Part of my holiday tradition is sending out letters to family and friends reflecting on the past year. This has been a tradition since 2006. I am sharing my letter for 2022 below, as I hope it may inspire you and encourage you to step out of your comfort zone. “ We cannot discover new horizons until we have the courage to lose sight of the shore.” Recently we cruised our boat from Annapolis, Maryland, to Stuart, Florida. One leg of the journey was a 32-hour, 300-mile offshore adventure from Hilton Head, South Carolina, to Stuart. The forecast was 15-25 knot winds and 2-4 foot waves, which in reality became 25-35 knot winds and 4-6 foot waves. Although the trip was relatively uneventful, it was my first overnight experience, losing sight of the shore and nearly everything else in the darkness of the night. As I took my first of two three-hour watches, I alternated from searching for lights on the horizon to observing possible targets on the radar and AIS instruments. My most memorable sightings were the incredibly bright stars on the port side of the boat, not nearly so on the starboard side where even 30 miles out, the lights of Florida lightened the darkness of the night sky. Having completed our overnight cruising adventure, I could not help but recall the above quote – attributed to several people, William Faulkner, Andre Gide, and even Christopher Columbus. This quote has been framed on my wall for many years. I always associated it with an unfulfilled desire to experience an overnight offshore crossing. While the saying is often quoted to inspire one to let go of the known and explore the unknown, I recently have related it to a much more subtle dynamic occurring in our contemporary culture. Our ability to discover new horizons in our daily lives is greatly diminished when our comfort zones are unconsciously reinforced. Yet is this not what we are experiencing continuously in this internet world? Are we not all victims tethered to the algorithms of our e-commerce and social media platforms? These algorithms deliver us not only the products they think we need but also those opinions and experiences that reinforce our comfort zones. And while the world continues to change rapidly around us, our social media sites keep us anchored to the comfortable shores of our little cove. In so many ways, we fail to recognize the scope of the world around us, waiting to be discovered. While that world may not be geographically distant, it is undoubtedly intellectually distant – obscured by the blinders of our respective cyberspace algorithms. Our vulnerability and addictiveness to the internet culture was recently highlighted to me by the director of a summer wilderness camp in northern Minnesota. We have supported this camp for young boys and girls for several decades because it offers these youth the opportunity to experience a beautiful natural world that offers much more personal development and enjoyment than smartphones and game consoles. However, in recent years, the camp has had to provide mental health support for young campers who exhibit mental and physical withdrawal symptoms for several days, when upon arrival at camp, they are asked to relinquish their smartphones – a manifestation of their very fear of “losing sight of the shore.” Many of us read George Orwell’s “ 1984 “, published in 1949. Orwell’s prophetic warnings are not dissimilar from the characteristics of today’s internet world. While today’s democratic governments do not appear to be “Big Brother,” our every action is easily tracked and categorized by the data gathering and data sharing nature embedded in our internet platforms. And while the apparent motivation for all this data tracking and sharing is commercially motivated, we are no longer the “customer” but have become the “product.” One of the political propaganda weapons created in Orwell’s “ 1984 ” is “Newspeak,” defined as
During 2020, we have all faced unprecedented headwinds. We began the year alarmed by the damaging wildfires in Australia that later befell the western part of our own country. We experienced a record season for tropical storms that extended into November. All of this was overshadowed by the COVID-19 pandemic that has affected all of our lives since March. It has impacted our economic lives, our family lives, and our personal lives. We made significant economic and personal sacrifice to help “flatten the curve” last spring, only to have the virus return with a vengeance this fall. In the midst of it all, we have had one of the most challenging political environments of our lifetimes – where even wearing a mask in the middle of a contagious pandemic has been politicized. And we finish 2020 with a continuing chaotic and disputed presidential election. With headwinds like these, how can we be an optimist – let alone find a way to adjust our sails? But if we look around, we find that leaders everywhere have been “adjusting sails.” Much of this adjustment is the result of the creative innovation that is a unique part of our culture. Businesses of all sizes have adjusted their sails to provide creative options in product and service. For example, restaurants are utilizing digital platforms to expand their business through take-out and delivery. These innovations and the work-from-home options are made possible by technology platforms that have been developed over the past decade. Technology infrastructure like Zoom for meetings, Amazon for delivery, Netflix for entertainment, and DoorDash for delivery have provided the tools to help all of us adjust our sails, whether for our jobs, our children’s education, our personal entertainment, or the continuing connectivity to our families. These readily available software applications have been critical for keeping our economy up and running and offering some joy to our personal and family lives. One of the most remarkable technology developments of the past two decades is the Human Genome Project (HGP) which identified the DNA sequencing of the human cell. It is worthy to note that the initial funding for HGP began in 1987 under the Reagan administration and continued until its completion in 2003, shepherded by the National Institute of Health through several presidential administrations. The significance of this work plays a key role in the international efforts to combat the COVID-19 virus. The DNA sequence of the virus was available to the international community within weeks of the virus’ discovery in humans. Several pharmaceutical companies immediately began the vaccine development process. Since the virus was well defined by its DNA sequence, these companies were able to use a laser like approach to the vaccine development. This is the primary reason we are seeing very promising efficacy. This HGP technology platform represents an unprecedented international accomplishment. This technology will allow future vaccine candidates for nearly any infectious disease to be produced far more quickly and effectively because of this unique platform for formulation, purification, and production. Our culture of innovation, our optimism, and our faith in the future encourage us to adjust our sails as we navigate through these turbulent times of 2020, confident that in the not-too-distant future, calming seas are on the horizon. Recently our nine-year-old granddaughter, Sophie, gave Judy and me a gift with the following inscription:
The headlines lately have been dominated by political news and pandemic updates. With so much uncertainty, it can be difficult to look into the end of this year and the beginning of the next with optimism. Just remember Kanter’s Law: Everything looks like a failure in the middle. I came across another quote recently that felt relevant to this moment: The pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails . – John Maxwell External circumstances being what they are, if you are in a leadership position in your organization, now is the time to be adjusting your sails. Sometimes you might have to do it daily as you and your leadership crew navigate the latest storms in our ongoing economic crisis. When I have been asked for advice by business leaders as they face COVID-19, I tell people that your ability to be successful in the coming months will be directly related to the quality of your ship and crew. Hopefully you have made appropriate investments in both prior to this moment. It is much more difficult to reactively institute appropriate business processes or build a new team when the economic environment is chaotic. The strength of your operation will always come down to the quality of your strategic planning. Is this a process you have in place? Have you invested in human capital such that you have people to rise to meet this moment? If so, you are more likely to survive the challenges of this economic environment, define your “new normal,” and resume your growth journey. Adjust the sails as appropriate, and then sail on.
Family businesses have unique cultures. Multigenerational family businesses continue to thrive because they remain focused on the principles and values that define those unique cultures. These values may include innovation, work ethic, strong customer and supplier relationships, and dedication to associates. Companies that fail to be multigenerational often do so because they become disconnected and stray from their stated values and the principles of their founding story. This is not just true of family businesses. Any institution that thrives over many generations will be built on a defined set of values and principles. An excellent example of this is the United States of America. Unique values and principles are embedded in the Declaration of Independence, in our Constitution and its amendments, and in the many laws passed by our legislative houses and signed by our presidents. These values and principles have guided our country for centuries, through both good times and bad. However, in today’s cultural environment, influenced by competitive 24-hour news cycles and social media, it is easy to lose sight of and faith in our historic foundation. Nowhere is this more evident than in the current anxiety about Supreme Court appointments. Media speculation and coverage are driving fear that a single nominee will have a detrimental effect on lives, now and in the future. To engage in that fear though is to forget or ignore the basic principles upon which the country was founded. In their wisdom, our founding fathers created three branches of government to provide appropriate checks and balances and prevent the tyranny of lordship and dictatorship. There was significant innovation in the system of government they created; the unique elected legislative branch, which represents states equally in the Senate and by population in the House, is where our laws are intended to be created with oversight by an elected executive branch. While the president is responsible for giving final approval of the laws, he can always be overruled by Congress. Hence, laws can be created and rescinded by elected government representatives. The Judicial Branch was created to interpret and enforce the Constitution and, subsequently, the laws created. Our Founding Fathers did not expect the judiciary to create law because, at least at the federal level, judges are appointed, not elected. If the elected legislative body does not like a Supreme Court interpretation of a particular law, it is entirely within its power to change the law. Congressional leaders abdicating their legislative responsibility to the judiciary branch diminish the values and principles of representative government, thus threatening its sustainability. Similarly, in multigenerational family businesses, the failure to keep alive the values and culture can result in the enterprise shifting with the winds of time. Consider Rubbermaid and Smuckers, two public companies that got their start within miles of each other in central Ohio. The J.M. Smucker Company’s decisions were driven by the value, culture, and history of the Smucker family. These founding principles can easily be accessed on their website. They include references to the company’s founding in 1897, the founder’s personal emphasis on quality, and articulated values that grew from a letter to the employees by then-CEO Paul Smucker written in the 1980s. Smuckers, an almost $8 billion operation, is in its fifth generation of family leadership. Rubbermaid, on the other hand, was founded by nine men in 1920. Without a similar set of familial guiding principles, the company went through financial hardship and was sold to Newell in 1999. By 2003, the company had shut down its Ohio manufacturing and moved most jobs out of Ohio. Family businesses must continue to invest in shareholder education focused on the history of the company and the vision of the founders. It is the responsibility of the family to ensure that their founding values are codified, shared, and used to drive and execute business strategy. The board must hold these values in mind as they elect leadership. Leadership then needs to be able to make appropriate adjustments to respond to their economic environment while growing the business while maintaining its values, principles, and culture. The governance structure of a government will materially differ from that of a corporation, but in either case, it is easy to lose sight of where responsibilities lie if the institution becomes disconnected from its founding story and associated principles and values. A failure to understand America’s foundational values and principles will only lead to an early demise of one of history’s greatest governing achievements. A failure to institutionalize your family business’ unique DNA will threaten its ability to achieve a multigenerational family business enterprise.
As we continue to confront the COVID-19 crisis, family business owners are being called on to guide their businesses through the crisis. Family members who work directly in the business will feel this imperative most strongly, though, in reality, it is the responsibility of all shareholder stewards to provide strategic guidance. I believe that allowing family members to have their careers outside the business is fundamental to the successful transition of many family businesses. Not everyone needs to or should be involved in the business’ day-to-day operations. However, it can be difficult to ensure that shareholder stewards, whose careers are outside the business, still have a deep understanding of the family business’s strategic challenges. In addition to a lack of exposure, some of this difficulty lies in the nature of the continuing education offered for family business owners. Most literature and programming – conferences, networks, consulting – emphasizes the family element of the family business, as if the business itself will carry on and be successful indefinitely. At the same time, the family business’ management team can attend conferences, read books, or receive coaching geared specifically towards operating the business, without regard for the unique characteristics or needs of a multigenerational family business. In order for a family business to become multigenerational, shareholder stewards must have an early understanding that they are not entitled to the business, nor will the business enterprise continue to be successful without shareholder guidance. It is a major responsibility of family shareholder stewards to ensure that certain business processes are in place that will enable the business to outlast them. I wrote my book, A Vibrant Vision, to bridge the gap between family business and business management literature and help shareholder stewards understand their unique responsibilities not just to their families but also to the business. For the family business to be multigenerational, certain choices need to be made early on that safeguard the business from either becoming a lifestyle business or being forced to an early exit. I detail the business processes that help support a long-term, multigenerational outlook in my book: An adaptable, innovative culture that acts on opportunities and responds to the inevitable risks and roadblocks caused by our ever-changing economic environment A strong human resource function and human capital process that is designed for the business’ growth A robust strategic planning process A focus on customer satisfaction and product excellence The ability to continually reinvest capital to upgrade the business’ technologies and capabilities A governance structure with roles clearly defined for the family, the Board, and business management A comprehensive education plan for future generations of shareholder stewards Shareholder stewards are responsible for ensuring that their Board is electing leaders who build these processes into the business. They must also continually evaluate whether the business is being run in accordance with the family’s long-term outlook and values. An excellent litmus test for whether or not steward shareholders firmly understand the strategic challenges the business faces are the “economic tsunamis” that predictably come along every decade or so. While shareholder stewards must always remain aware of the strategic direction of the business enterprise, times of crisis can provide clarity for how adequately they fulfill this responsibility, in addition to shedding light on how well the governance and leadership processes in place are able to respond to unexpected economic challenges. As an example, the COVID-19 pandemic is one of those inevitable economic tsunamis. Shareholder stewards must, in this moment, hold the Board accountable to the family’s mission and values while also ensuring the management team is sharing with the board how COVID-19 is affecting the business. How are associates being kept safe day-to-day? How is management adapting to strategic challenges on a near-term tactical level? Most importantly, what will the business enterprise look like post-COVID-19? This kind of active stewardship requires that all family members have a good understanding of the strategic challenges required to keep the family business sustainable. The development of family business ownership and the development of strategic business growth must occur together. If you focus only on the family ownership challenges or only on the business challenges, you will not achieve sustainable multigenerational success.
We are seven months into the COVID-19 crisis, and this pandemic is causing havoc in both the major loss of lives and the disruption of economies around the world. Every week brings new challenges as we try to adapt to our “new normal.” However, as time goes on, it has also become apparent that the pandemic is driving innovation in a number of ways. The foremost example of the pandemic driving innovation is the rush to develop a COVID-19 vaccine. In the early days of the pandemic, forecasts predicted that we would not see a viable vaccine for another 18-24 month. Still, it would be another 5-6 years before that vaccine was widely available. These projections were based on historical precedent in vaccine creation. However, as of August 2020, there are more than 165 COVID-19 vaccines in development, 31 of which are already in human trials. Not only has vaccine development been significantly accelerated, but vaccines are also being developed in new ways. These innovative options are possible because of the ability to quickly identify the DNA signature of COVID-19. For example, Moderna’s new vaccine, one of two vaccines already approved for human use, is based on RNA messengers (mRNA) delivering viral proteins to the body, a new mechanism to promote immunity. New modes of development will potentially both increase the effectiveness of treatment and also widen distribution by being more efficient and cost-effective to produce. COVID-19 testing has evolved by leaps and bounds in the last few months, too. As of writing, the FDA has approved a new test that will test spit instead of swabs, significantly increasing testing capabilities. Other industries and businesses of all sizes have seen significant innovation as well. Many small businesses have changed their business model to accommodate contactless transactions. For example, restaurants are utilizing digital platforms for take-out or delivery, or have begun offering pantry supplies as well as prepared food (this was especially relevant in the early days of the pandemic when grocery stores were experiencing supply chain disruption and increased demand). The innovative transition to digital, contactless transactions, or the work-from-home model, have been made possible by the technology platforms developed over the past few years. These readily available software applications have been critical to the technology infrastructure required to keep our economy up and running. Innovative software platforms like Zoom for meetings, Slack for communication, Amazon for delivery, Netflix for entertainment, and UberEats for delivery have made living and working from home more productive and infinitely more tolerable. When human lives are at risk, we go into survival mode, and innovation drives entrepreneurial progress. It is critical, crisis or not, for all businesses to institutionalize innovation if they are going to survive. But, “when you are up to your neck in alligators, it is hard to remember that your initial objective was to drain the swamp.” In other words, attempting to develop a robust strategic planning process that drives innovation in the midst of the kind of economic crisis that strikes every decade or so can be profoundly difficult. Fortunately, there are excellent examples of businesses that continually innovate to provide inspiration and guidance: multigenerational family businesses. In order to survive successive generations, the family business must be ready to respond to the crises that unfold during each generations’ leadership. We can look to multigenerational family businesses for instruction on how to institutionalize innovation: Innovation must come from the top. Sustainable innovation must be led by the CEO. This is especially true in times of crisis when the company needs clear direction and leadership. Identify your “secret sauce.” While it can be useful to benchmark other companies’ experiences, your company will have a unique quality that produces your most innovative products and services. Look to company history and your founding story to distill what that attribute might be. Assess your technology platforms. Often, innovation results from considering new ways to utilize the technologies you already have. For example, an engineer at 3M developed a new product for the Ford Motor Company when he realized that he could make masking tape simply by eliminating the sand particles after applying a modified adhesive to the sandpaper web. Strategic planning helps focus your investment in innovation. Strategic planning turns innovation into viable business solutions – and also drives your human capital decisions. In order to foster innovation in your business, you must have bright, intelligent people who operate with an entrepreneurial spirit and a sense of urgency. Remember, in my experience, we can anticipate an unforeseen crisis about every decade, which I refer to as economic tsunamis. Suppose you can develop an innovation process supported by robust strategic planning before the crisis hits. In that case, you will find you and your organization effectively responding to the next economic tsunami rather than being forced to react tactically.
