(Authors: Nadine Kammerlander, Cinzia Dessi, Miriam Bird, Michela Floris, and Alessandra Murru)
Research Applied précis prepared by Ken McCracken, Withers Consulting Group
Everyone will be familiar with a version of the entrepreneur’s story that celebrates the personal achievements of an individual who succeeds, sometimes after overcoming adversity through a combination of hard work and innate talent.
In some families, however, the story will focus less on individuals and more on collective achievement and the contributions to overall success made by various family members, often emphasising their shared values system.
The question addressed in this paper is which type of story is more likely to encourage future innovation in a family firm?
Heroic entrepreneurs can cast a long shadow over their progeny who find it difficult to innovate and author their own entrepreneurial story while acknowledging the achievements of their forbears. They find it is unacceptable to deviate much from how things were done in the past, whether the founder is still present and in control or has long passed away; or after the type of synthetic succession when control formally passes to the next generation but the surviving founder remains very much in charge.
In contrast, firms who emphasise the family in their shared stories frequently introduce innovations earlier than their competitors. Their story, it seems, is one of each generation contributing to continuing success, which creates an environment that is more conducive to change and less concerned about venerating the past. As one interviewee summed it up, “I learn from the past without sticking to it.”
The case study also reports that families whose stories emphasise the founder suffer more destructive relational conflict between the generations. This is due to younger family members feeling thwarted in pursuing their entrepreneurial ambitions.
This research was carried out on 41 small and medium sized Sardinian wineries, fully owned and managed by members of the founding family and having 24 employees (3 family, 6 non-family and 15 seasonal) on average. This tight sample avoided possible distortions, such as cultural factors, but it would of course be interesting and helpful for advisers if the research were expanded beyond such a homogenous group.
Table 1 in the paper gives a number of quotes from the research that demonstrates the impact different kinds of stories have on members of a family business.
In its present form the research provides valuable insights for advisers given that they are essentially helping clients during periods of change to agree and write the next chapter of their continuing story. In order to do this there is likely to be some break with the past through the introduction of new ideas, structures and policies but there is also a human need for the next chapter to link with the past and continue making sense. The discussion section of this paper is an excellent summary of the findings of this research project.
Given the importance of innovation for any family business to remain competitive, there may be opportunities for an adviser to encourage the narratives that will help support innovation. According to this research these will be in the third party voice and celebrate the collective achievement of the family rather than offer eulogies about the founder.
This could be a delicate process when the first generation entrepreneur stories have become firmly imprinted on the family, but periods of change are the best ever opportunity a family will have to reshape their stories. Advisers should take note.
About the contributor
Ken McCracken is joint managing director of Withers Consulting Group in London and the US. An FFI Fellow, Ken is also the recipient of The Interdisciplinary Achievement Award. He can be reached at firstname.lastname@example.org.