LIKE MANY Americans, I am struck by the age difference between the two candidates currently campaigning for president. Without commenting on who is best qualified for the job, I can't help thinking, as a long-time adviser to family businesses, that Senator Bob Dole, at 73, is old enough to be President Bill Clinton's father. Clinton recently turned 50. The two men represent two different generations, and if they happened to be father and son in a family business, it would be Dole's job to see to it that Clinton develops into an effective leader.
Wouldn't it be interesting if, instead of beating up on each other — instead of the father attacking the son for being untrustworthy, and the son attacking the father for being out of date — the two men could work together to make sure the country has the best possible leadership going into the 21st century?
That's not the way our system works, and perhaps it's just as well. But it's worth thinking about in the context of the family business. Dole Inc. will have trouble surviving if its founder is too closely identified with the past. Clinton Inc. maybe seen as drifting aimlessly if its leader lacks core values. Both Dole and Clinton have invoked the symbolism of bridges — bridges to the past and bridges to the future — to characterize some of their election themes. The same themes are central to succession in a family company.
As I've written many times, a family business, like any business, has to anticipate the needs of the future rather than dwell on the successes of the past. It has to fight the next war rather than the last one. It has to constantly think strategically and ask: How can the company remain relevant to society's needs? How can it cope with new forces in the marketplace? How must it change?
At the same time, however, a business, to survive, must have an anchor in the past. It has to have values and traditions that most people think are worth preserving and carrying on, that will inspire the many individual stakeholders to do the hard work and make the many sacrifices necessary to sustain a business in the modern world.
I can speak with feeling on the subject of bridges. As I look out my office window pondering these great themes, the screensaver of my computer is blinking at me. It is a reminder of how much the world has changed and will continue to change after I am gone. Even at my age, not far from Dole's, I must learn new things constantly in order to "keep up with the action."
I also know, however, that you can stay so current that you look ridiculous, like an old man trying to wear garments more appropriate to a rock musician. You can't get to my age without having values that define who you are. Likewise for a successful enterprise. If a company endures, it will be because it has values at the center of its very being. In every multigenerational company, there are some things that you don't want to change, things that define the purpose of the organization and give it direction. And, yes, there are things that are simply too difficult to change. The famous prayer of Reinhold Niebuhr sums it up beautifully: "Oh God, give us serenity to accept what cannot be changed, courage to change what should be changed, and wisdom to distinguish the one from the other."
Some people see the kind of family business that I have worked with as a charming anachronism. It is true that the forces of change — increased competition, the consolidations taking place in many industries, the need for more and more capital to keep up with changing technologies and market demands — are engulfing many family companies.
But there are companies that have learned not only to grow smartly, but to do it the old-fashioned way — without dissipating ownership among contentious heirs and without going to the public markets for capital.
One example that comes to mind is a food processing company in a sleepy Southern town that cans locally grown, seasonal vegetables. This is a third-generation company going into the fourth which has been through a massive restructuring in recent years. The family leaders raised an immense amount of money by getting rid of farms and land and products they didn't need. They professionalized their management. They invested in market research. They created new products. They invested in management information systems.
The management refocused the energies of the company with the aid of committed outside directors and strategists who provoked them into thinking deeply about their future. Lastly, they borrowed some money to buy out a segment of the ownership that did not agree with their plans, shedding some 20 of 50 shareholders and leaving only those who had confidence in the company's future as envisioned in the plan. The spurt in growth that the company has since enjoyed has already enabled them to pay down most of the debt. The remaining passive shareholders have been rewarded with a threefold increase in the value of their investment.
To survive in today's world, I companies have to be very tightly focused, take a long-term view, get agreement concerning the company's direction, and move swiftly to seize niche opportunities. I believe the privately owned family business, at its best, will play an important role in the global economy of the 21st century. With the help of a board that can marshall the brilliance of outsiders, these companies are perfectly designed to seek out and capture profitable niches in an increasingly changing world.
Will members of the next generation appreciate their heritage? Will new leaders emerge for the family business?
Every business parent hopes that all the kids won't become lawyers, dentists, or software designers. In recent years, the family business seems to have become a more attractive career option for many young people. All it takes in every generation is for one or two true leaders to carry the torch.
We are dealing here not with Horatio Alger but with Horatio Alger's kids and grandkids. It seems to me we need stronger, more truly responsible parental models rather than new myths about heroic entrepreneurs. The Baby Boomer approaching 50 who doesn't listen to anyone's advice in running the company, for example, provides a model for similar ego trips by his successors. The aging entrepreneur who divorces the mother of his children — and buys her off with $20 million — in order to marry a trophy wife" is sending a message to the next generation that values don't count; only the material has value. Likewise with a business, too many just build it and, when they get tired of it, sell it — no matter how socially valuable it may be.
The business leader of the future must combine the enthusiasm to find new markets, develop new products, and seize new opportunities with the discipline to subject his or her judgments to the review of others. We need more models of those qualities in the senior generation. Many years ago I observed that the problem is not to get the young excited by the many opportunities offered by a family business. The problem is to get the old to risk what they have but may no longer need, for their successors, who do need it. If seniors take that chance, if they provide the right models, I am betting the new generation will make them proud.
Léon Danco is the founder of the Center for Family Business in Cleveland and the author of four books on family business.