Entrepreneurship & Family Business - Complementary Dynamics

1st Families in Business Day - November 8, 2013

Thank you to our partners.

Thank you to our presenters.

Thank you to each of you.

Welcome!

1. Treat everything shared as confidential.

2. Leave the office at the office.

3. Meet someone new.

4. Learn something new.

5. Apply something new.

6. Share your experience.

Groundrules

Asia Pacific (10)2007

Africa2009

North America (10) 2011

Europe (13) 2005

Latin America (10) 2006

STEP Affiliates

Key Facts• 43 Affiliate Universities• 200+ Scholars• 100+ Family Cases Worldwide• 15 Summits / Academic Meetings

STEP ELGAR BOOKS

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ENTREPREURSHIP – What is it? FAMILY BUSINESS – What is it?

In a Family BusinessWHOSE RESPONSIBILITY IS

ENTREPRENEURSHIP? Individual vs. Family

Where are we today & Where do we want to be?

FOUNDERS

Think of a male / female founder

What word/s describe this person/s

HENRY FORDCARLOS

SLIMHenri Nestlé

Celeste North, NuFlick

Founders

Decisive

Risk-takerCreative

IndependentVisionary

Confident

Controlling

Passionate

Entrepreneurs?

POPULAR VIEWS

1.Decisive

2.Independent

3.Visionary

4.Confident

5.Risk taker

6.Creative

7.Controlling

8.Passionate

IN REALITY1.Yes – but no different from other leaders2.Support family & team3.Often no vision4.No more confident than others5.Moderate to low risk6.Often don’t create technology, buy business, or license7.Yes- but no more than other occupations8.Yes- but doesn’t distinguish

Adapted from Schlesinger, 2010

Entrepreneurs?

POPULAR VIEWS

1.Decisive

2.Independent

3.Visionary

4.Confident

5.Risk taker

6.Creative

7.Controlling

8.Passionate

IN REALITY1.Yes – but no different from other leaders2.Support family & team3.Often no vision4.No more confident than others5.Moderate to low risk6.Often don’t create technology, buy business, or license7.Yes- but no more than other occupations8.Yes- but doesn’t distinguish

Adapted from Schlesinger, 2010

Capabilities matter

NOT traits

Develop Entrepreneurial Spirit

Practice, Practice, Practice…..

Use the entire life span for practicing entrepreneurship

Something new every day, every year –

…… products, places, processes, people ….

10,000 hours of practice to excel in anything

even ENTREPRENEURSHIP!

When the shoe fits…..

ENTREPREURSHIP – What is it? FAMILY BUSINESS – What is it?

In a Family BusinessWHOSE RESPONSIBILITY IS

ENTREPRENEURSHIP? Individual vs. Family

Where are we today & Where do we want to be?

What is F-B Success?

Family level +ve outcome

Family level -ve outcome

Firm level+ve outcome

Warm Hearts Deep Pockets!

Pained HeartsDeep Pockets

Firm level-ve outcome

Warm HeartsEmpty Pockets

Pained HeartsEmpty Pockets

Distinguishing FBs from NFBs

CONTROL & INFLUENCE

How?

Through

OMG combination of

Ownership, Management, Governance

The Three Circle Model

Ownership

Management Family

1

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4

5

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GLOBAL Report on Family Businesses Large numbers & contributors to jobs / economy / society

Latin America / Asia – 90-98% US / Germany / Spain – 80-90%

Large, Medium, Small size

Out-perform non-family enterprises

– Especially in the first generation; Second generation some do, not others

70% would like to pass their business to next generation

BUT next gen is not always interested OR

capable OR

prepared to work in the founder’s business - WHY?

• MARKET value / marketability of the firm

• Founder’s dream may not be shared by the next generation

• Founder’s shadow is deep

• Next generation not ready

• Entrepreneurial / leadership skills not honed

• Limited opportunities in ONE enterprise to practice

ENT / Leadership skills of 2 or more generations

WHY might family firms NOT get to the 2nd generation?

Success Across Generations

World’s Oldest Family Firms

Kongo Gumi (578 to 2007)

Hoshi (Japan 718) Baravier & Toso (Italy, 1295)

Hotel Pilgrim Haus (Germany, 1304)

Mittelstand

Successful multigenerational organizations balance

Tradition with innovation

Family with Business

51 questions to become a Henokien one day

ENTREPREURSHIP – What is it? FAMILY BUSINESS – What is it?

In a Family BusinessWHOSE RESPONSIBILITY IS IT?

Individual vs. Family

Where are we today & Where do we want to be?

  Focus of Entrepreneurship

NO – New Creation or

Innovation

YES – New Creation or

Innovation

Focus of Family Business Studies

NO Significant

family influence on business

Plateaued FirmsCruising Managers

Entrepreneurial FirmsLone

Entrepreneurs/Entrepreneurial

Teams

YESSignificant

family influence on business

Plateaued Family Firms

Cruising Kin

EntrepreneurialFamily FirmsEnterprising

Families

Entrepreneurship and Family Business

Entrepreneurship & Family Business: HANDLING NEW INITIATIVES

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2

3

4

5

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Life Cycles

Key changes in last two decades?Longer expectancy (USA)

MaleFemale

1900 46.2 48.9

1981 72.4 79.2

2012 80.5 84.7

Women in US workforce

72 million (58.6% of all 16+ women) participate in the labor force

47% of US labor force are women

By 2018, 51% of US workforce is expected to be females

Healthier lives lived

More females joining the workforce

Key changes in last two decades?Longer expectancy (USA)

MaleFemale

1900 46.2 48.9

1981 72.4 79.2

2012 80.5 84.7

Women in US workforce

72 million (58.6% of all 16+ women) participate in the labor force

47% of US labor force are women

By 2018, 51% of US workforce is expected to be females

Healthier lives lived

More females joining the workforceGenerational Stack-

Up!

Life Expectancies

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P A U S E 1. Where do you fall on the life cycle map?

Pre-adulthood (0-15 years)

Provisional adulthood (16-30)

Early adulthood (31-45)

Middle adulthood (46-60)

Late adulthood (61-75)

Late-late adulthood (76+

2. How are you practicing entrepreneurship -

doing something new?

Let’s PauseLife Stage Person #1 Entrepreneurial

activitiesPerson #2 Entrepreneurial

activities

Pre-adulthood (0-15 years)

Provisional adulthood (16-30)

Early adulthood (31-45)

Middle adulthood (46-60)

Late adulthood (61-75)

Late-late adulthood (76+

ENTREPREURSHIP – What is it? FAMILY BUSINESS – What is it?

In a Family BusinessWHOSE RESPONSIBILITY IS

ENTREPRENEURSHIP? Individual vs. Family

Where are we today & Where do we want to be?

Entrepreneurial Family Firms:

COMBINING FORCES

Family AND Business

Individual AND Family

Managing AND Innovating

Entrepreneurship in EVERY generation?

1

2

3

4

5

6

ENTREPREURSHIP – What is it? FAMILY BUSINESS – What is it?

In a Family BusinessWHOSE RESPONSIBILITY IS

ENTREPRENEURSHIP? Individual vs. Family

Where are we today & Where do we want to be?

What’s next?

10:45 - 12:00 p.m. - Concurrent workshops - Session AVermont A, Vermont B, Burlington Conference room

12:00 - 1:30 p.m. Lunch Keynote - "Staying Innovative after 200 Years in Business" with Charlie Kittredge, Chairman and former CEO of Crane & Co. - Seasons on the Lake room

1:45 - 3:00 p.m. - Concurrent workshops - Session B Vermont A, Vermont B, Burlington Conference room

3:15 - 4:30 p.m. - Concurrent workshops - Session C.Vermont A, Vermont B, Burlington Conference room

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Enjoy!