In a 1988 article in Family Business Review, W. Gibb Dyer Jr. wrote: “The culture of the family firm plays an important role in determining the success of the business beyond the first generation.” Dyer stated that culture is a bundle of interconnected traits that begin with basic assumptions, usually instilled in the company by its founder. These assumptions establish a foundation for the company's values, which are defined as the guiding rules for all situations employees face. These values ultimately lead to artifacts that serve as the physical evidence of the assumptions and values.
For example, consider a founder who assumes people are good and trustworthy. A resulting value would be, “Our people are key to our success,” and a resulting artifact would be a sophisticated employee training facility. Conversely, if the underlying assumption is, “People are basically lazy and untrustworthy,” the resulting value might be, “We run a tight ship,” and an artifact might be a time clock or observation window overlooking the production floor.
For the family business facing a transition, two fundamental questions must be addressed: What are the assumptions from which the culture derives, and are these assumptions helpful or harmful to succession?
Participative cultures
To uncover some helpful assumptions, let's turn to two companies that have enjoyed multiple successful generational transitions: SC Johnson and Son Inc. and the J.M. Smucker Company. SC Johnson was founded in 1886 when Samuel Curtis Johnson, at the request of his customers, created a preservative for hardwood flooring his company was selling. To create the product, he studied how Europeans preserved the wood floors in manor houses, and then developed a formula that he perfected in his bathtub. The company's culture, in part, is based on an underlying assumption of “doing.” The resulting value is, “We will not stop doing until the customer is satisfied.” The artifact is the founder's bathtub, which played a central role in the company lore.
Johnson also assumed that people and communities were essential to his success. The resulting value around employee practices is, “We care about you”; the value around community involvement is, “We are part of our communities in which we work and, therefore, believe in paying our civic rent.” Artifacts include a pamphlet entitled, “This We Believe,” given to all employees. The pamphlet starts with the following powerful statement: “The goodwill of people is the only enduring thing in any business. It is the sole substance … the rest is shadow!”
J.M. Smucker dates to 1897, when Jerome Monroe Smucker began producing apple cider and apple butter from apple trees growing near his Orrville, Ohio, home. He was so obsessed with quality and fairness in his pricing that he added a bit more product in his jars to ensure the customer was not being cheated. He also personally signed every lid of every jar he produced. Smucker assumed that in a business that bore his name, people had to be treated fairly and with respect. From this assumption, the values of quality products, fair treatment of employees, responsibility for the wellbeing of the communities where the company operates and customer satisfaction had their roots. An artifact that flowed from this basic assumption is the J.M. Smucker signature, which still appears on all jars of Smucker's products.
Both SC Johnson and J.M. Smucker include in their value systems the importance of customer satisfaction, respect for and appreciation of their employees, and a commitment to the communities in which they operate. Both perpetuate the memory of their founders with artifacts that remind all employees, both family and non-family, of what values the businesses hold dear. Both companies have created a participative culture—a culture in which customers, suppliers, family, employees and community all participate in decision making.
Since a participative culture is essential to multigenerational success, how do you keep that type of culture in place through generational change? Knowing that future generations of children will be raised in different economic and social environments than their parents, and marrying spouses whose upbringing may be foreign to the culture of the business family, what is today's business leader to do?
The role of storytelling
The answer to this question can be summed up in one simple word: stories. Telling and codifying stories can distinguish a family business and promote its longevity.
Family business stories can share the folklore of the company's founding. They can explore the rationale for critical decisions that shaped the company's development. They can recount the achievements, and failures, of past business cycles. They can recount meaningful or silly events that led to employee bonding.
The more stories are shared in an organization, the more the benefits are felt. Take a succession, for example. As a company's leadership is being handed from one generation to the next, the stakes are raised for the company to articulate its culture—the assumptions, values and artifacts that have served as the “glue” over the years. In a research paper for clients, GenSpring listed communicating “family history and culture” as one of the 25 best practices of multigenerational families. As we saw with the Johnsons and Smuckers, the communication of culture, mission and values is what helps companies maintain cohesion for successive generations.
In Made to Stick: Why Some Ideas Survive and Others Die, brothers Chip and Dan Heath write that one key to success is the use of stories, especially those that are emotional or inspirational. Hearing and internalizing stories from a company's past can fundamentally change the way next-generation members will act when confronted with difficult situations.
Storytelling can also benefit the company's employees. Stories add color to the principles espoused by the company's leaders, and the assumptions underlying these principles. They help employees identify with the values and culture. SC Johnson's “This We Believe” pamphlet describes the company's commitment to “Maintain good relations among all employees around the world based on a sense of participation, mutual respect, and an understanding of common objectives.” This would not be possible unless management clarifies what those objectives are.
A recent Reel Tributes client, a CEO of a family business turning 120 years old, cited his employees as a motivation for storytelling. As he explained early in the film project, “I want my staff to know how special the history of our company is, and how special they are to the history of the company. It's this link that I want to establish with these stories.” A chapter of the film, titled “Finding and Keeping Passionate People,” is dedicated to the company's staff.
A company's customer base is another key audience for its stories. Consumers prefer to buy from companies that share their values. But if the company doesn't express what its values are, how are customers to know whether they are shared? For this reason, companies are increasingly presenting “Our History and Values” as a central part of their websites and marketing materials. Showing that a certain store has been in the same location for four generations, or a company has raised millions of dollars for local charities, is a powerful sales tool. However, it is not enough to just list this information. Tying the history and values to stories, such as a personal anecdote from the CEO explaining why his daughter's struggle with cancer led him to support the local cancer hospital, makes the connection with customers that much deeper.
Recording your stories
Many business owners ask us, “Where do we start? How do we encourage stories?” The key is to find the right people and ask the right questions. Chances are, the older generation holds a wealth of knowledge. Ask about the company's founding, its background and its challenges. Find out what values were established early on, and how those values have changed over the years. Probe into how the company's culture has developed. Start small, perhaps with a few questions at lunch or at a family meeting, and build up to in-depth “storytelling sessions” over time.
Avoid limiting the storytelling to management and family. Invite employees to participate in the conversations. Ask them what stories they hold dear. Multiple perspectives on the same story will emerge, and new information will be revealed about the company culture. This information may be glowing, or it may be difficult to swallow, but it will certainly be enlightening. As SC Johnson writes on its website, it is impossible to maintain healthy relations without “Fostering open, two-way communications between management and employees.”
Once the stories are told, the question then becomes, “What do we do with this information?” Technology has provided many options for recording and preserving stories. Companies can post their stories on their website. They can publish a book detailing the history and values of the company, and present copies to employees and customers. Digital tape recorders can collect oral histories for the company archives. Social media present an engaging outlet for telling a company's stories to its network of followers, and receiving valuable feedback. And video documentaries allow for the compilation of interviews, photographs and other memorabilia in an engaging format.
No matter what method you choose, start sharing your stories today. Don't wait until it is too late. The reality is that while companies and their cultures can live on, founders and family members will not. We recently met with a client who is retiring at the age of 70. In the course of the interviews with the CEO and his family, and in explaining why stories were so important to them, the word “stewardship” repeatedly came up. The CEO's daughter said proudly, “My father is not focused on himself. Money and awards aren't important; what matters to him is creating an avenue for future generations to thrive.”
The tenure of an individual leader is limited. What stories are you recording to ensure your business—and the culture it has created—is not soon forgotten?
David Adelman is founder and CEO of Reel Tributes LLC, which produces documentary films to preserve the legacy of families and family businesses (www.reeltributes.com). William Alexander teaches a course focusing on family-controlled companies at the Wharton School at the University of Pennsylvania (alexwh@wharton.upenn.edu).
Copyright 2012 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.