Family constraints have their benefits
The best family businesses balance emotion, reason and perspective Financial Times December 14, 2010 by Philip Delves Broughton Randel Carlock and John Ward, professors at Insead and the Kellogg School of Management respectively, have studied family businesses around the world and report their findings in a new book, When Family Businesses are Best.
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Professors John Ward and Randel Carlock
Serious family business thought leaders The best family businesses excel at two things: balancing emotion and reason; and retaining a long-term perspective. “Families are about love and emotions, and businesses are about making money and accomplishing tasks,” Prof Carlock told me from Hong Kong, where he was lecturing to groups from Asia’s many family-run businesses.
“These two systems operate on completely different views of the world. So if a family is to run a business they must become ‘professionally emotional’.” Non-family businesses can fool themselves into thinking that they only make decisions based on reason. A chief executive can initiate a merger telling the markets it makes hard financial sense, says Prof Carlock, when all along it’s about his ambition. Family businesses do not have this luxury as any confusion between reason and emotion can destroy not just the business but the family as well. Consequently, they are compelled to find ways of acting that are more emotionally mature. |
In the Press
- Interview on Singapore's news radio station 93.8LIVE on “The Women of Worth (WOW) with Michelle Martin” February 2016
- Keeping UAE business in the family, Interview with the National, UAE November 16, 2014
- Achieving Win-Win in Family and Business 实现家族与企业的双赢 China Management Magazine 管理学家 January 2014
- 从家族企业到企业家族 "From Family Business to Business Family", CEOCIO Magazine in China IT 经理世界 第372期 September 2013
- Top 10 Tips for Successful Sibling Working Relationships, Campden FB April 25, 2013
- The Family That Goes To School Together, Wall Street Journal, August 22, 2011
- Campden FB Survery of Top 50 Family Business Leaders, March 2, 2011
- Campden FB: The MBA Dilemma, 2011
- The Ladder -- Oedipus Complex: How to Get Help For a Family Business. Wall Street Journal Europe, February 27, 2001
Interview on Singapore's news radio station 93.8LIVE on “The WOW (Women of Worth) with Michelle Martin”
February 2016 by Michelle Martin
Martin's 25 minute interview with Prof Carlock discusses the HQ-Compaq Merger of 2001 led by Carly Fiorina, the lessons for governance structures and processes and the challenges of women in leadership.
February 2016 by Michelle Martin
Martin's 25 minute interview with Prof Carlock discusses the HQ-Compaq Merger of 2001 led by Carly Fiorina, the lessons for governance structures and processes and the challenges of women in leadership.
Keeping UAE business in the family
Could you sack your own son, or give your sister a pay cut?
Delivering unwelcome news is never easy for managers – but it is especially difficult for those working for the Middle East’s numerous family-owned businesses, which dominate the private sector.
Randel Carlock, a professor at Insead, says family businesses face unique challenges in reconciling the emotions of family life with the harsh realities of the balance sheet.
But the co-author of When Family Businesses are Best – who was in Dubai this month with the Entrepreneurs Organisation, a non-profit global network of more than 10,000 business owners – explained why the long-term approach often favoured by family firms can pay off.
Why is the management of family businesses an important issue?
Because of the overlap of family and business you have a lot more drama. Take Gucci: everybody knows the terrible stories of the sons turning their father in to the tax authorities. When family and business overlap, it creates a powerful story – of both success and potential failures and conflict. When you work for a family business, it’s basically about trying to be professional and emotional at the same time. And that’s something of an oxymoron.
The other thing is that the world economy is shifting. Where’s all the growth? It’s in the Middle East, Asia and South America. Those economies are totally dominated by family businesses, so it’s just raised the profile of how important it is to the world.
Are family firms run less rationally compared to other businesses?
The business side is rationally run. But how can you be rational with your son and your daughter? You love them. Maybe your daughter is really skilled as a business leader, but your son is not quite so skilled … What do you do? Do you leave your son out? It’s a natural conflict.
How do you manage that?
The two critical factors for family business success are clear values that the family agrees on, and strong governance: the family meets together and has a board of directors for the business. If your brother is not performing and if you’ve got good governance, you make that tough decision to move your brother out.
How important are family businesses in the UAE?
The whole economy is built on family businesses. Sure, you’ll have international firms that come in. But in some parts of the economy, particularly fashion, automobiles – anything that takes a long-term commitment to build the brand and reputation – you’re going to find more family firms.
Why is that?
One of the key competitive advantages of family businesses is passion: they care. Very few people go home at night deeply committed to the large public company they work for. But when you work for a family business, even if you’re not a family member, you’re part of the family. It’s one of the reasons that fashion and cosmetics are dominated by families – because you can’t do those kind of industries without passion. But you don’t see a lot of family-owned insurance companies because insurance is really just numbers.
Several family businesses in the Gulf are said to be considering IPOs. Good idea?
If you need the capital to expand, then go public. But too many people go public for the wrong reason. And the truth is it’s not a very good way to be organised. Wouldn’t you rather be owned by 50 people from the same family who plan to keep the business for generations? Because that is the competitive advantage of a family business: a long-term perspective. Growing on your own capital at a steady pace is a much smarter way to do it. And family businesses have enough trouble keeping their family happy. Why bring in 10,000 strangers?
Are there any issues in the way UAE family businesses are run?
Their technology is first world – it’s the latest thinking. But sometimes on the family side they’re a little too traditional. Young people need to be empowered because young people have the energy and the new ideas. And this is what makes a dynamic economy. And so I think one challenge in the Middle East is to keep that respect and participation of the seniors, but the energy, motivation and the passion of the young generation.
Do family businesses suffer from an image problem?
Probably, simply because they don’t do a lot of public relations, and economically most people are fairly naive. Most people do not realise that their Volkswagen comes from a family business … that their Louis Vuitton comes from a family business. And even some family businesses do not realise how important family businesses are.
Could you sack your own son, or give your sister a pay cut?
Delivering unwelcome news is never easy for managers – but it is especially difficult for those working for the Middle East’s numerous family-owned businesses, which dominate the private sector.
Randel Carlock, a professor at Insead, says family businesses face unique challenges in reconciling the emotions of family life with the harsh realities of the balance sheet.
But the co-author of When Family Businesses are Best – who was in Dubai this month with the Entrepreneurs Organisation, a non-profit global network of more than 10,000 business owners – explained why the long-term approach often favoured by family firms can pay off.
Why is the management of family businesses an important issue?
Because of the overlap of family and business you have a lot more drama. Take Gucci: everybody knows the terrible stories of the sons turning their father in to the tax authorities. When family and business overlap, it creates a powerful story – of both success and potential failures and conflict. When you work for a family business, it’s basically about trying to be professional and emotional at the same time. And that’s something of an oxymoron.
The other thing is that the world economy is shifting. Where’s all the growth? It’s in the Middle East, Asia and South America. Those economies are totally dominated by family businesses, so it’s just raised the profile of how important it is to the world.
Are family firms run less rationally compared to other businesses?
The business side is rationally run. But how can you be rational with your son and your daughter? You love them. Maybe your daughter is really skilled as a business leader, but your son is not quite so skilled … What do you do? Do you leave your son out? It’s a natural conflict.
How do you manage that?
The two critical factors for family business success are clear values that the family agrees on, and strong governance: the family meets together and has a board of directors for the business. If your brother is not performing and if you’ve got good governance, you make that tough decision to move your brother out.
How important are family businesses in the UAE?
The whole economy is built on family businesses. Sure, you’ll have international firms that come in. But in some parts of the economy, particularly fashion, automobiles – anything that takes a long-term commitment to build the brand and reputation – you’re going to find more family firms.
Why is that?
One of the key competitive advantages of family businesses is passion: they care. Very few people go home at night deeply committed to the large public company they work for. But when you work for a family business, even if you’re not a family member, you’re part of the family. It’s one of the reasons that fashion and cosmetics are dominated by families – because you can’t do those kind of industries without passion. But you don’t see a lot of family-owned insurance companies because insurance is really just numbers.
Several family businesses in the Gulf are said to be considering IPOs. Good idea?
If you need the capital to expand, then go public. But too many people go public for the wrong reason. And the truth is it’s not a very good way to be organised. Wouldn’t you rather be owned by 50 people from the same family who plan to keep the business for generations? Because that is the competitive advantage of a family business: a long-term perspective. Growing on your own capital at a steady pace is a much smarter way to do it. And family businesses have enough trouble keeping their family happy. Why bring in 10,000 strangers?
Are there any issues in the way UAE family businesses are run?
Their technology is first world – it’s the latest thinking. But sometimes on the family side they’re a little too traditional. Young people need to be empowered because young people have the energy and the new ideas. And this is what makes a dynamic economy. And so I think one challenge in the Middle East is to keep that respect and participation of the seniors, but the energy, motivation and the passion of the young generation.
Do family businesses suffer from an image problem?
Probably, simply because they don’t do a lot of public relations, and economically most people are fairly naive. Most people do not realise that their Volkswagen comes from a family business … that their Louis Vuitton comes from a family business. And even some family businesses do not realise how important family businesses are.
专访An Interview by 管理学家 China Management Magazine
Carlock: Achieving Win-Win in Family and Business 卡洛克:实现家族与企业的双赢
January 2014 by 李明阳
The magazine interviews Professor Carlock about the rigorous but practical Parallel Planning Process and how, in the areas of competing commitments, inter-generational and strategic decision-making, it can be applicable to China’s family businesses.
Carlock: Achieving Win-Win in Family and Business 卡洛克:实现家族与企业的双赢
January 2014 by 李明阳
The magazine interviews Professor Carlock about the rigorous but practical Parallel Planning Process and how, in the areas of competing commitments, inter-generational and strategic decision-making, it can be applicable to China’s family businesses.
CEOCIO Magazine in China IT 经理世界 第372期
www.ceocio.com.cn
20 September 2013 by 叶丽雅
从家族企业到企业家族 "From Family Business to Business Family"
一个家族企业想要保持基业长青,成为企业家族,需要做哪些工作?这就是家族企业专家兰德尔·卡洛克教授的观点。
Randel's latest interview in the IT 经理世界 CEOCIO magazine in China: 从家族企业到企业家族 "From Family Business to Business Family" talks about how the Parallel Planning process addresses the concerns of family businesses today and prepares the family and the business for a seamless transition and successful legacy.
20 September 2013 by 叶丽雅
从家族企业到企业家族 "From Family Business to Business Family"
一个家族企业想要保持基业长青,成为企业家族,需要做哪些工作?这就是家族企业专家兰德尔·卡洛克教授的观点。
Randel's latest interview in the IT 经理世界 CEOCIO magazine in China: 从家族企业到企业家族 "From Family Business to Business Family" talks about how the Parallel Planning process addresses the concerns of family businesses today and prepares the family and the business for a seamless transition and successful legacy.
Campden FB Top 10 Tips for Successful Sibling Working Relationships
campdenfb.com
25 April 2013 By Attracta Mooney
Number 1: Don’t create a pressure cooker. It shouldn’t be all or nothing when it comes to the family business, says INSEAD’s Randel Carlock. When parents say, “if you want part of the wealth in this family, you have got to work in this business”, you’ll end up with children joining the family firm despite not being qualified or it not being their first interest. “That’s when emotions take over,” Carlock says. “When people are smart and capable, their smarts and capabilities balance their emotions. When people are weak and afraid and unqualified, that’s when they deal with emotions.”
Read more: Campden FB
25 April 2013 By Attracta Mooney
Number 1: Don’t create a pressure cooker. It shouldn’t be all or nothing when it comes to the family business, says INSEAD’s Randel Carlock. When parents say, “if you want part of the wealth in this family, you have got to work in this business”, you’ll end up with children joining the family firm despite not being qualified or it not being their first interest. “That’s when emotions take over,” Carlock says. “When people are smart and capable, their smarts and capabilities balance their emotions. When people are weak and afraid and unqualified, that’s when they deal with emotions.”
Read more: Campden FB
The Family That Goes To School Together
By Alina Dizik
...A new wave of executive-education courses aim to untangle the unique problems of family-run companies
Wall Street Journal
August 22, 2011
Family businesses are discovering a new venue where they can work out their problems: the classroom.
For example, a model founded at INSEAD in 2005 helps family members better deal with the ramifications of company decisions, says Randel Carlock, a professor of entrepreneurship and family business at the school. Having one sibling promoted over another, say, may elicit a more emotional reaction than it would in a business that's not family-owned. So companies and families are encouraged to set up objective processes they must follow for all decisions, to eliminate the perception of bias.
Bear Necessities
Of course, the courses come with caveats. First, there's the cost. The price tag can run more than $10,000 per person for week-long programs at top business schools—and that may be prohibitive if many family members attend. Discussions can also get heated, the same way they would around a family dining-room table. Sometimes family members storm out of the room, and tears are not uncommon, says Mr. Carlock.
Still, professors insist that they make sure everyone's voice is heard. For instance, at the Family Enterprise Challenge, an executive-education course offered at INSEAD, there's one rule participants have to follow during small-group discussions: Only the person holding the teddy bear can speak.
It's a good way for family members to learn how to communicate effectively without interruption, Mr. Carlock says. "The CEOs and the dads want to talk all the time—the real learning for the family is to learn to listen to each other," he says.
Read the full article
Wall Street Journal
August 22, 2011
Family businesses are discovering a new venue where they can work out their problems: the classroom.
For example, a model founded at INSEAD in 2005 helps family members better deal with the ramifications of company decisions, says Randel Carlock, a professor of entrepreneurship and family business at the school. Having one sibling promoted over another, say, may elicit a more emotional reaction than it would in a business that's not family-owned. So companies and families are encouraged to set up objective processes they must follow for all decisions, to eliminate the perception of bias.
Bear Necessities
Of course, the courses come with caveats. First, there's the cost. The price tag can run more than $10,000 per person for week-long programs at top business schools—and that may be prohibitive if many family members attend. Discussions can also get heated, the same way they would around a family dining-room table. Sometimes family members storm out of the room, and tears are not uncommon, says Mr. Carlock.
Still, professors insist that they make sure everyone's voice is heard. For instance, at the Family Enterprise Challenge, an executive-education course offered at INSEAD, there's one rule participants have to follow during small-group discussions: Only the person holding the teddy bear can speak.
It's a good way for family members to learn how to communicate effectively without interruption, Mr. Carlock says. "The CEOs and the dads want to talk all the time—the real learning for the family is to learn to listen to each other," he says.
Read the full article
Campden FB Survery of Top 50 Family Business Leaders
2 March 2011
In a major new survey, Campden FB has compiled a list of the top 50 family business leaders in the world.
With the aid of four senior family experts from the world's leading business schools - Randel Carlock from INSEAD; Joachim Schwass from IMD; Kavil Ramachandran from Indian School of Business; and John Ward from Kellogg School of Management – Campden has sifted through loads of data to compile the final list. The top five places went to John Elkann, Azim Premji, Güler Sabanci, Guido Barilla and Ratan Tata.
Read more: Campden FB
In a major new survey, Campden FB has compiled a list of the top 50 family business leaders in the world.
With the aid of four senior family experts from the world's leading business schools - Randel Carlock from INSEAD; Joachim Schwass from IMD; Kavil Ramachandran from Indian School of Business; and John Ward from Kellogg School of Management – Campden has sifted through loads of data to compile the final list. The top five places went to John Elkann, Azim Premji, Güler Sabanci, Guido Barilla and Ratan Tata.
Read more: Campden FB
Campden FB: The MBA Dilemma
campdenfb.com 2011
INSEAD business school pioneered teaching in family business. Now most of the big business schools have followed INSEAD's example and offer courses around the family business model. But are MBAs useful to businesses where the founding family member is unlikely to have one?
Jeremy Hazlehurst investigates
Download the article here
INSEAD business school pioneered teaching in family business. Now most of the big business schools have followed INSEAD's example and offer courses around the family business model. But are MBAs useful to businesses where the founding family member is unlikely to have one?
Jeremy Hazlehurst investigates
Download the article here
- The Ladder -- Oedipus Complex: How to Get Help For a Family Business
- By Cotten Timberlake
27 February 2001
The Wall Street Journal Europe
Perhaps you felt a twinge of envy when you read the recent news that Francois-Henri Pinault, 38, was anointed heir apparent at the French retailing and luxury-goods empire his 64-year-old father Francois built, Pinault-Printemps-Redoute.
Twinge not.
We hope things are going swimmingly for the younger Mr. Pinault, who was elevated to joint managing director of the Pinaults' parent holding company, Artemis, in January, and who declined to be interviewed for this article.
But contrary to the popular myth that sons, and yes, daughters, get all the breaks in family businesses, being a member of the so-called next generation can be a total nightmare.
...
But less than 20% of family businesses make it from the first to the second generation, and less than 10% make it to the third, he says. (Only 70 of the enterprises listed in the 1955 Fortune 500 exist in the same form today, says Randel Carlock, who teaches a family business course at Insead in Fontainebleau, France.)
...
Imagine you always wanted to be an architect, but Dad threatens to disinherit you if you don't join the family business, says Stuart Makings, a partner at PricewaterhouseCoopers, which operates a family business consultancy from Leicester, England. So you buckle. But then Dad, a control freak, treats you like you're hopeless, and constantly reminds you how much harder it was for him starting out. When you remodel your office, he makes you change it back, Mr. Carlock says.
The pits, adds Mr. Carlock, is to have a job you don't deserve. "It's got to be frustrating . . . You know everybody behind your back is saying the same thing, that if your grandfather hadn't launched the company, you wouldn't be there."
...
Why would anybody ever want to do it?
Well, imagine the best-case scenario: You love your job, you do it well and you own your business. You want to make it bigger and better and pass it on to the next generation, Mr. Carlock says. "From the standpoint of career rewards, it's probably one of the most meaningful things you can do," he says
Read more
The Wall Street Journal Europe
Perhaps you felt a twinge of envy when you read the recent news that Francois-Henri Pinault, 38, was anointed heir apparent at the French retailing and luxury-goods empire his 64-year-old father Francois built, Pinault-Printemps-Redoute.
Twinge not.
We hope things are going swimmingly for the younger Mr. Pinault, who was elevated to joint managing director of the Pinaults' parent holding company, Artemis, in January, and who declined to be interviewed for this article.
But contrary to the popular myth that sons, and yes, daughters, get all the breaks in family businesses, being a member of the so-called next generation can be a total nightmare.
...
But less than 20% of family businesses make it from the first to the second generation, and less than 10% make it to the third, he says. (Only 70 of the enterprises listed in the 1955 Fortune 500 exist in the same form today, says Randel Carlock, who teaches a family business course at Insead in Fontainebleau, France.)
...
Imagine you always wanted to be an architect, but Dad threatens to disinherit you if you don't join the family business, says Stuart Makings, a partner at PricewaterhouseCoopers, which operates a family business consultancy from Leicester, England. So you buckle. But then Dad, a control freak, treats you like you're hopeless, and constantly reminds you how much harder it was for him starting out. When you remodel your office, he makes you change it back, Mr. Carlock says.
The pits, adds Mr. Carlock, is to have a job you don't deserve. "It's got to be frustrating . . . You know everybody behind your back is saying the same thing, that if your grandfather hadn't launched the company, you wouldn't be there."
...
Why would anybody ever want to do it?
Well, imagine the best-case scenario: You love your job, you do it well and you own your business. You want to make it bigger and better and pass it on to the next generation, Mr. Carlock says. "From the standpoint of career rewards, it's probably one of the most meaningful things you can do," he says
Read more