Each Generation has a Unique Governance model

Decision making among our imagined cousin group, as is typical, is complex with lots of different people involved and differing levels of competence.  Besides, there are different roles within the family business [including some being just shareholders without any management responsibilities]. So to deal with this, the cousins have aFamily Business governance advisors consultants and coach kenya governance system…councils, committees and detailed processes and protocols.  In our imaginary upside-down world example, handing on such a structure suitable for cousins to the sibling group proves to be immensely bureaucratic for the siblings, and takes up far too much sibling time and attention away from the business.  In the imagined next phase, [moving backward as in our case, from sibling to founder], the siblings’ decision making model leaves the Founder feeling restricted.  [S]he is in total control and wants to make decisions on her/his terms, when and how [s]he chooses, not in accordance with a specific pre-agreed process.

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And so ….. whereas the expectations of each generation seem obvious in this thought experiment, working backwards through the generations. However, and very often, in the real world of family businesses, it often happens that one generation does not recognize the need to change their structure and processes to incorporate the expectations of the next generation. Very often, the preceding generation expects the next generation to fit into how they do things, and in so doing underestimate what is needed to create the conditions for success as the family and business evolve…. recognize innovation and embrace the signs of the times.

Daunting Task of Preserving family values across generations – to some its’ impossible!

Every family, as a group, shares their own set of values which underlie the surface of its day-to-day interactions. These values, are typically transmitted over generations in the family.  The magic in the transmission, is to hold onto those that are positive, for instance: “integrity” and knock off those which are decidedly unhealthy and inhibiting and which invariably hurt the children, the family, the community and society as a whole examples being, “greed”, “selfishness,” and “dishonesty”  and so on.

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However, imagine passing values ~ back-wards ~ from cousins, to siblings, to parent.  It sure is a pretty difficult, task, despite suspending reality for the purpose of this thought experiment. One of the reasons for this, is the seeming impossibility of funneling a set of values from a collective group to a single person. How can all that a cousin group stands for fit within a single founder? And this is where, I think, there is something to be learned from our ~ upside down ~ scenario, because the same applies the other way round: channelling the values of a single person into several is also an enormous challenge. Over time as the family expands, new experiences affect the system [including family systems] and the values, norms and beliefs change. This is not inherently negative, and nor can this be prevented.

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And so……. despite this, many family groups often wish to imprint the values and traditions of the founder(s) on the generations that follow: During a number of family retreats, I’ve been asked, for example “what should the repercussions be if someone steps out of line from ‘our values’?”  And the answer is that rather than focus on reprimand, it is more useful to celebrate rather than enforce the values and principles of the founder(s). And so families ought to explore the real current values of the group, as they have evolved, with the aim of discussing which of these are helping the family and its business and which are hindering it.  As a guiding principle, the family must then uphold those values that really benefit from harnessing the “familiness factor” within a family business.

The Take-Away;

In this particular case, I think, the following are demonstrated and are a good take-away;

Lesson #1   The transformational change required of a family at each generational transition is not to be underestimated. It is no wonder therefore, that without support family businesses can struggle during these phases of deep change.

Lesson #2   While this blog may have started on a little mischievous note, with my imagination running  adrift for a short while, I suppose, we have generated some interesting perspectives for you as well.   I trust, that this proves that exploring new creative ways of looking at an issue, however briefly, can generate valuable ideas, or even simply build on what is already known.

I dare say, this can be applied to a variety of fields and not only family businesses. So next time when confronted with a situation, why not try an upside down thought experiment?

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