LOUISCAUFFMAN.COM
Synopsis ‘Developing and sustaining a successful family business’
This practical and important book offers ideas, examples, and suggestions that address the challenges inherent to developing and sustaining a successful family business. It explores the complex dynamics involved in working with loved ones and how to pass a business on to a new generation.
Structured around the story of a family that has built a successful enterprise, now facing the issues of succession, the book utilizes the solution focused model to provide step-by-step instructions to creating good working relationships and orienting toward common goals while building trust, respect, and love.
Complete with summaries, toolkits, and case studies, this book is an essential read for any member of a family business, as well as those who provide services to family businesses, including coaches, consultants, and non-family employees.
Louis Cauffman is a business economist and clinical psychologist with a wide range of therapeutic training, ranging from Systemic Family Therapy to Ericksonian Hypnotherapy through all possible directions within the Solution-oriented approach.
Table of Content
- Foreword Dennis Jaffe ix
- What Is This Book About? xiii
- Author’s Introduction xv
- Dramatis Personae xvii
- How It All started xix
- 1 A Family Business Framework 1
- 2 A Solution-Focused Framework 12
- 3 Family and Family@business Life Cycle 18
- 4 Education Is the Mother of Leadership 38
- 5 The Big Question 48
- 6 Challenges for the Next Generation 57
- 7 How to Prepare G1 for Succession 64
- 8 The Solution-Focused Toolkit 73
- 9 The Solution Tango 88
- 10 Conversations with the Siblings 102
- 11 Next Gen: Eight Tools for Your Future 118
- 12 Generational Transfer, Sale, or IPO? 129
- 13 The Decision of a Lifetime 141
- 14 The Dance of the Stakeholders 146
- 15 G1 How to Let Go after Succession? 156
- 16 Three Family@business Governance Tools 164
- 17 Three Family@business Management Tools 174
- 18 The John & Annie Family Business, Ten Years Later 190
- Addendum 1 Little Note on Solution-Focused Mediation for the Family@business 198
- Addendum 2 Is the Solution-Focused Approach an Evidence-Based Model? YES! 199
- Bibliography 200
- About the Author 203
- Index 205
- What is this book about?
John and Annie
Throughout the book you will be in the front seat to observe how the family and business lives from John and Annie, their children and employees, evolve from a young couple with a growing family and from startup to full grown company. You will learn how the children gradually become involved in the company up to and including the moment when they take over the leadership from the parents.
It is obvious that after several generations, many more people are involved and the complexity of the business poses more challenges. This book provides a framework for handling these complexities.
Individuals differ from each other and the same is true for families and family business. No case is the same. Yet, comparable dynamics are often at play. The John and Annie case can be seen as a template that you can fill with the specific details of your own situation.
Future Proof Toolkit
Starting a business is one thing, making it successful over the generations is of an entirely different nature.
In order to avoid the infamous three-generation trap ‘from rags to riches to rags’, meticulous precautions are necessary. The biggest challenge for a successful family@business surely is the transition over the generations. This book serves as a guideline to help both the Founding Generation and the Next Generation to take the necessary steps to maximize a successful outcome.
Foundations of this book
The author was the first to translate the innovative solution-focused approach for use in management, coaching and other business applications. This is the first book ever on the application of the Solution Focused Model for family@businesses.
It contains the author’s expertise after more than thirty years of study and service to family@businesses.
Theory and Tales
In the first part of the book we put more emphasis on explaining the professional expertise that is useful when working with, for or in a family business. This part of the book is in more in the form of a textbook. In the second part of the book, the many dialogues show how it works in practice. This part is more in a conversational style but the reader can easily translate the storytelling into a more formal textbook.
Just like the intertwining of the life cycle of the family and the family@business, the tools of the solution-focused approach are interwoven with best practices, conversations, theoretical insights, practical applications and the evolving story of the John & Annie family into a tapestry of many colors.
How to read this book
The order of the chapters follows the logic of the different steps in the life of a family business: from birth over growth to complexity and succession by the next generation. However, the reader can choose to go through the chapters he needs most at this point in his career.
Terminology
We introduce the concept of family@business to highlight the intimate connection between the family dynamics and the business dynamics that make family-owned companies special.
Throughout the book we will call the Founding generation G1 and the second generation G2 or NextGen.
How it all started.
Half past two in the afternoon. The front door slams. John storms into the house, face red, mood ferocious. Annie, his wife who works from home as an accountant, is startled: ‘What’s wrong? What happened?’ John grunts something incomprehensible, pours himself a stiff drink, and gulps it down.
Pacing back and forth, fists clinched, John tells Annie:’ I have had it with these F&$%heads, I quit. My manager killed my project. Told me I have been tinkering long enough with it. He even used the word ‘played with it’, the moron. I will never ever set a foot in that place again, never. Unless to buy it. Taking me off my project, who do they think they are.’
Annie knows her husband well enough to let him ramble, curse and use ugly words until his steam runs dry. She knows that her working day has ended and another work starts: getting John at ease so that they can talk sense.
Having met at the university where she studied finance and he was in engineering, they married right after graduating. The week after John got his Ph.D., their son Eric was born. Headhunted out of his postdoctoral program, John works as a project manager in a multinational. Besides his day job, John spends all his free time developing a software program. It is his dream to write a software package that will fully integrate all the back-office functions that construction companies need. He has been raving about this project to Annie for some time now. How the software will interface and integrate all elements of the building process. How the libraries of all possible building materials and subcontractors will speed up the quotation process. How the project management module will interface with the performance studies per component and of the whole building process as it goes along. How inventory can be minimized by a continuous synchronization with the progress of the construction process. John realizes this is a distant dream but he keeps going at it with all his passion. Annie helps him with the financial and fiscal aspects of the program. They both know that their product, when ready, is scalable.
Annie: ‘So, tell me why you go bonkers.”
John: ‘We got summoned to a meeting and our manager simply told us that he pulled the plug on our project. It was way too slow and too expensive, he told us. But he hasn’t got a clue and does not understand the importance of this project for the future of the company. It is not the first time that he acts like this. Well, I lost my marbles, got mad and yelled at him. When he told me to get out, I really lost it.”
Annie: ‘Oops. I can imagine how that must have looked like’.
John: ‘Yeah, I exploded and told him to stuff his project.’
Annie: ‘Then what?’
John: ‘I left the building and I intend to never go back.’
Annie: ‘So, we need to talk about our future then! Let’s go for our own company.’
The result: after a few days of doubts, hope and calculating, they decided to start their own business. Annie was confident in the feasibility of John’s concepts. John was confident in Annie’s financial managerial knowhow. Their shared dream: becoming entrepreneurs.
They had some money in the bank. Annie would continue working as an accountant. That would pay for their daily needs while John would immerse himself in speeding up his construction software.
The apartment became a beehive for the growing family and the startup business.
Buckle up and let’s go for a ride!
Dramatis Personae
The Company: Solution Builders International
The John and Annie Family
Parents:
John and Annie, Co-Founders and Co-Owners.
Siblings:
Eric, future CEO
Ella, M.D., Urologist
Cherly, future HR Officer
In-Laws
Lars, husband of Eric
Max, husband of Ella
Pablo, husband of Cherly
Grandchildren
Eric and Lars: Esther and John Jr.
Ella: The twins, Aurora and Annette
Cherly: Indra
The Family@business Consultants
Mark: Psychologist, Family Therapist, Business Economist, developer, and trainer in solution-focused coaching for the family@business
Cynthia Hange: Professor Organizational Design and Innovation
The Non-family Family
Bert: employee number 1
Alice: employee number 2
The Management Team
CFO: Muriel
Head Marketing: Alice
HR and Legal: Lillian
Country managers: Bruce, Gunther, Alessia, Jacques, and Chen
General Manager: Jerry
Investment manager: Mony
Business Unit managers: Monika, Andrea, Patrick, and Rebecca
CONTENT
CH1. A Family Business Framework
We explore the historic development of how family businesses were originated and highlight their importance in the worldwide economies. The Familyness of the business is a powerful force that must be kept in check so it can act as a power plant and not deteriorate into a bomb that splits the family and destroys the company. To mitigate this, we list six important challenges that face the family, the business, and the family business. We refer to the chapters in the book for strategies, best practices, and solutions. Once the family@business survives the dangerous first years, the succession to the next Generation comes up. Success in the process of succession needs good relationships and we offer ten best practices to do so.
CH2. A Solution Focused framework
Steve de Shazer and Insoo Kim Berg developed the solution focused model in the context of psychotherapy. The solution model not only spreads rapidly within the original field but also in many other fields of application. This is possible because the solution focused way of thinking and working is a process model. In itself, the model is without content. The content comes from the client and the situation at hand. This chapter present an overview of the ten essential elements that built the framework of the solution focused approach. We refer to the chapters in the book where you will encounter all these essentials in the interventions and conversations between the protagonists.
The extensive conversations between the protagonists will give you an idea of how it goes in real life and offer you a chance to study the details of the solution focused language.
CH3. Intertwining Life Cycles of the Family and the Family Business
A Family Business is a unique combination of two different worlds, namely a family and a company. There is a natural tension between these two worlds. Families are supposed to take care of family members while a company is supposed to take care of business. Just like the individual and the family moves through their lifecycle, so companies also go through lifecycles. This chapter discusses the details, challenges and best practices that come with the five phases in the growth of children towards participating in the family business. All these stages of life bring their own specific challenges.
Understanding and respecting the interconnectedness between family life cycle and company life cycle creates the platform for future. Here we introduce John and Annie. The story of how these young entrepreneurs create and expand their business into complexity parallels the story of their growing family.
CH4. Education is the Mother of Leadership
Offering an education to your children is maybe your grandest task in life. This task can feel overwhelmingly difficult, prone to failure and stressful. Education is an offer. The only thing you can (and must) do is to create a loving, open and safe environment that enhances the chances that your children accept this offer of education and make the best of it for them.
This chapter first offers you the best practices in MUST-DO’s and show you what is best avoided, if you want the education, you offer your children to have the best chance of helping them grow into well balanced and self-supporting grownups.
For children that grow up in a family business, we provide ten additional best practices that will enhance the chance that your children will become interested in becoming NextGen.
CH5. The Big Question
This simple question is the most difficult to answer: does the Next Gen have what it takes to lead the family@business towards the future? We discovered ten indicators of leadership potential and present you with a tool to find you strengths and development needs as a leader.
The John and Annie characters in our ongoing case open these delicate discussions amongst themselves and they quickly invite a family business expert to help them.
Of course, answering the Big Question is just one step. Later we will have to address the question of ownership, shareholder-ship, dealing with stakeholders, wealth management, etc. Depending on the reader’s situation and learning needs, we offer a reading guide that directs you to specific chapters.
CH6. Challenges for the Next Generation
An important solution focused tool, the Formula P, helps one to reframe every problem as a wish for change that, with the right approach, can be translated into challenges.
This chapter offers the NextGen tools to deal with four major problems that need to be translated: 1. Morphing from children/offspring to employee to leader, 2. Respect but no idolatry, 3/Trust is a verb and 4. How to deal with your siblings.
CH7. How to prepare the First Generation for succession
When most Family Business owners think of succession, what first comes to mind are issues like: what are the financial, fiscal and inheritance rights consequences? Are these technical issues important? Sure. Are they the most important? Absolutely not! Solutions to these technical issues can be purchased from the respective experts. Research shows that once the emotional minefield is cleared, the solution to these technical issues is almost self-evident.
John and Annie invite a solution focused family business coach, Maar. In their first session, Mark explains that every succession is as individually different as a person’s fingerprints. In order to prepare, he gives the couple some homework: questions that will guide their thinking.
This chapter explains the ten Best Practices that prepare the Founding-Owners for their next step. John and Annie have their first meeting with the children on the topic of succession.
CH8. The Solution Focused Toolkit
This chapter deals with all the insights, theoretical background and intervention techniques of the solution focused approach.
Based on the work of the founders of the solution focused model, Steve de Shazer and Insoo Kim Berg, we have created a specific set of application that is ideally suited to the needs of family businesses. Key elements are: 1. the importance of a good working relationship between consultants and clients; 2.the importance of asking questions instead of telling people what to do; 3.the three mandates (leader, coach and manager) that are essential when working as family@business consultants; 4. the resource orientation that is the essence of the solution-focused approach and 5 the seven premises upon which the evidence-based solution focused model is based.
To enhance your learning experience, we refrained from dry theory. On the contrary, the solution focused toolkit comes to live in the conversations between two family business experts that join forces to help the John and Annie family.
CH9. The Solution Tango
What exactly is it that you do in the contact with your interlocutors, be it clients, family members, co-workers, or staff? Instead of using a fixed interactional protocol, you dance with your interlocutors. The five steps of the Solution Tango structure the pattern of interactions between the family@business consultant and the client(s). The five steps shape the process of the interaction, and by process we mean the form of the interaction and not its content. The content of the conversation comes from the client’s situation and is related to his goals for the intervention.
The five steps of the solution tango are: 1. Make contact; 2. Clarify the context; 3. Goal setting: a conversation without a goal is like the ocean, ever moving but going nowhere; 4. Big attention to the resources of the system you work with and 5. Offering authentic compliments. We explore the Formula GRC: The power lies in the connection of the compliments to those, and only those, resources that are needed to reach the goals. Throughout all the conversations in the coming chapters, you will see how these solutions focused interactional steps guide the ongoing coaching process.
CH10. Conversations with the Siblings
You saw how to use the genogram, learned about systemic thinking and the five-step tango of the solution focused interview, but you also had a glimpse of how reality unfolds in a real family and a real family@business.
We touched upon themes that occur frequently but are seldom discussed: nonfamily family, demoting or even firing someone who has been closely involved in the history of the family@business, strife between siblings, life cycle drama’s like the near collapse of John and Annie’s marriage, family@business group dynamics, etc.
CH11. Eight tools for the Next Generation’s future
Here we present eight tools (lust for learning, look outside, self-awareness, self-confidence, moving out of your comfort zone, adopt resilience and adapt to change
Long-term strategy view, communication skills) that the NextGen can apply to prepare themselves for their future in organizations. These tools are generic so they can also be used for non-family executives. With the help of solution focused scaling questions, all parties can visualize their status concerning each tool. One can use the proposed form that helps to plan the next steps. That way, each tool can be used as an ‘stretching’ exercise.
Like everywhere in the book, transcripts of the actual conversations between the protagonists offer the reader the opportunity to participate in the action. The family business coaches provide the siblings with the seven best practices for effective communication and show them how they can hone those skills.
CH12. Eight possible Scenario’s for the Future
Every individual is unique, every family is unique and therefore every Family Business is unique. This implies that the way a Family Business transitions to the next generation also is unique. Although there are no ready-made or one-size-fits-all solutions, there are a lot of possible scenarios. There is a myriad of combinatorial possibilities, but no mathematics exists that can show you what the best choice is.
Mark talks John and Annie through all the possibilities that range from ‘doing nothing’ (not advisable!) to ‘selling the company’. The in-between possibilities are interim non-family manager, succession within the family, management buyout/in, IPO, permanent non-family manager and last and least: a bit of everything (not advisable).
Mark then leads a meeting with the entire family to prepare them for their decision process in the coming period.
CH13. The Decision of a Lifetime
After in-depth consideration of all that was described in the previous chapters, after your careful yet not always comfortable study of the family@business phases, the tools, the indicators, the exercises to help you stretch your comfort zone, the possible scenarios for the future, after all that preparation, now the time has come to decide. Do I step in or not?
Since your decision to join the family@business is a major decision with long-term consequences, being safe is better than being sorry.
Before you commit, it can be useful to create a safe environment in the form of a probation period. Communicate openly with all parties involved (family, employees, stakeholders) so that an eventual ‘Thank you but no, thank you’ does minimal harm.
When you feel confident to go for it, then and only then say ‘yes’ to full commitment. Use the seven guidelines that will help you unleash your passion and energy and immerse yourself fully in the family business.
Yet, go slow. nobody can run a marathon at sprint speed and your work as NextGen will last you a generation.
CH14. The Dance of the Stakeholders
Stakeholders come in many colors. The classic tool to chart all relevant stakeholders in a family@business is the Three Circle Model by Tagiuri and Davis from 1982.
Stakeholders are the life and blood of every organization. In the old days one used to talk about ‘stakeholder management’ but stakeholders are far too precious to be merely managed. They deserve stewardship. Therefore, we designed the quintuplet People, Planet, Passion, Profit and Pleasure. Most family@businesses put people on the first rank. As a direct result, or perhaps as a direct cause, family@business participants are naturally more inclined to be intrinsically motivated. After all, their job is not just a job. Their job is a means to carry the legacy of their predecessors into the future.
This chapter introduces the management team of the John and Annie company, Solution Builders International. We witness a workshop in which the project “Prepare for the Future’ is shared.
CH15. How to let go after Succession?
This chapter describes how the Founders-Owners can take care of themselves when they gradually let go their life’s work. First, they need to understand why letting go is difficult yet normal. Their company has always been their eldest child. It gave them a lifelong task, consumed lots of time and energy, gave them immediate feedback about their actions and last but not least, it gave them an identity as Founder-Owners. Yet, change is inevitable. So, they have to move ahead. This brings two major worries: 1. How do I see my personal future? And 2. How will the new leadership cope?
At the end of the career of the Founder-Owner there are a lot of aspects that need consideration. Issues that play are financial, legal, emotional, psychological and relational. We offer ten tips to help you let go by grabbing something else.
CH16. Three Family@business Governance tools
In order to allow the family and company to navigate the turbulent waters of the future in a flexible and adaptive way, the following tools are helpful:
•The Family Charter: a commonly drafted text that encompasses all matters important to the functioning of the family in the company,
•The Family Forum: a communication platform where discussions on all possible topics can take place,
•Family Stewardship initiates a leadership style that underpins the cohesion and connection within the family.
CH17. Three Family@business Management tools
This chapter brings us closer to more businesslike interventions that are helpful in the succession process. The tools we discuss here create T.E.A.M-work: Together Each Achieves More.
The following three management tools fit precisely with the needs of the family@business in this stage: 1. Resource audit; 2. Collective ambition; 3. Business strategy.
Once explained, you will witness how these tools are discussed and applied during meetings of the top management.
For good measure, we throw in the ‘Service Profit Chain’ strategy tool that is very recognizable in the workings of well lead family businesses.
CH18. The John & Annie Family Business, ten years later
This chapters tells the ongoing story of the family, the siblings and the company. You will learn the dramatic developments in their family life. Phase 4 and 5 of the family@business life cycle have taken place. On the 35th birthday of the company, the festivities made clear that Solution Builders International, once the eldest child of the family that had to be taken care of, now the company has many caretakers that act as loyal stewards. The company thrives.
Addendum1: a little note on Solution Focused Mediation
We present a five-step program for dealing with conflicts in a positive and constructive manner.
Addendum 2: is the solution focused approach an Evidence-Based Model?
YES!
Many clinical studies show that the solution focused approach is evidence-based. In plain English: there is proof that it works.
What is the relevance of these data for the solution focused work with the family@business?
Given the importance of family@businesses and given the complex dynamics between the individuals involved, the stakeholders, the families and the business in itself, it is of the utmost importance that the state-of-the-art practices with proven efficacy are deployed.