Family champions spark innovation, positive change

By Dennis T. Jaffe

Timo Recker, 28, is a third-generation member of a German family that owns a meat production company. Although the business is successful and growing, he knows that meat production is costly and that more people can be fed if everyone eats fewer meat products. He wanted to do something that would leverage the skills within his family and help create a sustainable future. With funding from his father, he used the family food production expertise to develop his own company, LikeMeat, which makes vegetable-based, meat-like products.

Rather than just enter the family business and work his way up to leadership, Timo took initiative to lead the family in a new direction. While his new venture is small, it has potential to take the family's expertise into non-meat-eating markets. Timo is deeply respectful of his family's achievements. Indeed, he could not have started his company without the family's financial and intellectual capital. But his venture follows his own values and his own perception of what is needed in the future. He is what we call a family champion of change.

The champion can lead the way when a business family faces a natural stumbling block. An elder family leader may become more invested in tradition and past successful practices than in innovation and change. Family business leaders tend to stay in leadership roles far longer than leaders in public companies. The good thing about this is that they can firmly keep the family on track and sustain a culture of excellence. But any long-serving leader also develops blind spots and may not be best positioned to see the need for change.

Enter the next generation. Raised in a culture of affluence, they are well educated and grow up in a digital, connected environment. While they appreciate the sacrifices and achievement of their elders—often they are in awe of them—they are also in touch with, and passionate about, genuine opportunities and creative ideas.

 

A clear-eyed look at future

Family elders too often expect the best members of the next generation to jump at entering the family enterprise. They can be surprised to find that the younger generation has questions and conditions. Potential family successors are able to look beyond the current success, at the challenges that lie ahead in a world in flux. In school they see new business models and encounter ideas and challenges outside the family leaders' more limited experience. If they enter the family business, they want to know that the company will adapt to the emerging global business environment. Often that means looking at issues of environmental sustainability or the effects of poverty, illness or inequality.

Timo got the idea for LikeMeat when he and his father had a vegan "schnitzel" dinner at a London restaurant. They liked the food, and got into an exchange about it. Timo discussed his reservations about the sustainability of meat production, since raising animals requires more land and water and produces more pollution than growing vegetables does. Timo felt that good-tasting vegan food could be a competitive product. The family meat business offered resources in technology, manufacturing and marketing, and his father was persuaded to fund the new venture.

The family champion's vision need not center on the business. He or she might focus on the social capital of the family—the way family members use their resources to serve the wider community. One family foundation had a long history of supporting the symphony and other institutions aimed at the more affluent segments of the community. The younger generation felt that, with poverty and inequality deeply influencing their city, the foundation should have a major focus on those "at the bottom of the pyramid," supporting causes such as affordable housing, clean water and economic development. The next-generation champions were able to bring the rest of the family around to their views.

Members of the next generation have a special voice in the family. They are young and just starting out, but they are also the heirs to the business, and as valued and beloved family members, they get the ear of the leadership in a way that does not exist in non-family companies. This dynamic creates a unique opportunity for innovation and family adaptation. Unfortunately, many families do not facilitate the exchange of ideas between generations. Elders expect their children to wait for their turn to lead patiently and, above all, quietly. The journey of the champion is immeasurably harder if the family is dismissive of his or her potential contributions.

Most families fail to cross generations as both a successful business and a connected extended family. Many family enterprises are absorbed into larger entities, liquidate or fragment because of lack of alignment within the family or the ascent of inadequate family successors. I have been studying long-lived families—those who successfully enter their third or fourth generation with thriving businesses and a vital, connected, aligned family. Two of the most universal qualities of these generative families are their ability to create a respectful dialogue across generations and their investment in adaption and innovation. Successful multi-generational families are resilient, adaptive and innovative, using both top-down and bottom-up strategies for change.

One young family member faced a deep dilemma. He was the only son, with two older sisters. His father, a traditional Asian patriarch, came from humble roots and made it clear that he expected his son to succeed him. The son, however, saw several challenges facing the family. First, his sisters were both educated professionals, and his older sister had the skills to lead the business and an interest in taking the reins. But his father would not hear of that. Also, the son felt that he needed to develop his skills and his credibility by getting an MBA in a Western school and working outside the family business. His father, who had not gone to college, could not understand why he needed an MBA from another country, and why he would not join the business right now.

The son had to choose whether to be the dutiful child and do what his father expected or to challenge his father's thinking, becoming a family champion of change. He has reached out to his sisters, and they are approaching their mother, and then their father, to urge them to think differently about the next generation. They must be gentle in challenging their father's cultural views, or else they will be sacrificing some of the value that they all can bring to the business.

 

Taking initiative

An essential quality of family champions is that they are not given power or authority; they develop it through their initiative and persuasive approach to the family. They see a need and feel passionately that their vision is the right one. To succeed, they must educate the older generation. Previous generations of young people were not in the habit of educating their parents, because change was not the dominant theme. Most important, the next-generation champion's vision must be viable. Many young people have ideas that are foolish, impractical or beyond the family's ability to manage.

Successful next-generation champions approach their elders with respect and humility, and bring them along by being able to compromise and work together with them. The family enters a process of respectful mutual learning, with the voices of tradition and experience interacting with the voices of innovation and change.

A real estate family's buildings were the high points on their city's skyline. For three generations the family name was synonymous with progress and community leadership. The fourth-generation family members were active in land and wildlife preservation and related causes—and in organizations that confronted the real estate association headed by the third-generation family leader. The family champion from the fourth generation sought out the third-generation family leaders (her father and uncle), pointing out that that their conflict was not helpful to their family's shared interest in the future of the city. She and her siblings and cousins patiently worked with their elders to craft a shared set of values that all of them were comfortable with. Then, the family together produced a plan for the future of the city that pleased critics of development and gained the support of business leaders.

The champion can take a more personal and less visible role within the family, becoming an emotional leader or an internal force for conciliation. In one family, three second-generation heirs to a growing manufacturing company were in deep conflict. They fought over who would be the leader and what their children's roles would be, as well as over business policies. Despite their parents' efforts, the third-generation cousins became close as they grew up. As they considered entering the business, and what it would mean to inherit the ownership of this business together, they decided their parents' conflict had to end. They formed a third-generation council and asked that the older generation allow them to develop a shared governance process. The older generation, after initially resisting their efforts, saw their children acting more maturely than they were, and accepted their initiative.

The family champion is a special resource that emerges in a successful business family. Whether family members are able to listen and work with the champion, or reject or alienate that person, can often determine whether the family will sustain vitality or become stagnant.

Dennis T. Jaffe, Ph.D., is an organizational consultant and clinical psychologist and a professor emeritus at Saybrook University (djaffe@dennisjaffe.com).

Copyright 2015 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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March/April 2015

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