Barbara Murray is Consultant Editor for Families in Business magazine.
Leadership is an important element in running a successful family business. Four of the eminent thinkers in the field of family business discuss its different meaning and forms
At the top of the list of names of those people who are best known and respected for their substantial and ongoing contribution to the world of family business theory, practice and education you will find the names of John Davis, Kelin Gersick, Ivan Lansberg and John Ward.
It's not often that all four of 'the gurus', as they are known, gather under one roof They are great friends as well as great minds and they rarely have the opportunity to spend time thinking and working together. So I took the opportunity to join them in the wintry surroundings of Montreal in January where we met to refine the plans for the FBN 2003 World Conference (together we comprise the Conference Design team).
Our goal was to agree on the key messages of the conference. The first is that exercising and supporting leadership in the family business involves everyone in the family business system – not just the business leaders – because leadership is a function that has to be managed over the generations. The second message is that effective leaders of the family, the ownership and the business are those who know how to earn and keep the support they need from the other members in the family business system. Without their backing (and ultimately their investment), leaders throughout the system would be unable to pursue their strategies.
I asked everyone for a one-sentence definition of what leadership is and what leaders do, based on their experiences of working with and studying family enterprises. Ward kicked off the discussion with his view: "It's doing whatever is necessary whenever it's needed." Lansberg offered a different perspective: "In larger, more complex systems, leadership is problematic because it evokes a lot of the dynamics surrounding authority and hierarchy. These can be softened somewhat if you juxtapose it with 'follower-ship' – rather than subservience." Davis's outlook was functional: "Being a leader in a family business is complicated because of the three circles – it affects everything. It can be boiled down into setting direction, supporting others and allocating resources." Gersick, eager to synthesise the discussion, concluded: "We're talking about the whole constellation here – not about leaders but about leadership: within and beyond the three circles. We need to go beyond 'The Great Man' theory in the textbooks and recognise that long-term leadership is what's needed, not a single, heroic leader. The mainstream business literature doesn't seem to get this idea. They're looking in the wrong toolbox."
Lest anyone outside the field of family business should argue the point, leadership in family businesses is different. In Ward's view: "It's multi-faceted and it's often all mixed up. It can take strange forms as structures are often invented to help the family stay in control – such as joint leaders or collaborative teams. Sometimes different balances of power are used to make it work. It's also very public – heirs are known to all from birth." It is also different depending on what part of the life cycle people are experiencing, says Lansberg: "At the younger stage it's about getting credibility and at the later stage it's about letting go. It can be about getting the support of a few shareholders at one point in time or a few hundred at a different point in time. In some family businesses, the gender dimension is still very evident. Women with leadership potential who want to contribute but don't have the opportunity to do so in the business often get the dirty work to do, and they can burn out." In Gersick's experience, it's important to know that "leadership is a practical matter. It's a trainable skill and not a trait. Developing leadership in a family business system often requires structural reform – changing the way functions and people are organised, in addition to developing the people involved to help make them better leaders or supporters."
Davis places a premium on the activities of leaders and how they earn the support they need from the wider system to do their job: "By this I mean providing strong operations management, or building a strong sense of direction in the family council, or amongst the shareholders. Without doubt the leadership role must be fulfilled in the board, the family and in the family council. I have seen it shared successfully among people in the system, but the function itself must be fulfilled, to avoid chaos or decline, and that is a real pressure on family businesses over time."
All agree that leadership – and support for the leadership – takes different forms and requires different approaches as the life-cycle of the family business unfolds.
The role of 'informal' leaders is one example of a different form of leadership. Often working behind the scenes, these people don't stand out as obvious leaders, yet when you look at their performance and achievements, and the means by which they achieve these, evidently they are carrying out the leadership function – in a low-profile style, and in a part of the system that is not highly visible to the outside world. Ward describes these as "people you sometimes see managing the family office or foundation, or indeed the family itself – they remain in the shadow of the figureheads, but they are leading – informally. They often don't get any recognition."
As leadership and support for leadership shows up in many different guises, people in family businesses will benefit from learning how to recognise and appreciate it. Davis explains: "It can take the form of a sentence like, 'I think we're on the wrong track here', which is something a youngster could say that might get a discussion back into focus and onto the right lines. But because he or she is not in the Chairman's role, this steering comment could land on deaf ears and the meeting could drift as a result."
Business leaders often demonstrate charisma and may leverage this to command attention, loyalty and service – with the aim of getting results. There are two sides to this phenomenon to be wary of. The first, explains Lansberg, is to do with "the reality that the role of leader acts as a lightening rod – conducting all the anger, frustration and disappointments that are felt by people or stakeholders who feel they are not benefiting from the choices being made by the leader. So the human being in the role of leader has to find a way of insulating himself or herself against these forces, to avoid becoming burned-out." The second side therefore involves creating a personal 'buffering' system that, according to Davis, "often involves investing huge amounts of time talking, informing and being with the people who represent other stakeholder groups – constantly explaining what is happening, why decisions are taking the form they are. Leadership is this sense means investing time in engendering support from those who stand to lose or gain from the leader's choices." All agree it also means taking good care of your physical and emotional self to cope with these demands.
On the part of those in the support role, it involves the process of self-education about the business and participating in the structures of governance in an informed way. This is not to be underestimated, and indeed it is considered to be the source of the advantage that family businesses have over non-family businesses – a group of committed investors sharing the vision of continued success to be enjoyed by their families over the generations.
Leadership, in its many forms and menaings, is an important element in running a successful family business. So, what are you doing to strengthen it in your family business?