Monday, December 5, 2011

Family Business: A natural subject for the business anthopologist

"Generation to Generation: Life Cycles of the Family Business" is, in my opinion, a major contribution to the study and understanding of the complex nature of this most basic of human occupations - the family business.

As a business anthropologist, I found the life-cycle model applied to the study of the family business eye opening from both an academic and practical perspective.

There is a saying among family business owners and consultants that expresses the folk wisdom of about the family business as an institution and enterprise. It goes something like this , "The first generation creates, the second builds, and the third consumes the family business."

A business is an institution and organization created to perform the function of making money, i.e. producing an income, for the owner(s) by producing a good or service to meet a public need. The business can be as simple as the one person/owner/operator start-up shoe shine stand at the airport to the $7.5 billion a year 5th generation conglomerate, S.C. Johnson & Sons.

Although each is uniquely different, yet each will face, now face or has faced, the same challenges and crisis to its survival outlined in this model.

Gersick, Davis, Hampton and Lansberg develop a life cycle model for the family business that explains in clear, objective and sound social science terms why there is so much truth to this folk wisdom. The authors define the three key domains in which the family business exists and in which it must survive. Each of these domains has its own dynamic and its own life cycle. Each responds to different and sometimes conflicting demands from its environment.

These domains are the business enterprise, the ownership, and the family. In order to understand and effectively manage a family business, the founder and his/her successors must understand how these three domains are operating at any particular time to create opportunities and threats for the business.

The life cycle model draws upon the principles of business ownership models as established in corporate law, the dynamic theory of organizational life cycles and management structures, and the theories of human and family development found in psychology, sociology and anthropology. This comprehensive, integrated model focuses on the business enterprise as a institution and is explained using examples from real family businesses and corporations. It addresses the basic survival problem all family businesses face -- succession. But more than that the authors clearly outline the issues and alternatives at each phase of the life-cycle for the enterprise and the key actors in the family and the enterprise.

As a consultant/business coach to family businesses, I find the insights here validating of the observations I have made and experienced in my practice with clients. I also find it reassuring to see how the holistic approach, which takes all three domains into account, can produce an outcome that will satisfy the personal and business objectives of all the interests involved -- the business, the owners and the family.

I strongly recommend this book to anyone who owns, operates, is part of, or interested in family business. "

No comments: