The forest vs. the trees
Earlier this month I traveled to Burlington, Vt., to serve as a judge for the final round of the second annual Family Enterprise Case Competition. Nineteen student teams from around the world participated in this event, the brainchild of Pramodita Sharma of the University of Vermont School of Business Administration and editor of Family Business Review.
The case that the finalists analyzed described a choice facing the third-generation president of a family company. Most of the student teams focused their presentations on how the company president should approach the choice. Some teams advocated one of the two alternatives; other teams recommended the opposite. All presented an impressive amount of evidence to support their conclusions.
When we judges -- professors, editors, business leaders and family business advisers -- discussed the case among ourselves, we noticed right away that the company faced an array of problems broader in scope than the either/or decision. Performance had declined. Ownership was very diluted, with numerous family members owning small stakes. The family seemed confused about differences in the roles and responsibilities of owners, managers, and family members. Governance structures appeared to be lacking. Family members seemed to take an entitlement attitude toward the business, instead of considering themselves to be stewards entrusted with preserving the family enterprise for future generations.
Only one of the teams in the competition -- the graduate student team from Jönköping International Business School in Sweden -- recognized that it was more important that the company leaders address the larger issues than make the either/or decision.
The student teams' focus on the small-picture issue mirrors many real-world family business situations. Decisions that seem urgent may be symptoms of larger problems that can be resolved most effectively by establishing family and/or business governance structures. An effective board of directors can keep a company president focused on performance. A strong family council can help family members understand their responsibilities as stewards of the family legacy.
The maple trees in Vermont yield delicious syrup. But it's also important to pay attention to the forest.