Family Business Center of Pioneer Valley

Family Business Center of Pioneer Valley

John McEnroe is Not the Celtics - and a Bumblebee Committee Can Fly

by Shel Horowitz

Ivan Lansberg probably could have talked for days without running out of material-and his audience would still have been hungry for more. Lansberg, a Connecticut-based organizational psychologist, spoke to the Family Business Center on April 9, at Storrowton Village. He egged participants on to work in their own businesses to "make a bumblebee fly." According to scientific study, a creature with the mass and shape of a bumblebee should never get off the ground. But of course, bumblebees do fly; Lansberg used this central metaphor repeatedly to show how business approaches that, on paper, oughtn't to work, are, in fact, highly successful.

Family businesses, Lansberg notes, can be run with any of a number of structures. Many originally start with the "John McEnroe" model of a solitary, high-achieving, hard-driving entrepreneur. But a business evolves over time: "John McEnroe doesn't have a clue about managing the Celtics; you're changing the rules of the game." In other words, the skills and structures necessary to run a team-based enterprise-for instance, a sibling team in the second generation of a family business-are noticably different from those with one ultimate boss. The two major points in a business' structural evolution are going from the founder to a sibling partnership, and then again from that partnership into a team of cousins.

A shared family culture and history is one important tool in getting even so unlikely a bumblebee as a an executive team of several equal siblings up in the air. Common memories and experiences, traditions, and values go a long way toward building success.

But equally important: siblings should have a fundamentally healthy relationship, so they'll enjoy working with each other. They need to recognize and appreciate each other's unique strengths (and structure the business in ways that take the best advantage of those strengths). Otherwise, like Zeus lording it over his brothers Hades and Poseidon, they will be dethroned by their own family members.

They need a generous spirit that can enjoy working for common, rather than individual, goals. And they need to manage the rivalries that have continued over since childhood - they exist, says Lansberg, even among adults. they're just a bit more subtle. It also really helps if parents, in-laws, and spouses are supportive - and that, in turn, will happen much more easily if these secondary players feel included and valued. If no one communicates with them, they won't have the context to understand what's really going on, and can drain a business of its vitality. Finally, a good sense of humor will make things much easier. When the business moves to the cousin stage, structures become exponentially more complicated - and so does the task of ensuring the business is enough of an asset to financially support the far larger number of people who are now depending on it.

Some of the structures may be formal: a family foundation for philanthropy, a committee to set guidelines for incorporating new family members into the business, specifric entry and exit policies, formal funds for managing venture capital and retirement buy-backs, a family council, an outside board of directors - something Lansberg, like many previous Family Business Center speakers, advises in the strongest possible terms: "If you have over $1 million in sales, you're really dumb if you don't have a real board, with at least three independent directors who will tell you when you're right and when you screw up."

But other structures come straight out of a particular family's approach to the world. For instance, one family decided that whoever had possession of a particular amulet had the final say if there was an impasse. But there was a catch: as soon as that tie-breaking power was exercised, the decision-making authority had to be passed on to someone else. One brother was somewhat arbitrarily named custodian of the amulet. Thus, the brother has a strong incentive not to exercise that final power. "He pushes hard for consensus, to aovoid giving up the amulet." And 35 years later, he has managed to bring consenus about every single tie; the amulet has never been transferred.

For another family, when ownership transferred from the father to two brothers (co-presidents), the father advised his sons to call his friend in Swtizerland if they get stuck. The friend listens to both sides and makes a decision. Even though it's arbitrary, the sons abide by it. They've called hin three times in as many decades. Says Lansberg, "You'll never read this in a management textbook, but for these people, with this history, it works."

It doesn't matter if the mechanism seems silly, as long as there is a mechanism for resolving disputes and moving forward. It becomes part of the "basic glue" of that family unit, and that business culture. To make cousin structures successful, the concept of stewardship is a great asset: this is the idea that the business is omething to be nurtured and passed down to future generations, rather than dried out and depleted for personal gain.

Building the values that will lead to successful transfer to the later, more complex business structures starts very early - at the family dinner table. Lansberg told of a supermarket executive who brought his 11-year-old daughter to an executive meeting. The company was having trouble with its downtown flagship store, because there weren't enough cash registers. patrons were complaining about the long wait, and the executives couldn't find a solution within the confines of the store's small space. At a break, the daughter told her father of a staggered layout she'd seen in a department store that could put nearly twice the number of cashiers into the same space. Having solved this problem for her father at so young an age, and having seen her solution implemented, "she will be eager to take the business on as an adult."

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