Tuesday, November 16, 2010

Partnering with the Network of Family Businesses

by Gale Martin, Director of Marketing, S. Dale High Center for Family Business


A longtime professional associate of the S. Dale High Center and friend to family businesses, Dr. Steven K. Moyer has created an exclusive online network connecting family business owners that premiered earlier this year. The Network of Family Business (NOFB) was developed to meet family business owners' limited time and schedules, allowing them to stay on top of trends while building their family legacies.

This partnership gives our members access to their content--online seminars and educational resources--a complimentary service that meshes well with our face-to-face seminars, intimate forums, and other programming.

A few weeks ago, I sampled one of NOFB's virtual learning seminars conducted by family business expert, Dr. Steve McClure called "Critical Issues for Succession Planning in the Family Business." Dr. McClure's slides were illuminating and chock full of content.

Here are just some of the key learnings of interest to family businesses I gained from this seminar:

Is this what your leadership transition looks like?
Key Learning: Succession needs to be managed.


The handoff of a family business is always a source of conflict and is rarely effectively paced, usually happening too fast or not fast enough. Without proper planning, the typical succession scenario can devolve into two buffalo butting heads, ramping up rivalries between the successor and the generation that's stepping down, all of which is highly injurious to stakeholder confidence.


Key Learning: Leadership Transitions should take longer and be more deliberate.
Handing off a business really isn't like passing a baton because we expect that transition to be instantaneous. Handoff needs to be a gradual and progressive transition. A more realistic model regarding leadership transition is needed. Sometimes it can be a 15-year process and will have ups and downs during that time, requiring continual adjustment. Typically, the more that the junior generation says things like, "When are you leaving, Dad?" the more Dad digs in his heels.

Key Learning: Both generations have to make an effort; both contribute to the success of the leadership transition.

One thing that is needed is a different point of view from the successor generation. The successor needs to examine how he or she can be an effective leader in their generation. Focus on learning how to deal and work with the outgoing senior executive. At the same time, the outgoing generation would be wise to consider that letting go of the business doesn't mean leaving. Executives who are most successful at leadership transitions are those who focus not on leaving but on going on to something else.


Key Learning: Put successors to work
on a common task.
 In preparing for a leadership transition, why not give the successor generation a task to complete? Dr. McClure advised putting siblings and cousins together and require them to complete an important task. Also, senior executives may need to provide mentors for those who'll be leading the company in the future. Executive coaches are becoming popular. Forums (like the affinity groups offered by the S. Dale High Center) can be extremely effective in growing the next generation of business leaders.

Those were just a few of the valuable learning points from NOFB's October seminar. For the rest of the presentation, NOFB makes archived versions available--just one of the benefits of the S. Dale High Center's new partnership with the Network of Family Businesses.

Friday, November 5, 2010

Leading in Crisis: Key Takeaways from Latest Family Business Seminar

by Gale Martin, Director of Marketing and Member Relations, S. Dale High Center for Family Business

Day to day, some executives never get to directly save lives in the course of running their family business. Then again, their mission isn't shooting astronauts into space and bringing them back alive either.

Make no mistake about it, however. Today's stalled economy shows no signs of catching on fire soon, according to one of the presenters, Scott Heintzelman, a partner with McKonly and Asbury, who is better known by his moniker, "The Exuberant Accountant." Though personal savings are up, the current employment recession shows no signs of abating. It's Heintzelman's prediction that economically businesses will have to accept a new normal, which looks very little like the old economic environment, and that leaders need to adapt their business plans and models accordingly.

Mike McGrann, family business consultant
Leading a family business in today's economic climate may feel manning a rocket launch into outerspace, at least in terms of the risks and pitfalls involved. It's fraught with challenges such as diminished sales, labor shortages, poor employee morale because of layoffs and downsizing, paying for the ever increasing costs of fringe benefits, complying with new regulations, etc. The economic downturn has been cause enough to throw businesses into tailspins and test their ability to lead through crises.

Presenter Mike McGrann, executive director of the S. Dale High Center, suggested that leading in crisis demands that executives ask and answer some hard questions:
  1. Are you honest about the brutal facts? Are you willing to face them?
    A few years ago, US Airways management would not accept responsibility for the severe employee morale problem and slowdowns following a 20% pay cut; and instead of containing the performance problems, they exacerbated their woes--dramatically--imperiling their corporation. "The difference between a good leader and a great leader is the amount of information they receive," says management expert Michael Useem.
  2. Can you let go of the need to be right? Convergent vs. divergent issues.Great leaders build a participatory culture. That means giving team members a voice (though not necessarily a vote), a right to express their opinions and challenge others' assumptions, a role in establishing their goals, and a feeling that their voices are heard. Leaders need to let go of the need to be right. As leaders, they get to make the final call. "Arrogance makes failure," says Millard Drexler, CEO of the Gap, Inc. "Once you think you know the answer, it's almost always over."
  3. Are you willing to conduct "constructive post-mortems" that get to the real cause?Problems are multi-layered and systemic and not linear. There is rarely one single cause for a problem. Leaders are part of the circle that is seeking processes of change and mutual solutions. Ask questions with the goal of seeking knowledge and understanding. "Don't push growth; remove the factors limiting growth," says Peter Senge, organizational learning specialist.
  4. Where is the unique opportunity within the crisis?There are very few quick fixes. At the same time, even crises offer opportunities to examine where business leaders are spending their time:  managing the present, selectively forgetting the past, or creating the future? Typically, leaders, especially those in crisis spend too much time and energy managing the present and selectively forgetting the past. Management expert Peter Drucker has said, "New opportunities rarely fit the way an industry has approached the market, defined it, or organized to serve it."
  5. Have you clarified your values and your vision? You can't make it through a storm without a compass.Effective business leaders have clarified their values and honor certain precepts such as integrity and transparency. Strong leaders have articulated their vision for their organization, too. They have also put practices and procedures in place to ensure their organization feels an urgency for achieving the vision, which shapes everyone's daily thinking. Leaders need to be true to their values, even when it hurts. "A vision provides, both the stability to stay the course and the inspiration to change."
A great summation of a business leader's most important job can be found in The Entrepreneurial Mindset by Rita Gunther McGrath and Ian MacMillan: "Their job isn't to find opportunities or identify critical competitive insights but to create an organization that does these things for you as a matter of course."

Monday, November 1, 2010

World Business Forum provided quality thinking time on important issues

 by Mike McGrann, executive director of the S. Dale High Center for Family Business

One of the benefits of attending the World Business Forum was that it provided a time away from the office in which participants were encouraged to think… rather than do. Jim Collins, author of Good to Great, encouraged participants to create time for disciplined thought. He referred to this as “creating white space” in your calendar to think. I know that I spend a great deal of time doing stuff and not enough time thinking about where our Center needs to be in the next five years… about how my classes at E-town need to change… about where I, as an individual, need to grow and change. The few times I have done this since returning from the World Business Forum have been incredibly productive. It is a practice I will continue.


I found several other points raised by Collins to be particularly compelling for leaders:

1. Double your ratio of questions to statements.

2. Continually ask yourself: “How is my industry changing, and what are the brutal facts?”

3. Create a to do list and a NOT to do list and rank it … with no ties allowed.

4. End our obsession with titles – great people have responsibilities, not a title.

5. Companies are more like likely to die of indigestion from trying to swallow too many opportunities… than starve from a lack of opportunities… so FOCUS.

6. Set a BHAG (Big Hairy Audacious Goal) 10-15 years in the future for your organization.

I also found Al Gore’s discussion of the relationship between climate change and capitalism particularly interesting. Some still doubt whether global warming is occurring, and others doubt that man is the cause of changes in the global climate. But it seems to me that these debates are avoiding one of what Collins calls a “brutal fact”… which is that man is pumping tons of carbon dioxide into the earth’s atmosphere. And the other brutal fact is that if you change the inputs to a system, eventually you will change the outputs. How long will this take? Perhaps 5 years, perhaps 50, perhaps 500… but eventually the ecological system of the earth will breakdown if there is no change to our current levels of CO2 output. As Gore pointed out, capitalism’s great challenge and great opportunity is to find ways to address this problem now in a way that creates economic opportunity. Ultimately, policies that inhibit economic opportunity create more poverty and further degrade the planet.

Mike McGrann was one of five business faculty and students attending the 2010 World Business Forum in New York City, representing Elizabethtown College and the S. Dale High Center for Family Business, made possible by The High Companies, headquartered in Lancaster, PA.

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