HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Understanding Family Influence
How the Family D...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
In last week’s lecture, we spent a
great deal o...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
These methods gave us an
understanding that whi...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
This week, we are going to go a little
bit deep...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Reardon Supply
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Reardon Supply is a $100 million-a-
year manufa...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Bob Reardon, President and CEO, is
fed up with ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Since taking over the company from
his father n...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
He has increased revenues 700%,
organized an ou...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Reardon carries no debt and is very
liquid, but...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The competition is now national and
internation...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
All of this is causing margins to
shrink and cu...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Reardon needs extensive capital
expenditures to...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
So when Bob accumulated enough
of the company p...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Bob is fed up with his siblings
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
All of his siblings are settled in
careers and ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Some have become concerned with
their own lack ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Others resent Bob’s salary, but are
very glad t...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Nancy, Bob’s older sister, believes
that he is ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
There is another family council
meeting coming ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
What should Bob do?
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The Problem with Family
Business
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Secrecy, lack of information, low
levels of fam...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
These problems may be the result of
a founding ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Or they may come from the family’s
belief that ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
After years of not communicating, not
editing/h...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The ability of next generation family
members t...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Years of “Just sign here”
management undermines...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The presence of family is the
essential differe...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Another problem with family business
is in our ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Business schools have typically
avoided discuss...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Especially when 90% of businesses
in the US are...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
So, not only are we unfamiliar with
the dynamic...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Another factor we must take into
account is the...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Family members who do not
participate in the ma...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
When these perspectives and
contributions are n...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
This inequality is the beginning of the
family ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
What Are We Going to Learn
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Today, we will be talking about 3
things:
Famil...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
By understanding these 3 things, we
will unders...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Some Examples
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Louisville Courier-Journal
and
the Binghams
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
On January 9th, 1986, Barry Bingham
Sr announce...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The Binghams had been unable to
communicate and...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
On this day, an agreement was
reached between t...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Unlike Reardon Supply, Barry
Bingham Sr. had no...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Also unlike Reardon Supply, there
were no indep...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Barry Bingham Sr. also did not fully
empower Ba...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
By never communicating his
commitment to contin...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Many of the problems, discussions
and decisions...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Without such a body, the conflict was
taken dir...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
In the absence of family meetings,
next generat...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The Seattle Times
and
the Blethens
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Frank Blethen, Chairman of the
Seattle Times, b...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The Blethens believed in sharing
information am...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
In family meetings, Frank would talk
about the ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
He stressed the need to value the
extended fami...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
He taught them that to be successful
as individ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Frank taught the next generation that
more than...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
What was the effect?
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Members of the 4th generation were
proud to rep...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
To 6 daily and 2 weekly newspapers
and 2 major ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
They had overseen a 215% growth in
assets and a...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The Seattle Times had been a finalist
for 6 Pul...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Through education and information
sharing, they...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The Zero Sum Dynamic
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
It is within the rights of ownership to
focus o...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
But in large multi-generational family
ventures...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
This lack of liquidity and the need for
selfles...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
They will only take on this
responsibility if o...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
But there is a problem here…
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Multi-generational families are fertile
ground ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
Zero-sum dynamics are
characterized by exchange...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
If one branch of the family uses
educational as...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
If family members in top
management are to be c...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
This is called “Us vs Them”
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The “Us vs Them” dynamic can be
triggered by an...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
The only time that “Us vs Them”
becomes active ...
HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
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Understanding Family Influence

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Understanding how family pressures can influence business decisions

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Understanding Family Influence

  1. 1. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Understanding Family Influence How the Family Dynamic Affects Family Business
  2. 2. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED In last week’s lecture, we spent a great deal of time talking about the best methods to running a family business
  3. 3. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED These methods gave us an understanding that whichever part of the business was made priority, it would have significant effects on the business venture
  4. 4. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This week, we are going to go a little bit deeper and understand how the family dynamic affects the operations of a business and its potential for success
  5. 5. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Reardon Supply
  6. 6. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Reardon Supply is a $100 million-a- year manufacturer owned equally by 8 brothers and sisters
  7. 7. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Bob Reardon, President and CEO, is fed up with his brothers and sisters.
  8. 8. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Since taking over the company from his father nine years ago, Bob has done a fantastic job
  9. 9. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED He has increased revenues 700%, organized an outside Board of Directors, and implemented strategic planning companywide
  10. 10. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Reardon carries no debt and is very liquid, but its growth rate is slowing down
  11. 11. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The competition is now national and international conglomerates who are able to produce and deliver much more than Reardon can
  12. 12. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED All of this is causing margins to shrink and customers to look for new options
  13. 13. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Reardon needs extensive capital expenditures to stay competitive
  14. 14. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED So when Bob accumulated enough of the company profits to acquire a company that would push Reardon to the next level, his siblings voted for dividends instead of the acquisition
  15. 15. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Bob is fed up with his siblings
  16. 16. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED All of his siblings are settled in careers and lives outside of Reardon Supply
  17. 17. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Some have become concerned with their own lack of liquidity and have expressed an interest in cashing out of the family business
  18. 18. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Others resent Bob’s salary, but are very glad to have “one of their own” running the company
  19. 19. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Nancy, Bob’s older sister, believes that he is overpaid since her husband is President of a public company worth more than Reardon, but makes less than Bob
  20. 20. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED There is another family council meeting coming and Bob knows he needs to do something
  21. 21. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED What should Bob do?
  22. 22. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Problem with Family Business
  23. 23. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Secrecy, lack of information, low levels of family emotional intelligence, and little knowledge of the business among family members all threaten the success of the venture
  24. 24. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED These problems may be the result of a founding culture that supported an autocratic leadership and control or a reincarnation of this culture in a later generation
  25. 25. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Or they may come from the family’s belief that there are many benefits in privacy including, flexibility in responding to competitors, minimization of tax liabilities, and management of expectations of relatives, employees, and even unionized workers
  26. 26. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED After years of not communicating, not editing/hiding financial statements, profit margins, cash flows, and market share information
  27. 27. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The ability of next generation family members to assist in the management, or become successors, is significantly difficult
  28. 28. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Years of “Just sign here” management undermines the commitment to the dream of having the enterprise continue from generation to generation
  29. 29. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The presence of family is the essential difference between a family business and other forms of enterprise
  30. 30. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Another problem with family business is in our business schools
  31. 31. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Business schools have typically avoided discussing the topic of family businesses in the study of all business topics, which makes our understanding and management much harder
  32. 32. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Especially when 90% of businesses in the US are family firms, employing 59% of the workforce and generating 49% of the national GDP
  33. 33. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED So, not only are we unfamiliar with the dynamics that family businesses operate with, but our own business education does not empower us to be able to understand their impact
  34. 34. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Another factor we must take into account is the influence of inactive family members in the business
  35. 35. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Family members who do not participate in the management of business often have significant influence on the discussions, decisions, and long-term processes of the family venture
  36. 36. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When these perspectives and contributions are not considered, not deemed legitimate, or devalued – they see inequality
  37. 37. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This inequality is the beginning of the family conflict that can destroy family ventures
  38. 38. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED What Are We Going to Learn
  39. 39. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Today, we will be talking about 3 things: Family dynamics Genograms Family History
  40. 40. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED By understanding these 3 things, we will understand family ventures better and how to manage family issues to positively influence the unique interaction between family and venture
  41. 41. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Some Examples
  42. 42. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Louisville Courier-Journal and the Binghams
  43. 43. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED On January 9th, 1986, Barry Bingham Sr announced that the Louisville Courier-Journal would be sold
  44. 44. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Binghams had been unable to communicate and resolve the differences between family members
  45. 45. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED On this day, an agreement was reached between the Gannett Company and the Binghams cashed out.
  46. 46. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Unlike Reardon Supply, Barry Bingham Sr. had not been able to demonstrate a visible commitment to continuity
  47. 47. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Also unlike Reardon Supply, there were no independent member of the Board of Directors
  48. 48. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Barry Bingham Sr. also did not fully empower Barry Jr. when he became the President of the newspaper, by repeatedly second-guessing him, and retaining his majority voting control
  49. 49. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED By never communicating his commitment to continuity, transfer of voting control and approving the sale of the company, Barry Sr. minimized his power as father, CEO and majority owner
  50. 50. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Many of the problems, discussions and decisions the Binghams could have taken to reverse course and prevent the sale of the company would have been in family meetings
  51. 51. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Without such a body, the conflict was taken directly to the Board of Directors, which was clearly overwhelmed by the conflict and paralyzed by its own membership
  52. 52. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED In the absence of family meetings, next generation family members lacked the education, information, give-and-take communication, and emotional intelligence that would have promoted understanding among the individual heirs
  53. 53. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Seattle Times and the Blethens
  54. 54. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Frank Blethen, Chairman of the Seattle Times, built a business to last
  55. 55. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Blethens believed in sharing information among family members through family meetings – a central governance body
  56. 56. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED In family meetings, Frank would talk about the commitment of every generation, which had resulted in over 100 years of leadership
  57. 57. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED He stressed the need to value the extended family over the individual or family branch, and challenged individuals who participated in the family business to assume stewardship of the family venture
  58. 58. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED He taught them that to be successful as individuals, it was essential that they understand the individual’s responsibility towards the group
  59. 59. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Frank taught the next generation that more than money, they inherit a responsibility to others and to stewardship so that the enterprise they received could be successfully passed on
  60. 60. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED What was the effect?
  61. 61. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Members of the 4th generation were proud to report to the family council that on their watch, the company grew from 2 daily newspapers
  62. 62. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED To 6 daily and 2 weekly newspapers and 2 major informational websites
  63. 63. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED They had overseen a 215% growth in assets and a 33% growth in cash flow – increasing the dividends to over $30 million – when only 20 years earlier it was 0
  64. 64. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Seattle Times had been a finalist for 6 Pulitzer Prizes and been named the 14th best newspaper in the United States, making it the best regional newspaper in the country
  65. 65. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Through education and information sharing, they were able to increase their patient capital slowly and steadily without being challenged by family members for “a bigger piece of the pie”
  66. 66. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The Zero Sum Dynamic
  67. 67. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED It is within the rights of ownership to focus on individual gain and to retain the right to immediate liquidity
  68. 68. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED But in large multi-generational family ventures, liquidity does not exist
  69. 69. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This lack of liquidity and the need for selfless interest can be a burden for family members operating in a society that tends to focus on the short term
  70. 70. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED They will only take on this responsibility if opportunities to acquire information, be educated, and to engage with important family value are plentiful
  71. 71. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED But there is a problem here…
  72. 72. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Multi-generational families are fertile ground for zero-sum dynamics
  73. 73. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Zero-sum dynamics are characterized by exchanges in which one party’s perceived gain is the other party’s perceived loss
  74. 74. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED If one branch of the family uses educational assistance for next generation family members, another branch assumes that less will be available for their children
  75. 75. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED If family members in top management are to be compensated at fair market rate, those not active in management assume they have to settle for lower dividends to compensate for it
  76. 76. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This is called “Us vs Them”
  77. 77. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The “Us vs Them” dynamic can be triggered by anything – male/female, active/inactive, richer/poorer, better educated/less educated, older/younger, blood relative/in laws
  78. 78. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The only time that “Us vs Them” becomes active is when the enterprise or wealth stops growing or is in decline
  79. 79. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
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