Logo for Saybrook University

Posts

Business is Personal: Family Business Offers an Alternative

By: Dennis Jaffe | 14 Nov | 1 comment

 

Photo courtesy of TimeOutSingapore.com.

Groups of young people and business-attired elders swarmed the lobby of the Ritz Carlton in Singapore in one of the most inspiring and unique gatherings I have ever experienced.

An estimated 700 family business owners from more than 40 countries—ranging from restaurants to oil refining, from media to manufacturing, from food to green technology—attended the annual Family Business Network International Summit in Singapore.

Some of them—the businesses not the people—were hundreds of years old. Despite the financial crisis, the owning families had a dynamism and faced the future with an attitude of sober optimism as they prepared to pass ownership and control across generations.

Is this what a gathering of the global elite—the royal families who have untold power and a tradition of living in a gilded cage—looks like?

What was most incredible to me was that with all of this hereditary wealth and power, the focus of the conference and most members of the group was not inward on self-congratulation, but outward on how they—as business leaders—could act as leaders of the social transformation that is so needed in the world today. Given the option to hide, sit back and enjoy life, these businesses instead were united in realizing that their personal and family success depended upon a shared future for the whole planet. They were a global group, representing every continent and political system; and the unity of purpose and values overshadowed the differences of culture.

Their view of business was very different from what might be heard in an investor’s conference. Their view of business was less about profit; it was more personal and value-based. It appears that family ownership can look like a responsible parent who makes sure that the focus on profitability does not come at the expense of other values—like the support of employees, the community, and the environment. To them, a family business has a deeply personal focus—they want their children and neighbors to be proud of them. This commitment leads them spontaneously toward what business leaders call the triple bottom line—or people, profits, and planet—as keynoter John Elkington noted to the group.

The focus of this meeting was on the family’s values and how they were expressed, not on profitability. In session after session, families shared stories of what they had done, how they changed over generations, and the struggle to balance these sometimes competing priorities. Fernando Zobel de Ayala, sixth generation family leader of a leading company in the Philippines, talked about how his family’s concern about the cost and quality of water in poor communities led to a family investment in water treatment that reduced the cost of water tenfold. While such a concern is shared by many, few families have the means to move from a problem to such a comprehensive and sustainable response. This effort is only one of many ways that his family exercises leadership in their adopted country.

The presence of the younger generation and their emerging role in their family enterprises is a core reason for this commitment by families. The family founders have created successful and visible companies, and they provide the best to the next generations. Of course, there are family members—those who typically do not attend such conferences—who decide to become consumers of the family wealth. But those present have taken a different advantage of their elite professional educations. Their stories were about a personal developmental journey from their family. Out of their education—mostly in other countries like the U.S.—and travel, they became aware of unrealized needs in their own and other communities, and wondered whether their family and its accrued resources could make a difference. Some shifted from business focus to social entrepreneurship.

For example, Ghazi Faisal Binzagr, scion of a Saudi trading family, knew since he was very young that he was not destined to be a trader. His family accepted his studying for a doctorate in organizational development and his community development work with local villages. Over time he has become what he calls a “merchant teacher” who combines his social commitment with his family skills of trading. Similarly, Melissa Kwee, whose family developed the building where the conference was held, began to work with undeveloped communities when she finished her studies rather than enter the family business. After developing her skills as a non-profit leader, Kwee joined the family business—the first member of her generation to do so with an understanding that she will combine her values and skills with the family’s real estate focus.

The blending of generations at the conference was another aspect of the unique culture of family that was clear in this gathering. Some younger family members talked about how it was not always easy for them to share their new values in their family. It was difficult to get their elders to listen or take these new ideas seriously, they said. They had to develop credibility by working outside and demonstrating that their ideas had substance.

The problem of business innovation was explored in several sessions. Family elders talked about how their traditional ways made it hard for them to change. Often some event or crisis around them led them to be more open to the message of the younger generation. Dialogue across generations, where the tradition and legacy of the elders was balanced by the new realities encountered by the younger generation, was a key theme of this family business gathering. Elders heard from other elders how they had changed, and learned to let go and trust their children. A session by a family patriarch and a business professor from India on the need for elders to shift their role from control to another form of leadership, brought this challenge to the fore.

Another theme of the conference was that this was not a quick, easy or even a natural progression. One business leader noted that there had been more change in the business climate in the last 20 years than in the previous 480 years of his family business. They almost did not survive as they faced changes as they had never before. Facing change means that the success of the previous generations is not guaranteed for the future. A family enterprise cannot focus on social transformation if it does not sustain and innovate in its business model. The next generation are the stewards; they must bring to the family business not just what they want, but what the business needs. But they want to do this by balancing the needs of the diverse group of family owners, and the needs of the business, and the community. What a task!

The new generation—far from sitting back and harvesting the fruits sowed by their parents—may have to resurrect a greatly challenged business with a grand history. For instance, several members of the Loy family of Malaysia—including siblings, their spouses, and outside managers—talked about the challenge of turning around a business after the untimely loss of two family members. Added to this were differences within the family—a group of siblings who may have in the past been more competitors than partners—who were faced with a struggling business partnership. While respecting the legacy of their parents, the new generation had to create their own model of making decisions and operating the business in ways that their patriarchal parents did not. With values like collaboration and social responsibility, they developed a very different way of working together than they learned from their parents. Illustrating collaboration and trust by throwing around an orange for each person to speak, the Loys talked about how they formed a family council to decide such issues as a family so that they could be effective in leading the business.

The conference featured visits to family businesses that shared their story and showed off their workplace and dining experiences where familes that owned a restaurant or food manufacturing business could show off special recipes or their approach to food.

In all, this was a celebration of a way of doing business that stands in deep and stark contract to the rational model of a business being run solely for profit with attention mostly to the needs of unrelated owners whose interest in social issues—if they exist at all—are explicitly outside the sphere of the business. Data were cited from several studies that suggest that family businesses with this focus were more profitable in the long run than similar public companies.

The idea that business has to be impersonal and rational flies in the face of the dynamism of family enterprise. The stark statistic presented at the conference shows us that while there are many large public companies running the global marketplace, a majority of commerce—both privately held and public companies—is owned, controlled, and often managed by a group of people who often have deep and personal relationships with each other and a deep connection to issues beyond profit.

Read other posts by Dennis Jaffe

Keep up with our community: Facebook | Twitter | Saybrook's Organizational Systems Program

 

Comments and Discussions

Dennis, I am so grateful for

Dennis,

I am so grateful for you blog. My family is a self-employed kind of family. From my father to my uncles, to my cousins, and siblings, we all own our own businesses.

I have found that the employees have become an extension of our family. When my dad was alive, he took great pride in giving back to the community by way of offering employment and volunteering time. I asked him once, "Dad, why do you employ Debra (not her real name)? She does not have any skills and makes so many mistakes."

He replied, "Debra's husband died, leaving her with nothing. She has young kids at home, and does not have the education to make herself employable. So if I dont give her a job, I dont know who else will. We are successful enough to support other families too, not just ours."

This was a huge lesson for me, and changed my perception of what a business is suppose to be about.

Thanks Dennis!

Facebook Twitter LinkedIn YouTube Google Plus

share