Tom Bonner

Tom Bonner

Manager

AT CFAR, we hold it as an axiom that a robust and resilient culture is critical to an organization’s success. Equally true — yet sometimes seemingly in tension with this — is that new ideas are endemic in any business. New ways of doing things can drive growth and spur innovation but may create disagreement about what will lead to success and threaten to upend perceived cultural norms.

Over time, a founding culture can fall out of sync with changes in generations, society, industry, and economic forces. This tension is especially acute within multi-generational family-owned enterprises, where the expectations around performance and an evolving culture in the business can seemingly come into conflict with familial expectations and historical ways of expressing culture. For a next-gen shareholder, it’s one thing to overhaul daily practices implemented by an outside CEO 20 years ago and quite another to call into question the ways of doing things that your grandfather used to build a successful business (from which you now benefit). In these contexts, the stakes around shaping and evolving culture are very high.

Especially in a business’s early years, the culture reflects the founding leaders’ values, vision, and preferences. This culture influences how things get done — when, where, how, and why people show up to work. Remaining anchored to these founding cultural norms and values might feel essential to maintaining identity, but it can also lead to stagnation in the business when interpreted too narrowly. To continue to grow and thrive, family enterprises need to adapt across generations. This means preserving what matters while making room for necessary changes. It’s a delicate balance that requires companies to reassess their values and behaviors, letting go of practices that no longer serve them.

Take, for example, Mechanized Solutions*, a 40-year-old engineering firm in New England. Founder John Wilson* was getting ready to pass leadership to his three children, the second generation. However, there was tension around how well the next generation understood and embraced the company’s culture, especially its people-first, servant leadership approach. In particular, John was dismayed that his children didn’t take up the practice of walking the production floor to connect with employees. He was concerned about their commitment to the company’s values and success.

CFAR worked with the Wilsons to assess the company’s culture, starting with a diagnostic that sought to test assumptions about company values and their alignment with behaviors. They discovered that certain traditions, like John’s habit of walking the production floors to connect with employees, had lost their effectiveness as the company grew. Yet the value behind that practice – valuing people and their lived experience – was still critically important.

Through this discovery, CFAR helped Mechanized Solutions develop new practices to align with their core values. This included implementing new communication methods, investing in employee development, and holding regular town hall meetings. By embracing change and challenging assumptions, the Wilsons strengthened the bond between the family and employees, supporting a smooth leadership transition and positioning the company for continued success. For the Wilsons, ensuring the alignment of organizational behaviors and core values challenged the family to commit to engagement across generations. To learn more about the value of multi-generational engagement, go read “A Winning Combination: Cultivating Entrepreneurship and Continuity in the Family Enterprise” by my colleagues Debbie Bing and Eliza Orleans, which further explores the importance of deep engagement and values alignment across generations.

In navigating the intricate landscape of cultural tensions within family businesses, honoring founding traditions and values is crucial for identity, and it is equally imperative to adapt and evolve with changing times. The case of Mechanized Solutions and the Wilson family highlights the necessity of reassessing cultural practices to ensure that behaviors that may be rote are in alignment with core values and support business growth. CFAR’s approach underscores the importance of challenging assumptions, embracing healthy change, and implementing new practices that resonate with both familial legacies and contemporary business needs. By striking a delicate balance between tradition and innovation, family enterprises can foster stronger connections with employees, facilitate smooth leadership transitions, and position themselves for sustained success in dynamic market environments.

* Names have been changed to protect anonymity