Five Challenges of a Family Business

In 1977, my father ventured out on his own as an entrepreneur to start our family printing business, Port of Printing.  As the oldest son of a business-owning father, I experienced organizational dynamics I would only learn to put terms to many years later as a graduate student in an MBA program.  

My being the oldest son in a family business set the course of my career.  The small to medium-size family owned business (SMB) is where I have spent most of my life in both middle and now senior management roles.  

For those new to the SMB world, Gartner Group defines SMBs as follows: Small businesses are usually defined as organizations with fewer than 100 employees; midsize enterprises are those organizations with 100 to 999 employees. The second most popular attribute used to define the SMB market is annual revenue: small business is usually defined as organizations with less than $50 million in annual revenue; midsize enterprise is defined as organizations that make more than $50 million, but less than $1 billion in annual revenue.
 
Recently, I have had the privilege of working with a great family in creating and executing a continuity plan as the family has become older and decided to have its first non-family key executives.  

Here are five challenges of working in family a business:

 1.  Family politics: Many family businesses operate like a gang or The Mafia.  As family members, we need to focus on building a strong family as the core of the business. As non-family members, you will never be part of the family (even when owners like to say you are), so never take sides when family members discuss family issues. 

2.   Change: Growth of business means learning how to deal with honoring the past while creatively destroying it in order to keep competitors from destroying you first. 

3.  Communication is at the heart of leadership: The flow of information between management, owners, and board is critical to decision-making, change, and growth.  This is the essence of governance and leadership.  When there is "back channel" communication (i.e., triangulation), gossip about family members, and negative judgments without direct conversation, family tensions will be high and dissension present. 

4.   Culture: As a big fan of Dr. John Ward's work on family business, I find his definition of family business culture both accurate and academically precise: "Culture is the result of what a particular group of people think and share together as being most important to them (values) and as a result, their shared basic beliefs influence the ways they interact with each other and with the world around them."

 5.  Anxiety: Learning to handle uncertainty with maturity can either make or break morale, engagement, and productivity in a business. Consultants are great tools for processing anxiety to prevent blame, scapegoating, triangulation, and Groupthink from taking over. 

These top five issues in family businesses also apply to larger corporations.  Innovation and entrepreneurial success flow from how well we navigate these management waters.  I am looking forward to taking a deeper dive into these and other topics in coming months.  See you there. 

Creativity, Design, and Innovation

Creativity is an inborn capacity for thinking differently than most, seeing differently, and making connections and perceiving relationships others miss. But most importantly, it is the ability to then extrapolate contextually useful ways of employing that data: 

to create something that meets a specific challenge.

 (Andy Rutledge)

Flying back from a baking conference in Florida, I was once again (as I am most days) thinking out what is next in our strategy for growing our sales revenues in a competitive and mature industry.  As I watched my son work a puzzle on his iPad I was thinking how developing new business ideas is like a puzzle or chess game.

Creativity, design, and innovation are always my big three drivers of growth. My son and I joke that our creative genes are regarded by some people as unconventional.  Exactly! 

Creativity is essentially the development of an idea.

Design is the creation of a plan or convention for the construction of an object or a system.  Design moves obstacles to the creative idea using new conventions or plans.  This is why I laugh when people say we are unconventional.  If we did what everyone else does we would get results equal to, or more likely, less than what others get.

Innovation is turning ideas into value.  Creative people such as artists often die poor because they never learned or desired to monetize their creativity. 

As I was flying home thinking about the market trends presented at the American Bakers Association, I was thinking about the future needs, opportunities, and trends emerging in the tastes of American consumers.  For years we have been building a creativity, design, and innovation culture.  In future blogs I will share some of our learning.

Andy Rutledge quote from Wendren Setzer at The Wren Design