What I have found is that, in a family business structure, sometimes what is needed is a sense of discipline rather than creativity. You have to take everyone’s ideas and make it work.– Ashwin Sanghi
"Isaac dug the wells anew, which had been dug in the days of his father Abraham and which the Philistines had stopped up after Abraham's death; and he gave them the same names that his father had given them" (Genesis 26:18).
Isaac is portrayed as a less dramatic figure than his father, Abraham, and his son, Jacob. His critical role seemed to be to extend Abraham's legacy of ethical monotheism to the next generation and beyond. Often, children of revolutionaries go off to stake out their future independent of their parent's celebrity. In Isaac's case, he made it his mission to preserve his father's spiritual and physical enterprise and, in a sense, maintain the family business. Isaac was blessed with plentiful crops and abundant livestock, rousing the ire and jealousy of the Philistines on whose land Isaac dwelled. The Claiming he was accruing excessive power and intimidated by Isaac's material success, the Philistines compelled him to relocate to the wadi of Grar. Isaac proceeded to restore the very same wells that Abraham had dug and that the Philistines had sabotaged. The Torah makes a point of noting that Isaac re-dug his father's wells and called them by the same names that his father had given them.[1] These actions appeared to require more perseverance and resilience than creativity--the wells had 'broken,' and Isaac 'fixed' them.
Amid altercations with the shepherds of Grar concerning these wells, Isaac persisted, expanding his enterprise by digging new wells to provide water for his expanding agricultural endeavors. Isaac moved away to Beersheba and enjoyed continued success. Avimelech, the Philistine king, came to realize that their lot was not enhanced by banishing Isaac from their midst, noting that God continued to bless Isaac’s enterprise. The Philistines' shifted their strategy, electing to approach Isaac to make a pact to forge a business relationship that would help them benefit from Isaac's success. Eschewing drama, Isaac showed his character as one of resoluteness, persistence, and resilience, thus preserving Abraham's business and spiritual legacy for the critical next generation.
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A family business’s second generation faces a different social, commercial, and family landscape than what the founding father (or mother) encountered. This generation's leader is more likely to pursue expansion than maintain the founder’s traditional approach, certainly in today’s warp-speed technological growth. Deliberating over how much to retain and what to modify is common, and if the founding parent remains active, some tension may ensue. Statistics reveal that 70% of family businesses do not survive to the second generation, and only 10% continue to the third.[2]
For a family business to succeed, a strong sense of purpose must be internalized among all participants, making family members subservient to the enterprise rather than allowing themselves to be distracted by tension over assigning titles and prestige. Bowing to family dynamics is liable to distort the meritocratic approach to assigning responsibilities, whether for marketing, sales, manufacturing, or finance.
A comprehensive global interview survey of 92 second, third, and subsequent-generation business leaders in 2016 by Deloitte[3] revealed the complexity involved in maintaining their enterprises. Among the critical challenges stated by these leaders were maintaining and transmitting family values, maintaining family support, determining leadership style, and avoiding intergenerational conflict. Among the respondents, 80% noted that their leadership style would differ from the previous generation's, and 51% anticipated taking more risks than their predecessors. This is not surprising because the new generation's challenges, competitors, technology, threats, and opportunities are different from those faced by the older managers (see Post #3 on performing periodic SWOT analyses).
Despite the inherent challenges family-owned businesses face, many surveys have shown that they outperform non-family companies. Among the primary factors for their success are having the patience to adopt a long-term orientation rather than seek quick fixes, a strong internalized institutional memory, a more thoughtful diversification of products, and maintaining a balance between tradition and change.[4]
Points to Ponder:
A family business's strengths are its shared sense of purpose and living and breathing the enterprise. Any entrepreneur needs to strike a balance between work and home. However, in a family business, several players may live under the same roof or at least share an affiliation beyond the workplace. One solution is to formulate agreed-upon boundaries to regulate work and non-work interaction. For instance, at what point should sharing marketing plans be brought to the dinner table, and when should they be pushed off to the morning? Should the children be involved in these discussions—at any age? These rules will vary among families due to the character of their relationship, the type of business, traditional family customs, geographical considerations, and other factors.
If you are a second or next-generation family business member, you have likely already confronted the classic dilemma: When a successful business passes to you, what considerations impinge on your decision? You would do well to ask yourself several questions: Are you entering the business only out of respect for your parents or due to pressure from others? Are other family dynamics at play? Was your role in the firm always Plan A in the family? (see Post #5 on family influences on career decisions). As you have matured, do you have a Plan B? Will this business allow you to develop your interests, skills, and abilities? Will it offer you the meaning and purpose you demand from a job? Is the mission of the business consistent with your current values? How will entering or not entering the business affect your family relationships?
Try this: Given the complexities of a family business, entering or avoiding the company for the wrong reasons (for you) may introduce further complications, not all of them pleasant. This may be an excellent time to consult a career counselor, career coach, or (non-relative) senior manager in the industry to help you survey the factors impinging on your decision and the prospects and opportunities awaiting you. Trusted family members can be helpful because they know you well, but a more objective professional will likely help you consider a broader perspective.
[1] Gen. 26:18.
[2] Finaldi, V. (2021). Best practices (and pitfalls to avoid) in second-generation businesses. Entrepreneurs' organization. https://blog.eonetwork.org/2021/05/best-practices-and-pitfalls-to-avoid-in-second-generation-businesses/
[3] Beelen, N. (2016). Next-generation family businesses: Evolution–-Keeping family values alive. Deloitte. https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/strategy/deloitte-uk-family-business-nextgen-survey.pdf
[4] Rodriguez, K. (nd). Why family businesses outperform others. Economist Education. https://execed.economist.com/blog/industry-trends/why-family-businesses-outperform-others