Perpetuating The Family Business : 50 Lessons Learned from Long Lasting, Successful Families in...

Perpetuating The Family Business : 50 Lessons Learned from Long Lasting, Successful Families in Business | John Ward | Perpetuating the Family Business

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Perpetuating The F...

	Perpetuating The Family Business : 50 Lessons Learned from Long Lasting, Successful Families in Business John Ward Palgrave Macmillan, 2004 - 256 pages average customer review:based on 5 reviews view larger image
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highly recommended

John L. Ward, a leading world expert on family business, offers the best practices of the most successful and long-lasting families in business, including Ford Motors, Marriott Hotels, Levi-Strauss, and the New York Times. He provides a framework of five insights and four principles in which to position his fifty "lessons learned" for family business longevity. This is a comprehensive book on sustaining family businesses that contains international examples, cases, essential tools, and checklists of best practices; a how-to every entrepreneur should have.

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Enlightening Lessons for Home & Work, New or Old

In a short book, John Ward offers many key findings & synthesized concepts (often surprising, even counter-intuitive) without wasting readers' time but with true-life examples enlivening his conclusions. His research & concisely presented insights match the multi-generational history of our multi-$B family holding company. This work should be on best sellers lists, not only because it is the "Built To Last" for private business, but also because it includes management principles that could be used in public companies seeking to endure.
C.U.

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Perpetuating the Family Business

Well written and researched, "Perpetuating the Family Business" is a "must read" for anyone interested in passing their own business on to the next generation. John Ward is not only experienced, but insightful regarding the dynamics that make or break families and family businesses.

A must read

It is simply the best book about Family Businesses that I read. Besides that, it is one of the few books in this field that has a conceptual structure.
It will be helpful to all people interested in the perpetuation of family businesses.

Clear, insightful, personal, terrific for business families

By 'clear' I mean relatively easy to read, this is not a textbook. Dr. Ward says himself that it is the most personal book that he's ever written, and I would say that it is his best. Because it is insightful.
One example: of the Five Insights and Four P's, one is 'Policies before the need'. This is something that I've been begging business families to do: establish a policy manual with rules for this and that occasion. Just because your family business is relatively small and simple today does not mean that you can delay.
A problem with other books on the subject is that they are written with a certain kind of family business in mind. This one, however, mentions the first three stages of family business evolution, and lists the 50 lessons under one stage or the other. Most helpful!
Appendix C: A Family Business Checklist made me stop and say "Hey, this question isn't for my business yet." but that only means that if the question and its answer is not appropriate for your business yet, it is still beneficial to start planning and educating. In other words, what is not needed by one generation is essential to the next.
Families in business: listen to this wise man, communicate, and educate.

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Although it's short, it's a very informative and insightful read on family business

I'm an avid reader of family business books, and I recently re-read Perpetuating the Family Business by John Ward and found myself tabbing numerous pages that contained insightful and important ideas that just about every family business can put into practice.

Ward begins by laying out his conceptual foundation for familes, which contain his "Four P's" - 1. Policies before the need; 2. sense of Purpose; 3. Process; and 4. Parenting. Understanding and practicing the four P's should provide families in business with a decent start in the right direction toward developing a sustainable and successful family and business.

The heart of the book contains Ward's "50 Lessons" for family businesses, broken down into three sections: lessons for owner-manager businesses; lessons for sibling partnerships; and lessons for cousin collaborations. At the end of each section he briefly applies the lessons to the story of two media families: the Och-Sulzberger family (of the NY Times) and the Binghams (the Southern US media family) for illustrative purposes. Below I've set out a few of my favourite lessons from the book.

Lesson 2: Irrevocable Retirement.
Ward highlights the importance of family businesses establishing mandatory retirement policies for executives. As he states: "While a mandatory retirement date addresses the delicate issue of the leader letting go, it does much more than that. The value of a mandatory retirement policy is that it creates the opportunity for more changes in leadership in the later stages of the business." Family member executives in family businesses often have a hard time 'letting go' of the enterprise, creating all kinds of problems for the next generation of family (and non-family) executives who's professional and personal development is often retarded as a result. Also, mandatory retirement will force family executives to find a 'life beyond the business' - perhaps turning towards a leadership or mentorship role in the family or community - that will continue to provide them meaning in their lives.

Lesson 4: Principle of Merit.
Ward argues that families should put in place policies that focus on competence and earned privilege and discourage paternalism. Merit should impact many areas of family business decision making, including what roles family members should play in management of the business; determining compensation; selecting successors; who serves on the board; etc.

Lesson 5: Attract Most Competent Family Members.
As Ward observes, family businesses often fail to attract the best family members into the business because the most competent family members often have opportunities elsewhere. He states that failing to adopt the Principle of Merit (Lesson 4) will result in the business attracting the least competent family members while those who are the most competent search for opportunities outside the business where their competence will be recognized and rewarded.

Lesson 10: Understated Wealth.
One of the most complicated issues for larger family businesses is how to deal with the privileges and responsibilities of wealth. Ward doesn't suggest that families pretend to live in poverty, but suggests that living beneath one's means is a good route to take. He warns that families who do not practice this concept can run into the situation where the salaries of family members in the business can escalate rapidly and compromise the business.

Lesson 12: Graceful Pruning.
The idea of discouraging family shareholders from exiting the business is one that many families often follow - especially once ownership has left the founding generation. Family members often ask questions such as: Why should my kids be able to sell their shares and walk away from the business I've built? or, Why should my nephews be able to force my children to buy their shares and put them and the business in a problematic financial situation? Ward argues that mandating that shareholders wishing to exit do so at a discount to their real value is a bad policy for family businesses to adopt. According to Ward, families should make it as easier for individuals to sell their shares (even offering a premium to their value) as doing so will allow unhappy family members or those not engaged by the business to leave freely, resulting the family being owned by family members who genuinely want to be owners.

Lesson 16: Selective Family Employment.
According to Ward, it is better for families to set policies that create higher standards of entry for family members wishing to join the business. Doing so will encourage the most competent family members to join the business and will preserve upward mobility for able non-family employees. Increasing the amount of outside work experience and education over generations should result in increasingly selective policies.

Lesson 25: Legacy of Values.
In my opinion, the concept of a shared set of values is probably the biggest factor contributing to the sustained success of select family businesses. Ward states that the business should serve as an example of the family's values, and also that the business can contribute to the values of the family.

Lesson 28: Spirit of Enterprise.
Families that consider themselves as being "in the business of business" are more likely to be successful over the long-run than families that are strongly tied to the specific business that the founder created. While attachment to the original business is common, and selling the business or re-orienting it in new business areas might be troubling for those who built the business, they should see their success not as creating a business that does a particular thing, but creating a family that shares their love of enterprise.

Lesson 45: One Family.
This is probably one of the hardest lessons for many families to adopt. Many families that extend to a sibling partnership and beyond tend to adopt practices and policies that view the family as 'factions' or 'branches' - e.g. allowing each branch to nominate it's own director. Ward argues that families should avoid this state of mind and the practices that go along with it. Instead, he suggests that families should view themselves as 'one family' regardless of which branch individuals originate from. Adopting the 'branch' theory results in too many family members on the board, promotes tension and rivalry, and allows family feuds to continue. A family that adopts a one family approach should be comfortable with one family representative on the board of directors, knowing that the individual will represent the interests of the family and will not be motivated by self-interest.

In summary, I think Ward's book presents many interesting lessons and can serve as a very good resource for new ideas for families seeking to improve the governance, communication, and ownership of their family and business.

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