The birth and growth of Family Business Magazine parallel the evolution of my own career.
By Ellen Frankenberg
When Family Business Magazine was found-ed in 1989, George H.W. Bush was president; the Soviet Union, under reformer Mikhail Gorbachev, was withdrawing its troops from a failed war in Afghanistan; and the Loma Prieta earthquake erupted in San Francisco just as two Bay area teams, the Oakland Athletics and the San Francisco Giants, were getting ready to play the third game in the World Series.
In 1989 the Family Firm Institute, the premier international organization for advisers to family businesses, was just three years old, and only a few seminal thinkers recognized the potential of family businesses as significant drivers of the U.S. economy.
A growing awareness
Even as the prolific generation of World War II entrepreneurs approached their 70s, there was little discussion of systematic succession planning within the offices of the 80% of U.S. businesses that were family-owned and -operated. During the 1980s Babson College was building its innovative program in entrepreneurial studies, but prospective family business successors heading off to college would find that most business schools focused on preparing their students for jobs in corporate America, not in family -businesses.
Carin Rubenstein’s survey of more than 1,000 family businesses across the country, conducted in the summer of 1989 and presented in the premier issue of Family Business, discovered “good news.” Participants in the study reported that the three most important advantages of working for a family business were independence, feelings of accomplishment and money. Would today’s family business members say the same thing?
A professional shift
In 1989 I was beginning to downshift from a thriving clinical practice as a family psychologist because I realized that managed care was coming down the road. I recognized that many families who came to me seeking help because of a pending divorce or a kid on drugs also had a business at risk, so I gradually shifted my perspective to working with families in the business context.
I found that the issues affecting these families’ businesses were often “familiar”—the need to clarify goals, build better communication skills, plan ahead, manage conflict effectively, build teamwork, develop new competencies, articulate a shared dream.
I discovered in the early ’90s that by going into the machine shop or the factory, I became engaged in issues that business clients would never bring to a therapist’s office, but yet could bring their businesses to a standstill. “Nobody’s talking to anybody around here, and I don’t know why,” a hassled patriarch would say, without a clue about family systems theory or the best practices of successful family firms.
Research was beginning to emerge about best practices (like knowing which decisions belong in the business circle, and which belong in the family circle) that may seem simplistic today, but as new concepts they cleared away some of the emotional fog that had stalled decision making in many family companies for decades.
In the mid-’90s I had become active with the Family Firm Institute. I attended FFI conferences and recognized the value of building interdisciplinary teams of professional advisers to work with complex business families. Meetings with lawyers, accountants and management specialists who worked with family businesses became more interesting to me than meeting with psychologists who all spoke the same language.
I began to write articles for Family Business Magazine and business newspapers, in which I translated family psychology for the busy entrepreneur who would never have the patience or the time to take a Psychology 101 course. I gave presentations to associations of professionals outside my field, such as lawyers, accountants and financial planners. Many of these professionals had not yet recognized family businesses as a specific focus for their practices.
I teamed up with insurance agents at first, since they were aggressive and often puzzled when they couldn’t sell a policy to fund a buy-sell, even when such an arrangement made very good sense for a family firm. The insurance agents found it helpful to learn about family systems and how they operate, especially when they came to the realization that in some cases Grandma—and not the company’s CEO—really was the decision-maker.
Eventually I integrated several of my articles on family psychology into a book, Your Family, Inc.: Practical Tips for Building a Successful Family Business to explain to my colleagues and potential clients how the dynamics of family businesses could be deciphered.
A new set of challenges
Ulimately major financial firms recognized family companies as a market and began to develop strategies to provide advice and liquidity, especially as firms in the third, fourth and fifth generation of family ownership evolved.
Universities across the country developed family business centers that offered programming and peer-group meetings to educate family business owners and to help them realize that they were not the only ones experiencing challenges at the interface of family and business. Eventually family business buyouts became more common, as many industries consolidated and families became more diversified. At the same time a veritable industry of consulting services focused on family firms emerged during these past 20 years.
Even in the midst of our current economic downturn, I continue to believe that family businesses will remain resilient and viable, especially because their motivation is so different from that of other corporations.
Twenty years from now the story will be different, but family businesses that don’t exist yet today will be alive and well, beginning to think about succession plans and how to pass on their legacy to yet another generation.
Ellen Frankenberg, Ph.D., is a consulting psychologist and an adviser to family businesses in transition (www.frankenberggroup.com).