Chinese family firms are a force for change in China, bringing a renewed interest in family entrepreneurship to the forefront. Notwithstanding the rapid changes taking place at the very core of Chinese family businesses, founders share five common challenges when it comes to succession. By reflecting on the simple principles below, owner-managers can advance the succession process in their firms without the disruption that often characterises poorly prepared transitions. Family-owned businesses that have survived the five great succession challenges have lived to be hundreds of years old, some more than a thousand years. They continue to thrive because they have ensured smooth successions from one generation to the next, as have the following examples of family-owned companies from around the world: Peugeot – The famous French automobile company was controlled and managed by the same family from 1810 to 2014, when they sold off its controlling share to a Chinese carmaker and the French state. Jardine Matheson – One of the original Hong Kong trading houses or Hongs, Jardine Matheson Holdings has been controlled by the Keswick family throughout its 185-year existence. Tata Group – Owned and managed by the Tata family since 1868, the conglomerate has contributed much to India’s transformation into one of the most dynamic emerging countries in the world. Ford Motor Company – One of the most recognisable names in the United States, the automaker dates back to 1903 when Henry Ford introduced mass manufacturing of cars. Chinese founders can learn many lessons from these tried and tested winners. To ensure their own longevity they should master the five challenges below. 1. Understanding The Culture Of Succession All successions are a product of the cultural norms that prevail in the particular country or region. Succession is shaped by the formal and informal rules of the specific environment in which families live and run their businesses. Influenced by Confucianism, Taoism and Buddhism, China’s culture transcends the individual, favouring collective or group initiatives instead. In this cultural setting, family members who are interested in joining the family business may not think their voice is being heard by the founders. If these key individuals are overlooked in favour of group recognition, the generational transfer of ownership and management of their family-run firms may not happen as planned. Hence, owner-managers should play a unifying role to prevent next gens from looking outside their family businesses for recognition. 2. Transferring Family Assets To The Next Generation Family assets are unique value-creating resources – they include the name, reputation, legacy, networks, cultural traditions and values of the family. While successful founders have proven that they can contribute assets to their firms, a key challenge is how to transfer these assets to the next generations and how to institutionalise entrepreneurial spirit. Owner-managers can act as role models, spending more time with next gens, taking them to business meetings, working out the governance structures, etc. Founders must find relevant knowledge-transfer measures if they want to maintain the momentum of the business in the transition to the next generation. 3. Developing Competent Children Today’s Chinese family businesses often have members of two or three generations working side-by-side on the shop floor. In this situation, founders face the challenge of overcoming educational differences. Next gens often want to develop their CVs, while elders are proud of their knowledge acquired from years of experience. While showing tolerance and respect, founders should not neglect higher educational opportunities for next gens, encouraging them to enrol in business schools abroad. They should also encourage next gens to obtain solid management experience outside the family firm. Having solid management skills and business experience, next gens will be in a better position to qualify for top roles in their family firms. 4. Communicating Across The Generation Gap In traditional Chinese culture, first-borns see themselves as junior in relation to their parents or elders, but senior in relation to younger siblings. This dual identity can inhibit personal and professional development if ideas from below are treated as less valuable than those from above. Fixed patterns can become etched in stone and resistance to change endemic. When Chinese families send their children overseas to be educated, the learning they bring back may be ‘lost in translation’. Hence tools for communication must be developed within the family and the firm to manage the expectations of heirs, while ensuring that the older generation does not lose face. This suggests a counter-intuitive style of communication that emphasises risk-taking where innovation and new ideas are fostered, and which reflects the entrepreneurial spirit that founders seek to pass on. 5. Engaging In Long-Term Planning For many founders and owner-managers there’s scarcely time enough in the day to look after their own short-term needs, much less the long-term needs of their heirs. Most will start planning for succession far too late in the game or not at all. But what if a founder suddenly comes face-to-face with a health shock? The family is then thrown into a succession crisis with no long-term planning to guide them. Research shows that only 22 percent of Chinese founders have succession plans in place. Without a plan, next gens lack the guidance they need to manage a successful transition. Founders who have not developed a plan for the future often look amateurish and unprofessional in the eyes of their next gens. Disillusioned by the confusing signals coming from above, heirs may pursue other career options available and often commit to alternatives outside the family business, leaving no successors to take over the firm. If founders respond to these five simple challenges of succession, the likelihood will be greatly increased that their families and firms will run smoothly for generations to come. By building a solid foundation upon which their firms will prosper and grow, they will bring longevity within reach. Morten Bennedsen is the André and Rosalie Hoffmann Chaired Professor of Family Enterprise at INSEAD and Academic Director of the Wendel International Centre for Family Enterprise. He is a contributing faculty member to the INSEAD Corporate Governance Centre and is co-author of the book The Family Business Map: Assets and Roadblocks in Long-Term Planning (Palgrave Macmillan 2014). This article was first published on the INSEAD website and has been reproduced with their permission.

A good insight into some of the challenges facing family firms and the family dynamics that promote smooth transfer to the next generation. Forty years ago, at the start of the great reforms in China that led to more openness and entrepreneurship, founders would have expected their children to start working on the shop floor and in the office from a very early age. But since the introduction of its one-child policy in 1979, there are far fewer children in business families today. Even though the government has phased out the one-child policy, introducing a two-child policy in 2015, many Chinese owner-managers may have only one child to succeed them in a family business. As a result, the second generation’s role is far more critical than to founders outside of China. Outside the mainland, owners of Asian family businesses have no qualms about raising a brood of children. Well-known names in the region have even gone to the extreme of fathering children with many wives. Casino king Stanley Ho is Macau’s wealthiest person and amongst the richest in Asia. He has 17 children, born to his four “wives”. In recent years, the 95-year-old ailing tycoon has handed control of his various businesses to several of his children. Not surprisingly, parts of the handover of the Ho family assets have hit legal roadblocks and messy lawsuits. Most founders on the mainland never have to worry about succession disputes like Ho’s because of China’s one-child policy. On the other hand, founders need to think far more carefully about long-term planning and how to teach their children the necessary skills to run a family business. The 'Sea Turtles' As an only child in China, especially one from the provinces, the son or daughter might have dreams of a future that could clash with the expectations of a founder. Why would they want to run a firm in the provinces when they could follow their vision of starting a career in Shanghai or Beijing or overseas? Traditional Chinese culture has adapted to the one-child policy by offering more choices for women. In the absence of a son, a founder may be more open to having a daughter take over the family business. In addition, founders often have more financial resources to provide greater educational opportunities to their single children. Following high school graduation, the only child may be rewarded with an all-expense-paid training programme abroad in a field of study related to the family business. China remains the world’s leading source of international students; more than 500,000 Chinese students went abroad to study in 2015, and most financed by their families. But upon their return, the sole heir has often surprised parents by not expressing an immediate desire to succeed them in the family business. Approximately half of returning Chinese students, termed “sea turtles”, have shown their desire to work in urban areas, such as Beijing, Shanghai, Guangzhou or Shenzhen. Nearly one-third of them have applied for jobs with multinational companies. Aware of the risk that their children may not return to their local business community after studying abroad, many founders have been pushing the Chinese government into developing higher educational institutions to rival the top tier schools abroad. However, if founders cultivate strong bonds of kinship among extended members of their families, their children would feel less pressure and would be more likely to return home to take over the family business. Grooming The Next Generation Next generation heirs in Chinese family firms are not free riders. Founders are often wise to educate their heirs in the allocation of family resources. By teaching their children how to pool their savings into a common family piggy bank, parents can make the difference between a unified and divided family. As founders move into their retirement years, the fruits of their hard labour will be reflected in their long-term planning. A clear set of succession guidelines will instil harmony, peace and order in the family household, giving rise to a prosperous business. Nevertheless, founders should fight against the tendency towards one-sidedness and blind conformity whereby family heirs miss out on valuable growth opportunities and innovative ideas. The single-child policy has left founders with fewer choices for family succession which may explain why so few families in China have undertaken succession planning. Despite these shortcomings, many founders have reserved their precious time and effort to educate and train the next generation to a high degree of professionalism. In so doing, they have given their heirs more incentives and the necessary skills to successfully take over the helm of the family and the business. This article was first published on the INSEAD website and has been reproduced here with their permission.

India has a rich and magnificent history of family businesses. The country’s rich history and culture have molded the edifice and character of family businesses over the years. Yashodhara Basuthakur and Dr Nupur Pavan Bang from the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business explain more. The joint family system was the backbone of these businesses and provided the required resources and capital for the cohesion and growth of the firms. In the early eighteenth century, India was predominantly an agrarian economy, with a deep-rooted caste-based social system that defined the occupational choices of the communities. Agriculture was the primary source of income and livelihood. The manufacturing industries were few and mostly in textiles, handicrafts. But India was lagging in the development of the economic, political, and commercial infrastructure essential for trade pursuits. The turn of the eighteenth century marked the transition from mercantile capitalism to industrial capitalism. The colonial rule led to the decline of the vibrant Indian merchant community. The Indian businesses faced discrimination in trade, policy and bank loans. During the Industrial Revolution in 1850, India became the supplier of raw materials and a market for the products of the British factories (cotton, iron and steel, chemicals, etc.). Some of the businessmen who emerged during this time were the Birlas, Kasturbhai Lalbhai, Walchands and the Tatas. They constantly criticised economic racism and created bodies of commerce and trade associations to lobby for the Indian companies. They invested in research and development and introduced new product lines. The Indian led business enterprises had expanded in scope and scale across the country by the end of the 1940’s when India gained Independence. The Indian family businesses also actively engaged in social causes and philanthropy through generous contributions to charitable trusts and other institutions driven by the cultural and religious traditions of “daan” (giving) as a sense of duty to the community. They played a pivotal role in institutional building by partaking philanthropic activities such as setting up premier educational institutes, research, and cultural centres for the progress of the country. The post-independence period marked with communal unrest was not very conducive for business. Additionally, the new Industrial Policy (1948) of free India was introduced which saw increased participation of the government in economic affairs. The large-scale nationalisation and government monopoly of critical industries such as utilities, transportation, iron and steel, heavy industries, armaments, atomic energy, manufacturing curbed the freedom of operations of the private enterprises. The Monopolies and Restrictive Trade Practices Act, 1969, put severe bottlenecks with respect to the quantities and types of goods or services that could be produced by the private sector. The firms now had to obtain licenses or permits to expand or start new businesses. Because of the limited licenses and capacity constraints, firms focused on diversifying into areas wherever they could acquire the required licenses instead of building on their core competencies. Some of the multi-generational business houses focused on restructuring by consolidation and expansion within the new framework by acquiring overseas companies and expatriate houses to enter new industries. Other business houses acquired a significant number of licenses to thwart competition and block other firms from entering the space. Also, there was a new genre of technology-savvy entrepreneurs who were well-educated with degrees from abroad and joined their family business or started new ventures. Some of the legacy business groups even lend their expertise in areas like engineering, iron and steel (Tatas) and shipping (Walchands) to the newly formed government enterprises. However, this period also witnessed some of the older business families already in their third generation going through splits due to waning family ties. The families had not yet adopted professionalisation, and the dominant family coalition still controlled the ownership and management. The economic liberalisation in 1991 was a landmark decision which opened the economy and introduced several macroeconomic and structural reforms. These reforms brought in a gamut of opportunities and challenges for the family businesses. While the businesses now had to compete with foreign multinationals and new entrepreneurial organisations for capital and resources, but they could now enter sectors which were earlier exclusively reserved for the public sector. The family firms were quick to restructure and respond to environmental changes. Some of the multi-generational businesses were able to weather the turn and came out triumphant in the new economy, while others who couldn’t sustain disappeared from the thriving business scenario. This era also witnessed the dawn of a new set of stand-alone first-generation family firms who harnessed the information-led economy by investing in research and technology. A study on Indian family firms by Bang, Ray and Ramachandran (2017) looks at the listed firms during the period from 1990 – 2015. The study categorises the firms based on ownership and management into two categories, namely family business group firms (FBGF) and stand-alone family firms (SFF) . According to the study, ninety-one percent of the listed firms are family-firms, which is a key driver of the Indian economy. In the year 2015, the top 30 family firms contributed to almost 50 percent of the total revenue of all listed family firms, which translated to 13 percent contribution to the GDP of India. Overall, listed family firms contributed to 26 percent of the GDP (Total Income). Out of the listed family firms, the FBGF’s contributed to 21 percent, and the SFF’s contributed 5 percent to the nation’s GDP. The family firms contributed to 28 percent of indirect taxes and 18 percent of direct corporate taxes collected by the government exchequer. The family-firms built more assets in the manufacturing sector, which has a long-standing impact across all industries. The SFF’s were predominantly in the services industry, owned and managed by the founder (or first-generation). The SFF’s played a critical role in the rapid development of the services sector and generated large-scale wealth and employment opportunities. During the post-liberalisation period, there was increased participation in equity markets by the family firms to meet the financing needs for expansion and growth. Among the listed family firms, the firms incorporated before the 1980’s were more likely to create business groups as a response to the macroeconomic conditions. The average age of the listed FBGF’s in the sample is 38.44 years, whereas that of SFF’s is 28.73 years. The family firms have displayed resilience, character, and adaptability over their long history and played a pivotal role in India’s growth story. However, with the current shifts in the economy and society, there are major challenges that family businesses must surmount. The family firms at the crossroads of succession have to take the decision on either to transition to next-generation or professionalise by inducting non-family managers. The family firms have to adhere to stricter and transparent corporate governance guidelines, better leadership and connect with the community to continue to chart the success story in years to come and ensure the perpetuity of the business and family. The authors are Yashodhara Basuthakur and Dr Nupur Pavan Bangfrom the Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business.

When we talk about the good practices of managing a family business, we refer to the layers of experience that have accumulated over the years and that are constantly presented as effective habits in managing relationships, making decisions and change strategy. From these practices, here are ten that we have had the privilege to learn from our clients and that we consider guarantee to a great extent of a high level of satisfaction in a business family: 1. Separate The Concepts Of Ownership, Governance And Management The family must clearly establish these differences, since they facilitate a better understanding of the management of power. The owners have a series of rights and obligations inherent to the ownership of the shares as their owners. The government sets the company’s strategy, for which we recommend that its managers have a broad knowledge of the company and the sector, as well as minimal financial and accounting knowledge, so that their contribution is positive and valuable. Finally, the managers’ obligations have to do with the execution of the major decision lines set by the government. As long as the family is clear about this separation of roles, a professional management of the company that meets the demands of the responsibilities of the mentioned functions can be better understood. 2. Create Governance Structures In Accordance With Its Complexity Implement a Family Management System that, based on the adequately empowered forum for decision-making (for example, the Family Council or the Board of Directors), planning activities to achieve real and measurable objectives (such as a Work Agenda), rules adapted and adaptable to the circumstances (an effective Family Protocol), based on a clear and defined north (the Shared Dream), can work based on conversations about a strategic plan that the family has designed and follows up on constantly. However, the design of these structures must obey to a reality commensurate with the complexity of the company-family-property system: too much structure can bureaucratise decisions, little structure reveals a lack of order. 3. Transparent Management And Continuous Accountability Trust between adults is based on the transparency of the information that is exchanged. Adults can be the partners of a family business that are not linked in a parent-child relationship, which has another, a more natural and deeper concept of trust. Transparency is based on consistent account performance. But an accounting performance is effective if the person who receives the information (which is usually basically financial, as it is the language of the partners), knows how to interpret them correctly. To interpret them correctly, you must have a minimum knowledge, which is had or is acquired. In summary: if we want to generate trust, we must know. 4. Generate The Concept Of Stewardship The idea reflects the need to preserve great value, the family name as a brand, its reputation. It is not just about money since equity, as patient capital, allows you to invest with a much longer time frame. It is thinking of different cycles. They are not years. They are generations. The families that succeed in transcending generational change are those who understand that what they inherit is not a gift from their parents, but rather a loan made by their children. 5. Improve Communication, Cultivate Dialogue And Tolerate Differences One of the main objectives when working with business families is to help create circumstances that allow effective communication between the interlocutors, who throughout their daily interaction are constantly discussing, analysing and proposing the different scenarios to face the future of the heritage they share. But be careful: this is only possible if we accept and tolerate differences, not only in basic terms of the message but also in communication styles, recognising and respecting the preferences of each one, for which a better knowledge of all members is required by everyone in the family group. Fortunately, this is a practice that can be learned and improved. 6. Keep On Continuous Training (shareholders, directors and next generation) We must constantly prepare ourselves to face the challenges inherent in their nature: find capital to grow without weakening family control, resolve the difficulties associated with generational change, anticipate the demands and challenges of the processes of economic change. Being able to guarantee control in these and other circumstances, maintaining order and ensuring the stability of the business, depends to a great extent on the constant training of directors, company managers, current shareholders and members of the next generation of leaders and owners. If you think that knowledge is not important, do this mental exercise: disconnect from the business environment and try catching up before lunch six months later, where you will attend with all the leaders of your competition. 7. Accept That Conflict Will Always Be Present As the family enterprise evolves and becomes more complex, conflicts within the family are inevitable. In fact, conflicts are necessary to be able to break with inertia and adapt to new circumstances that arise from changes in the environment, or as a consequence of the natural evolution of the family or the business. Therefore, we must understand that crises in business families are not necessarily negative: depending on multiple factors and how we re-qualify and manage the situation, a conflict can lead us to a healthy and necessary solution to a motionless situation that cries out to face change. 8. Trust The Judgement Of External Advisers Although it depends on each case, in general a Board of Directors must be made up of representatives of the shareholders, representatives of the managers and, in addition, some external professional who adds value to the company. They must be trustworthy people, with business experience in the sector, with recognised and valuable prestige and criteria, but above all, truly independent. They provide the family business government with a fresh and objective vision, help to professionalise the decision-making process, and thus, prevent family conflicts from affecting the proper functioning of important decision-making centres. 9. Accept The Definition Of ‘Institutional Retirement’ The guarantees of effective transfer of the management of a family-owned business will require (beyond the role of the family, environmental factors or the planning and preparation of successors), enthusiasm, capacity and responsibility. But above all, will require a bond of trust and commitment to solve things together between successors and the leaders in charge. We are not looking to replace the personality that once played a role, as that is simply impossible. The key is to understand that it is the substitution of the functions of the position and not of the person himself: it is the institution in command that requires a new person in charge who meets the previously defined objectives of the position. 10. Draw Up A Family Protocol Based On The ‘Shared Dream’ Many times, in the path of the evolution of a business family, the owning family is sooner or later with the necessity to write a Family Protocol. It is usually presented as an excellent opportunity to develop a set of rules that regulate their relationship with the company or the main economic activity. If the drafting project is completed, the owner family will have in their hands a manual for the strategic managing of their assets, which will allow them, among other things, to carry out the transition of the business to the hands of the next generation. But in our experience, these “user manuals” are only sustainable over time when they base their manufacturing process on the methodology of a Shared Dream, in which all individuals find the common place where they can bet as one for the future they want. The implementation of these recommendations in a family business is neither simple nor free of obstacles, but the goals set can be achieved as long as two conditions are met: First, all agreements must be consistent with the future projection (which it is known as the ‘Shared Dream’). And, secondly, all decisions in a Family Council must be based on the concept of “consensus” which, unlike ‘unanimity,’ fuels debate and increases the group commitment.

More than four decades ago, Billy “Mack” Jameson (a real character with a fictitious name), founded a modest grocery store in San Diego, CA. Over the years, his tireless effort, the unconditional support of his wife Martha and his business eye for real opportunities, turned his initial venture into a solid retail organisation, constantly diversifying it services and growing as a leading business. Ten years ago, after the founder’s death, his three sons Jamie, Linda and Bobby, took over the set of operational assets that today directly employs more than two thousand five hundred people throughout the state of California. However, the Jameson siblings decided from the beginning to impress a differentiating feature on the family’s relationship with the company: they did not want to make their father’s mistake by spending so much time with the company and neglecting their family, so they decided that their children would not “be contaminated by the vice of constantly talking about work”, and they agreed not to talk about the company at home, leaving the next generation to enjoy without worries the benefits and privileges that belong to a wealthy family with a good social position. A few months ago, after a surprise heart attack from which he is successfully recovering, Jamie, the older brother, begun to seriously talk to his sister about the succession to the third generation. However, none of the founder’s five grandchildren (now in their mid-twenties), has so far had the greatest interest in the business. In fact, they have done little in their professional lives. They were neither motivated to finish their studies nor assume responsibilities in any job (it is forbidden to work in the family business, according to the rules imposed by the founder’s children). After all, the grandchildren think that “thanks to their charismatic and successful grandparents, they have their parents’ wealth that will support them in the future.” Jamie realised this cruel but true reality of his family and commented to his sister: – “We have to talk about the family business with our ‘children’ … but where do we start?”- To what she replied: – “We should start by ourselves. First thing’s first…” This is a real-life case that shows the reality of some families I have had the opportunity to work as a family business consultant. The lack of communication between family members is often the main cause of the conflicts they face. Attempts to create moments of coherent conversation about shared heritage often end in heated discussions between sibling partners, who have different perspectives of the same reality. One of the main goals when working with families in business is to help to create minimum conditions that allow effective communication between the owners, who must discuss, analyse and propose the different scenarios to face the future of the legacy they’ve been sharing. The initial conversation should then determine if the family truly wishes to remain united around this heritage with a defined purpose. Implementing these processes is neither simple nor free from obstacles, but the degree of satisfaction can be increased as long as two conditions are met: First, all agreements must be consistent with the purpose of the legacy and the future projection of the family (known as the “shared dream”). Second, all decisions in a Family Council must be based on the concept of “consensus” which, unlike “unanimity”, fuels debate and increases the group commitment. At certain point, families must face the question: “When is the next generation going to participate in this process?”. The answer is always “When the generation in charge is ready.” It is not possible to create a programme that prepares future owners if the current leaders are not clear about the intentions and rules of engagement for the next generation. Cousin problems (third generation) are usually due to relationship problems among their parents (second generation). The best way to achieve a second-generation preparation plan is to have a fully functional Family Council consistent with its members’ decisions. Through their Family Council, the Jameson siblings found a way for having a forum that allowed them to strengthen the role of their Family Office and Board of Directors, focusing on their responsibilities as owners and building a more efficient wealth strategy. But all this was only possible through the creation of a space exclusively dedicated to the conversation of family and legacy issues, based on effective communication and mutual respect and recognition, with the awareness that the leadership inherited from their father was now divided among the three siblings. And precisely, thanks to the leadership of the Family Council, in a couple of years a special educational programme was designed and implemented with external and in-house resources, focused on the motivations, skills, attitudes and knowledge needed for the third generation to be responsible future owners of Mack and Martha legacy.

In turbulent times there is a clear need for “white space” – that is, quality time for reflection with a trusted neutral person. Greg McCann explains more. Even before COVID-19 rocked our world, family enterprise leaders have had the challenge of navigating today’s rapid pace of change, global interdependence and complexity. They’ve also had to adjust to the fact that the average family enterprise now consists not of one but of five or more businesses. Add in all the other challenges of running a family enterprise, and it’s no surprise that one thing every leader I have worked with other the past 20 years has agreed on is the need for “white space” – that is, quality time for reflection with a trusted neutral person. Those who get this through leadership coaching find it leads to a direct increase in their capacity and agility as a leader, which helps them meet the challenges family enterprise leaders face today—and will almost certainly increasingly face in the years ahead. So, how exactly do these qualities of capacity and agility benefit you as a leader? What does a leadership coach do to develop them? And, what should you look for in a coach? The benefits of developing your capacity and agility Developing your capacity means becoming better able to think on different levels—to identify whether any given problem is a problem to solve, a system issue in need of a strategic solution, or a culture issue to influence. It also benefits you by deepening your self-awareness—so you know your strengths, weaknesses and blind spots, which helps you relate more effectively with others. It also increases your empathy for others, which research on emotional and social intelligence has shown is a significant benefit to business leaders. Agility is about being able to choose the right style or approach for a given situation or relationship. In short, developing your capacity gives you a greater number of effective ways to think and act, and agility helps you choose the right one for each situation. Together, they help you become a better leader; and with many family enterprises over-managed and under-led today, that gives you a powerful advantage. What A Leadership Coach Does A leadership coach creates the framework for all this work to occur. For example, I often spend a day with new clients and then arrange for three one-hour calls per month. This framework is designed to allow the time for leaders to pause, reflect, and process challenges, opportunities, patterns and even choices they may or may not be conscious they are making in the hustle and bustle of business. It is also allows leaders time to process big ideas—such as, considerations about changing your enterprise or your family—with someone who is neutral, which can be hard to find among your family members. Coaches are also more focused on helping you explore your own good ideas than on giving you advice—recognising that giving someone advice robs them of developing their capacity as a leader. They start with the belief that the client has the answer, and it is the coach’s role to facilitate the exploration of those options with questions, objective feedback, a re-framing issues, and an offering of stretch goals. In other words, a good coach views each discussion as less about solving some immediate issue (say, a sibling conflict) and more about helping you develop your overall capacity (for example, recognise your communication patterns, which may or may not serve you in the current and other situations). What To Look For In A Coach Trust is vital. You need to ask yourself: Can I trust this person to have my well-being and development as of primary importance? Trust, in turn, rests on competence and character. Is the person you are considering as a coach competent at what they do? Do they have experience and training as a coach? Expertise in your industry may not be necessary but understanding the nature of a family enterprise is. As for the coach’s character, it helps to ask yourself if you respect him or her as a person and a professional. Do you think they can support you, push you when necessary, and have the fortitude to go deep when necessary? As someone who has both had coaches and been a coach for two decades, I can say that it is one of the best investments you can make in your leadership development.

Giving the decorator everything that could possibly be needed for a perfect finish was Clement Brewer’s dream when he opened his first shop in Eastbourne on the Sussex coast, in 1904. Selling mainly wallpapers and all the materials necessary to make up a wide range of varnishes and paints. Now with 177 stores in the UK, Brewers Decorator Centres serve decorators and homeowners alike up and down the country. Clement stuck to his ideals and so have all the subsequent generations of Brewers. After over 100 years of successful growth and service to painters and decorators alike, they hope that you find the same friendly support, advice and service that Clement Brewer strived to offer. Clement was a Quaker and a man of strong business principles. His customers appreciated his unfailing reliability; his heavily laden delivery bike was always on time, whilst suppliers welcomed his excellent payment record. Before and after World War One, five of Clement’s sons came into the business, which made possible expansion beyond Eastbourne. Soon branches were thriving at Redhill, Tunbridge Wells, Guildford, Horsham and Bexhill. At the close of World War II the huge programme of rebuilding and repair work saw Brewers grow to meet the demand for decorating materials. During this period branches opened throughout the South of England and South London – with the third generation of the family picking up the baton. Later the fourth generation has seen moves into the rest of the UK. In increasingly competitive times Brewers have always valued the loyalty of their customers. But that was no accident – establishing good relationships with customers, suppliers and staff has always been at the heart of their philosophy. Today’s employees – now over a thousand strong – are continuing to build the company’s reputation through their friendly, helpful advice and their knowledge of decorating products, techniques and trends. How the decorating trade has changed since 1904! In those days the decorators’ merchant did many of the things that a manufacturer does today. For example, wallpaper was received from the manufacturers in large hessian-wrapped hand sewn bundles. The Brewer ‘boys’ would then carefully unwrap them and make up the pattern books. Wallpapers had to be hand-trimmed to size by Brewers, a process calling for some skill, where the odd mistake could prove expensive. A ‘piece’ of wallpaper was made by joining 12 sheets of ‘Double Demy’ (22” x 35”) which measured a length of 11 yards. This size standard is almost identical today. Clement Brewer’s paint stock included White Lead, a pigment that was mixed with linseed oil to make paint. Colours were supplied both dry and ground in oil; you could choose from 16 different coach varnishes, 22 kinds of decorative varnishes, 14 stains and polishes – and others specially to order. A milestone of those early years was the arrival in 1908 of the first supplies of Halls Distemper, the revolutionary wall treatment in pre-determined colours. Clement prided himself on having everything the decorator would ever need. Nothing’s changed! All the major brands If service and expertise are at the heart of Brewers, then the backbone is surely the unbelievably wide product range – an A to Z of leading brand decorating materials, paints, papers, tools and accessories, plus Brewers’ highly regarded in-house brand of Albany Paints and Wallcoverings. The Albany brand has grown over the years. The name was originally chosen by Clement in the 1920’s for their wallpaper collection to reflect the highest standards of interior decor which were to be found in the flats just off London’s Piccadilly. The brand is just as strong today because there’s consistent quality in every can that the decorator can trust – and because of the depth of range which all adds up to the complete painting system. Available for interior and exterior applications, every finish is represented – traditional gloss, vinyl matt, vinyl silk, soft sheen emulsion, eggshell, masonry point and the latest water-based acrylic gloss and eggshell finishes. Every colour too: hundreds of shades including British Standard, NCS and RAL colours that would surely have turned Clement Brewer green with envy! Brewers have a vision At the celebration of a centenary of supplying decoration materials it was time to look back and reminisce – but only briefly. The Company has prospered by their readiness to anticipate market needs, nurturing a hard-won reputation for having everything the decorator will ever need, with knowledgeable, well-trained staff in the branches. They have steered a steady course through some momentous changes in trading conditions in recent years – preserving services that put the long-term benefits of customer loyalty ahead of short-term gain. This is why, for instance, Brewers trade decorators continue to enjoy best value with free daily deliveries, free technical advice and on-site representation. ‘Can we do it any better?’ is a question they continuously ask themselves. The answers come with initiatives such as the development of online shops selling quality designer wall coverings and paints. Whilst decorators searching for specialist industrial coatings or looking to move into spray painting will find that the products and expertise are now available at Brewers. Looking further, chairman Mark Brewer says, “By retaining our status as an independent family business, we have been able to grow at our own natural pace. This has enabled us to build teams of knowledgeable and helpful people at each branch and to ensure that new outlets are always launched with competent staff ready to give our customers all the decorating help and advice they need.” For more information please visit www.brewers.co.uk

At Tim’s Dairy they’re proud of their 70 years heritage in making yogurt, and in this video they share the journey so far. From their Dairy in the Chiltern Hills they make yogurt in batches using fresh pasteurised British milk, natural ingredients and bio-live cultures. Their family has a traditional Greek heritage and they’ve been making fresh live yogurt since 1949. Tim’s Dairy is a family business located in Chalfont St Peter, Buckinghamshire, and is run by brothers, Chris, Peter, Bides and Tony Timotheou. At the dairy they are passionate about making yogurt, crème fraîche and soured cream for a wide variety of market sectors including retail, wholesale, foodservice, private label and supplying fresh ingredients to food manufacturers.

A family business that has made it to the 3rd generation has already beat the odds. Approximately only 12% of family businesses will ever make it to this point. Making it to the 4th generation proves to be even harder with only 4% ever getting there . There are some key inter-generational conflicts that make transitioning the business to the next generation and working with another generation family member even harder. We all know working with any family member can be a challenge, but working with one that has very different goals and expectations stemming from a generational gap can be difficult to manage and understand. Danielle Walsh explains some of these inter-generational conflicts that include: Differing work ethics: The founding and 2nd generation often worked very long hours. The founding generation is likely to have spent more time working in the business then at home, the same can often be said about the 2nd generation. The 3rd generation tends to value work-life balance and looks to automate or find efficiencies to ensure they can find time for family. This is also very different from the 1st generation since back then there was often a stay-at-home parent. Now days, it is the norm to find two working parents, which means both parents need to have some flexibility with work. This differing work ethic can sometimes lead to conflict between the generations due to a lack of understanding and a significant change that can be hard for the older generations to deal with. Communication: The founding generation and 2nd generation of many family businesses are famous for being poor communicators. I have often heard “No, I haven’t told anyone else – they should just know.” The 3rd generation tends to be much more transparent and willing to take the time to communicate with family members. Keep in mind, however, that the way the 3rd generation communicates often frustrates the 1st and 2nd generation. Emails and text messages instead of phone calls or face-to-face. This change has had a major impact on how families communicate and for the older generations it can be difficult to adapt. This sometimes leads to communication significantly slowing down or even stopping between the generations, which can leads to serious issues for the business. Being aware of the method that an individual prefers to use to communicate can certainly help bridge the communication gap. The 3rd generation needs to be aware that just because they sent an email about it, doesn’t necessarily mean it has been clearly communicated to all. Differing priorities: This ties in with the differing work ethic above. The 3rd generation tends to prioritise work-life balance and family. This can be very different from what the founding and second generation have done, which can lead to conflict. In my experience, the 2nd generation is often frustrated by what they perceive as a lack of commitment to the business by the 3rd generation. The 3rd generation is often frustrated by the demand on their time. Clear expectations need to be outlined so that all members of the family irrespective of the generation know what is expected of them and what they can expect from the business. Business priorities also tend to differ. The 3rd generation often prioritises innovation, change, and the use of technology which can be difficult for the 2nd generation to support. This is an issue that is becoming more and more common in family businesses and particularly in the jewellery industry. Therefore, we will further explore this issue below. Innovation & Change I don’t think we should be too surprised that the 3rd generation often find that they struggle to get their current owners (the 2nd generation ownership group) to endorse change and allow them to implement new and innovative strategies for their jewellery operations/stores. It just might happen to be due to one of the more common outcomes of inter-generational ownership. It is well known and documented that 1st generation family business owners are very entrepreneurial, which by definition means they are innovators, risk takers and typically passionate about both the industry they are in and their business. They tend to dedicate all of their time to building the business which in turn fuels their continued passion for it. But the next generation, the 2nd generation, often join the family business while gen 1 is still at the helm with their primary role in the family business being one of managing what is already there. They become managers and focus on improving effectiveness and efficiencies (refining) of what the founders built. They typically do not have the same degree of passion as the founders which is to be expected since it is not their baby that they brought to the world but rather that of the founders. As Gen 2 move along their career paths in the family business they tend to become risk averse and less open to change. They view their role as gate keepers to what the founders have built and continue to build. They tend to rely on Gen 1 to continue to innovate, implement change and take risks. These same managerial traits then get to permeate their thinking once they become owners. Note: Of course, the above does not apply to all Gen 2 individuals but it does apply to many so in that regard it is worth addressing. Then along comes Gen 3 who are a whole new breed of individuals with very different expectations with respect to life balance and very different expectations with respect to the use of technology (change) as well as a keen desire for innovation since it surrounds them every day. Gen 3 tend to be quite comfortable with change even rapid change and they tend to view business risk as a necessary frame of mind for success. Clearly these Gen 3 traits will be in conflict with those of the Gen 2’s described above. As such, Gen 3’s often feel like they are being stalled in their desire to innovate, implement change and take calculated risks to grow the business and take it down new paths. We can see this in the desire of many 3rd generation family members to shift from brick and mortar stores to online stores. This change is not a small one. The 2nd generation that has continued the family legacy and often maintained the business in a very similar way as the founding generation may not be comfortable or used to taking major risks such as this one. Without taking this major risk, the business may not survive long-term. A major shift in business strategies, like going from a store to online, is one that often occurs only once the 3rd generation has become owners and have control. However, this may be too late. Ideally, this change occurs with the support of both generations meaning a wealth of experience and a united front. One of the major risks for the family business (other than the inability to survive) is that they may lose those entrepreneurial Gen 3’s who do not have the patience to wait for approval to implement their strategies and who feel passionate enough to go out on their own and often in the same business. So what can a family business do mitigate this risk? 1. Gen 2 needs to recognise that Gen 3 are different and that they want operational improvements now (versus later), they want a work-life balance that meets their expectations, they want to innovate and be current with respect to what technology can do to help meet all of these objectives. 2. Gen 2 need to accept that the differences between them and Gen 3 is nobody’s fault but more so an outcome of inter-generational transfer of power and ownership. 3. Gen 2 and Gen 3 should implement a management succession plan that will allow Gen 3 to prove their skills, decision-making, and ability to work together over time. Without a clear plan, the competent Gen 3’s are likely to leave. By implementing a management succession plan over a specific timeframe the Gen 3’s have the opportunity to prove themselves to the older generation. When this happens, Gen 2’s often feel more comfortable relinquishing managerial control but also tend to embrace the new ideas and changes put forth by the 3rd generation. 4. Gen 2 needs to realise that Gen 3 may manage and lead in a very different way. Often Gen 3’s will have a management team made-up of some family and some non-family managers. It is no longer just one person that will fill all the roles (like mom or dad did). 5. Strategic planning is very rarely completed by family businesses. If there are competent and knowledgeable Gen 3’s in management it can be of benefit to let the next generation (in this case Gen 3) do the strategic planning and then have them present it to the owners (Gen 2). This helps bring together the next generation, allows the next generation to gain the trust and respect of non-family managers and provides new and different insights on how to move forward. This doesn’t mean than Gen 2 has no say it just means we allow the next generation to put together the first draft of the plan. Allowing the 3rd generation to participate in this type of decision-making plays a big part in keeping them motivated and retaining them in the long-term. There is no magic solution to dealing with inter-generational differences – just know that all family businesses face these issues at some point. Being aware of these issues and accepting them are steps in the right direction. Learning to work with them will lead to greater success for the business and will help safeguard family harmony. By implementing a comprehensive family business succession plan you will increase the likelihood of transitioning to the next generation successfully and it will certainly help manage the inter-generational differences by clarifying what is expected (what is expected work in the family business, manage the family business, and own the family business). About the Author - Danielle Walsh is the founder and President of Walsh Family Business Advisory Services, a consulting firm that specialises in assisting family owned and operated businesses navigate the rough waters of management and ownership succession. Danielle is a Chartered Professional Accountant (CPA), Chartered Accountant (CA) and a member of the Family Firm Institute (FFI), an international association of family business professionals providing in depth information on family businesses from around the world as well as ongoing education and training in the field of family business consulting. Danielle has obtained the FFI Certificate in Family Business Advising and the FFI Certificate in Family Wealth Advising.

Stewardship matters for successful and enduring family businesses. Stewardship is a defining hallmark of businesses that achieve success, significance and sustainability. In crux, stewardship encapsulates the essence of responsible and meaningful value creation in a sustainable way to benefit stakeholders, as well as the larger community that they are a part of. It underscores the importance of an ownership mindset, a long-term perspective and an inclusive approach. These stewardship elements undergird and reflect the business leaders’ motivation and commitment to nurture and grow what they are entrusted with, such that it can be handed over in a better shape to successors. Stewardship is particularly pertinent to family businesses, which form a key component of economic activity around the world. This is especially relevant in Asia, where family businesses remain the mainstay of business ownership, and families continue to be influential players in the business landscape, as owners as well as managers. Successful and sustainable family businesses create wealth and growth for the family across generations. In their stewardship journey, such great and lasting family businesses leave a rich legacy, contributing significantly to the multiplier effects such as knowledge creation, economic development and capacity building of human and social capital to benefit society in the long run. Family businesses are very diverse in nature – ranging from small, medium local enterprises to huge conglomerates that operate across industries and countries. For our purpose here, we broadly define family businesses to include companies with the presence of family members as shareholders as well as board members and managers who are able to influence strategic decisions. We use the term family businesses to include family companies, family firms and organisations. Notwithstanding their diversity in scale and nature, family businesses in general face some common challenges: Responding and adapting to the vortex of disruptive changes stemming from the global and local fronts, while still maintaining the sense of purpose that propelled them to success Maintaining coherence and harmony as ownership becomes more fragmented over time Attracting, retaining and “professionalising” talents that constitute the human capital essential for family businesses to maintain their competitive edge Transitioning successfully during periods of leadership renewal, especially for firms where the influence of the founder-leaders dominate Guarding against the pitfalls of hubris and complacency on one hand, and a reluctance to adapt due to inertia to changes on the other Upholding high standards of resource management and corporate governance Faced with such challenges and an increasingly demanding business environment, stewardship has become all the more relevant and important. Well-stewarded family firms emerge over time as engaged, forward-looking and adaptable enterprises. They are able to leverage their inherent strengths and competitive advantages. Guided by their values, such family businesses remain resilient in the face of changing times and disruptions, overcoming adversity and outperforming their competitors. Stewardship is, however, always a journey. Every generation of family business faces unique circumstances, challenges and opportunities. A family business with a successful stewardship experience in one generation does not guarantee its continual success into the next. Hence, for family firms striving towards success, significance and sustainability, a resolve to continually imbibe, propagate and reinforce stewardship concepts and actions is vital, and remains relevant and timely. Download and read the full report below:

In 1997, Gael and Francesco Boglione moved their young family from central London to Richmond. Their new home, Petersham House, overlooked a local plant nursery, which had been carved out of the grounds of their Queen Anne home in the 1970’s. Francesco recalls initially not knowing what to do with the place. Inspired by his youthful travels to India, when as a self-confessed hippy, he bought and sold unusual furniture, paintings, sculptures and decorations as a means of funding his expeditions. He recalls a vision materialising. Bringing a gentle approach and an ability for drawing out beauty in the simplest of things, Gael’s natural style, elegance and attention to detail was at the heart of the transformation, evolving over the years into the strong ethos maintained today. In 2004, after extensive restoration works, the nursery re-opened, completely transformed. Furniture, gifts and antiques were found amongst the plants which adorned the greenhouses, and in the most elegant wooden teahouse, whole leaf teas and homemade cakes were offered. The nurseries became an instinctive mix of Gael’s love and enthusiasm for nature and the earth, mixed with Francesco’s desire to deliver products and services in a peaceful and beautiful setting on the river. Over the years, Gael and Francesco have steadily nurtured the space, drawing upon their travel experiences and incorporating their Italian and Australian cultures within this English garden setting. They have created a lifestyle destination, reflective of their values, love of food and personal collections within their home. The family is dedicated to positive living; where ethics meet aesthetics, philosophies which are interwoven in every aspect of the business. This is demonstrated from the way they look after their employees, to what is sold and served. In recent years, Gael and Francesco have encouraged their children, Petersham’s next generation, to step forward, forging a future for the nurseries and Petersham offshoots.

In this article, Morten Bennedsen of INSEAD takes a look at family business longevity, some of the challenges and the need for owners to step back. Too much centralised control puts a family business at risk when the owner-manager dies. Professionalising a family firm is a necessary yet difficult progression. The owner-manager starts with a solo performance but the firm builds into a symphony orchestra in which the family continues to have a say in the running of the firm. Family-run businesses need to shift their deeply engrained organisational culture from a single-family member leader to a professional manager leading the firm. It can be a difficult process to get right because of the larger emotional issues at stake. For professional managers who have little or no experience with family firms, most will have never confronted this kind of transformation before since it is unique to family firms. In general, both owner-managers and professionals often underestimate the length of time and the scope the process can take. One study has shown that large publicly-traded family firms in Hong Kong, Singapore and Taiwan have lost half their market value in the five years following the retirement of a family owner-manager. Most of these firms had been too dependent on the family leaders. Hence, embarking on the professionalisation process is crucial for the survival and prosperity of the family firm. In guiding the firm through this process, owner-managers will create added value while reducing key personal risks, such as sudden health problems or accidental loss of life. Take the example of Lee Kun-hee, the second-generation leader of Samsung who realised in the 1990s that the firm needed to move beyond its closed-door culture and begin hiring talent from outside the traditional pool, and at considerably higher market wages. A sea change in culture was necessary for the firm to move from a mass producer of cheap goods to a maker of high-quality innovative products. To make his point loud and clear, Lee issued a command to his staff: “change everything except your wife and children”. From that point on, Samsung has developed a professional cadre of talented leaders across all its approximately 60 business units, whilst the Lee family still manage and control the company. An example of a company that was dragged into professional management is the Evergreen Group, which in 2017 had 27,000 employees and 30 major affiliates worldwide, of which four were listed on the Taiwan Stock Exchange. When its legendary founder Chang Yung-fa died in January 2016, he went to his grave with the mistaken belief that his youngest son by his second wife would take over as Chairman. However, his three sons by his first wife put a stop to that. The leadership role was handed over to management professionals by the collective action of the three sons who together owned a majority stake in the company. Next-Gen Input The good news is that next-generation family members are more likely to embrace professional management if they are included at the very beginning of the transformative process. Their opinions count. Professionalisation of the family firm is also a key way to attract new minority investors including foreign ones. Investors want to hear that family-owned firms can continue to create value even without founders and their families. This is particularly true if the business could be sold to investors or taken public. Many owner-managers start the process of professionalisation to allow a formalisation of company strategy. In larger family firms with few formal procedures or defined structures, owner-managers often end up addressing the day-to-day issues and don’t have time to consider the big picture. In so doing, they are forced to postpone making decisions that affect the future of the firm, including adopting new business strategies, starting new investment projects, making long-term plans, restructuring capital assets, conquering new markets and relocating production to other regions. The typical elements of a professionalisation process are the following: Establish a formalised dialogue between generations. Restructure leadership with a two-pronged approach: For the owner-manager: Take less of an operational role and more of a strategic role. For family members: Find the right roles and jobs for current members and next gens. Hire and empower non-family managers to make decisions and take responsibility without interference from founders and family members. Clarify the role, structure and composition of the board. Once on the road towards professionalisation, owner-managers can better communicate the vision, strategies and goals of the firm while retaining the spirit of the founder. By holding fast to family values and traditions, owner-managers can take off the operational executive ‘hat’ to speak authentically as engaged visionaries. They can then improve their chances of overcoming the challenges facing their firms and improve the likelihood of attracting external investment or even the transfer of the business altogether. In this way, stakeholders will better understand the direction in which the founder is trying to steer the company. If a radical shift in the corporate organisation is on the table – such as an IPO or company sale – founders will be in a better position to communicate the news and adapt the firm to the new paradigm successfully. From Solo To Orchestra In conclusion, the professionalisation of a family firm can be compared to a concert by a symphony orchestra. At first, the star violinist gives a thrilling rendition of versatility. The performance is then handed over to the orchestral musicians who entertain the audience throughout the duration of the concert. It’s similar for a family business, where solo performances by the professional managers are contained with the larger symphony orchestra – family members are still pulling some of the strings.