Photo by dolgachov / 123rf.com
It was the summer of 1966. I was a rising senior at Bowling Green State University in Toledo, Ohio, and I had convinced my father, then the founder and president of our family’s textile business, to allow me to take a three-week trip abroad. We would begin in Copenhagen; travel to Helsinki; move onward to Leningrad and Moscow; then visit Bucharest, Prague, and Czechoslovakia before finishing in Rome. I was young, naïve, and terribly excited to be embarking on my first big international adventure outside of my hometown, a village of 400 people in the heart of Amish Country in Ohio.
Our first evening in Copenhagen, following dinner, I joined three fellow students to take a walk through Tivoli Gardens, the city’s Central Park. There, we met several Danish students and began talking with them. I thought certainly they’d envy us when they learned we were visiting from America. But when we told them, I was instead shocked by their response.
“Well, how nice, but we certainly would not want to be Americans,” said one young woman.
“Why not?” I asked.
“You have many benefits in your country and you’re doing quite well, but you are only 250 years old. You have no history, no long-term culture.”
I had assumed that pride in your country, even at our young age, was measured by financial or material success, or financial opportunity. This Danish woman saw things much differently. What she valued was the multigenerational, centuries-old history and culture of her homeland. GDP per capita was not part of that consideration.
These divergent cultural viewpoints are evident in our paradigms about family businesses in the United States. In the U.S., success in family business tends to be measured by its profitability and ability to sustain the ever-growing lifestyle of the people running it. Motivation to pass the business on to the next generation is dependent on one or more of the children being willing to have their careers in the business—oftentimes primarily to support the lifestyle of the next generation. If there is no one in the next generation who wants to work in the business, then the obvious exit strategy is to harvest it and pocket the money. In fact, growing a business for a high potential harvest event is one of the most common models of entrepreneurship embraced today.
When my father and mother founded their business in 1949, my father had a clear vision: to build a business that would support his family and survive him. He died young, just 17 years after they started this effort. Having worked by his side, I took the lead when he was gone and have found numerous good reasons to adopt the same vision. Fortunately, along the way I have discovered entrepreneurial models that focus on the concept of multi-generational stewardship while also staying focused on financial results.
Embracing a multigenerational ownership model requires business owners to take a longer-term view of success. We have to utilize resources generated by the business differently and focus on building the infrastructure of our businesses, considering not only one great innovative idea but many, as well as the human capital, marketing, sales, operational excellence, finance, and governance processes required to support a longer-term vision. We have to bake long life into our strategy.
Why bother? Family businesses are a more significant part of the fabric of our national economy than most people realize:
• The Family Business Review reveals that eight to nine out of ten businesses in North America are family-owned and generate roughly 64 percent of the Gross Domestic Product (GDP) of the U.S., or $5,907 billion.
• In my book, A Vibrant Vision, I debunk the commonly held image of family business as a “mom-and-pop shop.” The fact is that some of the largest businesses in our country are family-owned or controlled, including Wal-Mart, Cargill, Ford Motor Company, Comcast, Mars, Milliken & Company, Levi Strauss, and the J.M. Smucker Company.
• An Edelman research study offers additional support, by showing that 75 percent of people would prefer to do business with a family-held business and 54 percent would prefer to work for a family business. Customers in the study even reported that they would be willing to pay more for products or services that come from a family-held business.
Realizing the value family businesses add to our national economy and appreciating the people, principles, and processes we cultivate within our family businesses may offer owners motivation to think twice about preserving these treasures and passing them on.