Nancy Drozdow
Principal
My husband, reading the Playbill, looked up and said, “now I know why you wanted to see Kinky Boots – it’s about a family business and shoes.” He was partly right – I had gotten tickets without knowing the story. Still, family business stories are a magnet to me; I have worked with and studied family firms for the last 30 plus years, and the time only serves to deepen my appreciation for the courage it takes to stay in business across generations.
Two articles in the Wall St. Journal this week provoked these reflections. One led with the title, “Do CEOs of Family-Owned Businesses Work Less?” (WSJ, 3/6/14) Ugh. Why not draw the reader in via taking the easy route – replay the centuries old stereotype of family organizations as rampant with entitlement, do-nothing family members driven by me, me, me. Throw in the old saw, shirtsleeves to shirtsleeves in 3 generations. I might have skipped reading it altogether but couldn’t – ready for a fight. In fact the article actually goes on to be pretty balanced, citing research from HBS, the London School of Economics and Columbia on hours worked (as though that alone might lend insight into what success takes). Even though there was little academic research when CFAR started working with family businesses, today, 30 years later, there are volumes of study about everything from gender to decision making to strategy, all with the intention of illuminating what it takes to succeed. And a lot has been learned.
The second article centers on business strategy, with the family business context important but in the background (WSJ, 3/8-9/14). “In Digital Era, Paper Makers Manage to Fight, not Fold” highlights strategic adaptation, with the example of Mohawk Fine Papers, Inc., a third generation family business in NY. It tells a story of a business in serious decline at the advent of digital media, with the choice of figuring out how to stay in business or closing up shop. The founder’s grandson, President Thomas D. O’Connor, Jr., made a risky bet: borrowing capital to adapt, not leaving paper but figuring out how people would use paper in a digital world. It reads like an all or nothing bet – rather than dying a slow death, he leapt, even though he is quoted as saying: “People thought we were crazy for buying (an expensive machine)” that helped them move from commodity paper to specialty paper. How could he know it would work? He couldn’t. But my guess is he looked over his shoulder at his grandfather, and his father, and took strength from something they left behind, some set of beliefs or values or courage that was not a straitjacket (I’ve heard this straitjacket expressed as, “what would dad, or granddad, have done?) but a call to action. This is what makes family businesses so riveting – when pulled to their best, they find ways to do what takes serious fortitude to do, make bets for the future, often having to bring family equity holders along, taking big risks that are not just about money.
Which brings me back to Kinky Boots. A theater goer could get lost in the detail of the story and forget that it centers on a grandson who first wants nothing to do with the family business and then gets pulled back, unwillingly, until he finally listens to his employees and others around him, finds his purpose, and makes a big bet for the future, not to leave the shoe business but move into a line of boots for a special market. This is strategic adaptation. This is what research tells us is essential for continuity. Wow, even Broadway gets it.
Strategic adaptation, family relationships, hard work (regardless of where the hours are put in, or how many), the ability to reflect and learn – no wonder I am drawn to helping family organizations succeed. Who doesn’t want to be pulled to their best selves?
And this dynamic tension between family history and business origins, on the one hand, and the need to adapt and take risk, on the other, is what keeps our work with family businesses always fresh.
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