Family Business Quarterly
by Jacques Leger
You don’t have to be a management guru to know that fast-paced change is an inescapable component of doing business today. The challenge for family businesses is dealing effectively with change as the business shifts from one generation to the next.
How can the second or third generations engage the founding generations in a process of change? With great difficulty in too many situation. The most severely limiting factor is often in the dreams of the new generation.
The business foundation. Consider the process of starting and building a successful family business. The launch begins with the entrepreneur’s dreams. The business evolves as a combination of the entrepreneur’s taste for risk early on, and the dreams of a brighter future for generations to come. Those dreams are reflected in the culture, the values, and the operating philosophy of the family-owned business.
Unfortunately, this business foundation often forms a solid core around which many business issues are seen as undiscussable. The problem is that the realization of the entrepreneur’s dreams, while at the center of pride of ownership, is often the key cause of intergenerational conflict in family businesses. As many of the dreams become realized, the taste for risk may dissipate, with the result that the appetite for change from the original success formula may wane.
The “undiscussables”. Take the case of a second generation CEO of a successful fuel distribution business. His father’s involvement in the business is a source of ongoing conflict because the CEO feels he is not being allowed his father’s luxury of making mistakes. Now, at age 39, he sees himself limited by the rules of the past–and by the success his father achieved. He concluded that he needed to break the impasse to bring the company to its next level of growth and thereby achieve his own brand of success.
The obstacle to breaking the impasse, in his view, was what he perceived to be a long list of “undiscussables” between his father and him. In his view, these include everything from the management structure to the sales compensation program. But these issues had shifted from being business matters to emotional issues because the CEO automatically assumed that his father did not want to hear his views on how to move the business forward.
The real problem,