All in the Family? Not So Fast Says Family Business Expert
Author Randel Carlock explains the balancing act between the bottom line and family.
It’s the most important characteristic of the family business.
It takes courage to follow in the footsteps of past generations. Courage to lead and find your voice. And, ultimately, to follow your convictions, when it’s time to leave the business.
“Family is the most important thing,” says Professor Randel Carlock, Ph.D., program director of the INSEAD Global Family Enterprise Program 2019 and Founding Director of Wendel International Centre for Family Enterprise. “The family’s values and vision drive the business. Family leaders need to develop courage to deal with the challenges they’re going to face.”
Carlock recently authored a groundbreaking book with 24 activities for family and business planning called A Family Business on the Moon. This is a culmination of his decades of research and experience in family business education and advising.
Thirty-plus years ago, while serving with the University of St. Thomas in St. Paul, Minnesota, USA, Carlock helped start the family business program there and set up his first award-winning family business centers as the first Opus Professor of Family Enterprise.
It was the first time anyone had ever addressed family business in a business school.
The rest is history.
Compared with other corporations, family-run businesses have unique challenges.
Say a couple of brothers in business together are fighting. They can choose to split the business and run their individual sections.
Put another way, if five members of a family are in business, and you asked about goals and directions to take the business, you might end up with five different answers.
It’s critical to get everyone on the same page.
“All families have problems communicating,” Carlock says. “We think family members need to make their implicit thoughts and aspirations explicit. Businesses change every day; families change every day. You have to constantly manage change in both systems.”
Likewise, it’s a change when a daughter gets married and her new husband joins the business. Or, say a couple of sons might want to grow the business in a particular direction and dad doesn’t want to take the risk.
“It’s the most important task of the parent to help your children become capable and satisfied adults,” Carlock says. “Our career and families are how we express ourselves and use our talents. When family and career overlap that’s very challenging.”
The balancing act: Bottom line and family
Entrepreneurship has evolved, changing much of the way family businesses operate.
Third and fourth generations change a business from a company to now, a family enterprise. Families may now invest in real estate together or engage in a philanthropy activity.
Additionally, millennials aren’t as motivated by money as they are by service and interesting careers, Carlock says.
The book, A Family Business on the Moon, highlights eight families that are doing much bigger things than business and profits.
- The most important activity a family can do is plan. Plan as a family and plan for the business. Plan specifically five things: Values (what do we believe in), vision (what do you want to become), strategy (what action are we going to take), investment (how much of our money and human capital are we going to put in to the business), and governance (boards of directors, etc.).
- Families need to be great communicators. You must be able to talk about the technical side of business issues and the human side/emotional issues. You need to become a professionally emotional family.
- Long-term thinking is important. This is the competitive advantage of a family business. Publicly traded companies must perform on a 90-day basis (and report earnings, etc.). A family can plan its business and think in terms of generations.
- You can never spend too much money or time developing talent. Develop talents and capabilities suited for the family member. It may be that a son doesn’t want to be a senior leader, so finding a better fit within the business will go a long way.
What lies ahead
Carlock oversees the newly-launched INSEAD Global Family Enterprise Program 2019, which has been created for YPO members and their families to understand and strengthen family relationships, values and business plans to create a shared purpose and vision.
The program is a deep dive that will take several years to fully develop through four modules.
During this time, participants will develop action plans for career planning, talent development and governance. They also will gain insight into the psychological dynamics of family leadership, business management and conflict.
Carlock teaches a section that’s quite literally about happiness. He’s very specific about what this entails: Meditation, turning off electronics at dinner, not taking calls in front of your kids, and focusing on kindness and gratitude.
“Your life is your life,” he says. “The business is just an excuse to work on everything else that’s important in our lives. Great CEOs are teachers and leaders who serve their families, businesses and their communities.”
The INSEAD Global Family Enterprise Program 2019 is the result of a partnership between INSEAD and YPO — both world leaders in their respective fields. Divided into four modules, the program has been created for YPO members and their families to understand and strengthen family relationships, values and business plans to create a shared purpose and vision. Participants develop new insights about themselves, their family and business to improve their leadership and ultimately support business growth. YPO members can learn more and register for the program here.