Every Business becomes more Family Business

Just had lunch and another stimulating conversation with Ollie Glass, our new creative technologist at NixonMcInnes. Ollie is a very clever and interesting guy.

He passed on this ‘off-hand remark’ that someone had made about how family businesses have tended to outlast corporations where the shareholders are, I’m guessing, not tied by family. (Will see if I can dig this out, but for now I want to play with the ideas rather than get into the data).

What this got us thinking about was what is it about family business that leads to these long-lasting dynasties? And what, if anything, can non-family businesses learn?

For me, family and business are two words I’m not keen to mix! I have a strong desire to keep different parts of my life quite separate – family, work, friends. I like the clarity and the ease that I feel comes with that. And I also really need and value the sanctuary that family gives me from the mental demands of work. It helps me to have them apart.

I also hate the idea of tip-toeing around a family that work together, or worse, of me and my family inflicting our bickering onto them. Could anything be worse than that?! 🙂

But when I think about the potential goodness that can exist in family business I start to feel that there could be some enormous good in there for the wider business community to take inspiration from.

When Carole Leslie from the Employee Ownership Association visited us a few weeks back to talk about employee ownership she told us that one of the most common paths to employee ownership was a family business where the founder wanted to pass her or his company on to their children, but the kids weren’t interested.

In order to keep the culture and fabric they’d built, they looked to employee ownership.

So what is it they fear and resist about, say, the trade sale – the most common alternative? What is it that another business cannot provide?

And if family businesses last longer, is there something about their fabric, their shareholder mindset, the decisions they make and the priorities they place on things that the rest of us can learn from?

Thinking about shareholding in particular, is it the connections between the shareholders that do something good in family businesses, rather than the federation of individual interests all pointing towards a single objective – capital appreciation (and I guess, dividends) – with corporate shareholder bases?

Or is it the shared values? Or the drive for legacy and dynasty? Or the personal reputation, the realest of real skin in the game?

As we begin to work towards an evolved 21st century kind of business, are we actually heading full circle – returning to long-standing and long-lasting principles that millions of enterprises have been built on since civilization began? Will every business become more like the good parts of a family business?

What is our organisation’s change velocity?

One of the things that marks out today’s cadre of digitally native businesses is their ability to change very rapidly. And their propensity to do so.

For me it’s one of their most violent and disruptive advantages.

They eat away at industry incumbents through their ability to whip through the OODA loop many times faster than the old guard.

Another change! Another change! Another change! POW.

I am thinking Amazon vs. Barnes & Noble / Waterstones, Netflix vs. Blockbuster, Threadless vs. GAP.

And related to this, one of their other great emerging characteristics is their ability to u-turn. By u-turn I mean not just product innovation. This is wholesale changes of direction.

Whatever you think of it, Facebook has been absolutely brilliant at doing something, hearing a load of feedback, and doing a public u-turn within hours or days. It doesn’t always, and has returned to the same initiatives and goals over time, but the Beacon turnaround sticks out – though there are others. See this Google search for “Facebook u-turn” – 999,000 results (same search for “Google u-turn” returns me 18,200 results, and for Apple 19,400).

I thought of this characteristic again having followed the interesting Netflix story lately.

If you haven’t already heard, they made some bold changes to their product – divided the whole business in two with no consultation, called the DVD mailing business Qwikster, kept Netflix as the solely-focused streaming business.

The outcry has been sustained, and numbers have backed up the complaints – some commentators say this is hitting Netflix’ business.

Now I read that, 23 days later, they’ve reversed the decision – That Was Qwik: Netflix Dumps Qwikster, Won’t Split DVD-Streaming Accounts by paidContent

I always admire a u-turn:

1. You tried to innovate and make change – that takes guts and brainpower

2. You listened – that takes ears!

3. You are humble enough to publicly admit you were wrong – that takes guts

A couple of the qualities we at NixonMcInnes most want to see in businesses and organisations in the future is the ability to hear/see and then to change. We are starting to think about this agility and openness as a characteristic of Social Business.

Now having begun to write this I realise that before this little phase of reading and writing I just got off a call with a team in a gigantic multi-national bank.

Some young talents in a development programme for top potential future stars have been working on launching a business innovation. Their biggest challenge is what they describe as the internal ‘conservatism’. Making change in that organisation is really really hard. Scarily hard when you think about the above.

A mate of mine has worked his whole career in sales. He is a proud salesman through and through. And he half-jokingly introduced me to one of his favourite concepts a few years ago: “revenue velocity” – not how much work the client needs doing in total, but how quickly they need or want to invest that budget. At the time I find it a hilarious encapsulation of his persona both good and bad (though in time running this services business I’ve learnt to appreciate some of the wisdom in it).

But it makes me think about an organisation’s ability to change quickly – would it be too cheesy to think about the change velocity of an organisation? Perhaps change quotient or potential is better?

Right now I am wondering about our change velocity 🙂

In the virtual organisation, where is home?

There’s this huge momentum towards fluidity at work – to remote working, to portfolio careers, job sharing, the rise of ronin / freelancing, work life balance, Skype, yammer and the Cloud and so on.

For us as individuals, as workers, there’s lots to like in all of this. We are unleashed! I can work from anywhere! When I want, how I want, with who I want (and so the dreamy hype goes).
And there are – of course – tons of benefits for organisations and businesses too who have been keen to capitalise on these.

But in this working world, if we are all remote and virtual and part of loosely formed networks around projects that quickly form and then dissolve, then where is home?
Where is the centre of gravity that binds and anchors and provides that sense of HQ, of the mothership?

We know what we gain with fluidity, but what do we lose when this base goes, both as workers and business owners?

This all occurred to me after a week where I spoke with two different Managing Directors of consulting firms, both much more fluid than NixonMcInnes.

One firm was entirely geographically distributed across the States, with 20 people peppered across the whole country. Their consultants were mid- to late-career, so pretty grown up, experienced business people and the consultancy operated a reasonably traditional ‘eat what you kill’ mode of rewards. No central staff, no support or admin people not earning fees, no geographical centre of operations. Certainly makes sense from a financial bottom-line point of view.

But not everything about the consultancy was traditional – like us they do some more radical stuff in how they work together. Their MD told me that they tried to get everyone together three times a year. THREE TIMES, I thought, as I thought of how frustrated I get when we struggle to get a decent turn out for weekly team meetings, given all of the important, useful stuff there is to relay and the constant challenge to satisfy people’s desire to know what’s going on.

The other MD runs a consulting firm also in Europe that does have a centre of gravity, an office with a small central staff and then consultants distributed in different countries, all working from wherever they want to work from. But we were talking about how that might not always be a good idea commercially.

The third thing rattling round in the same tumble-dryer of background thinking was the 37 Signals case study of distributed team, connected by digital tools, and their Meetings are Toxic mantra. They are world class in what they do, they seem to do ok without lots of face to face meetings – theoretically one of the key benefits of a central HQ.

And these conversations and thoughts made me think about what we’ve been doing with NixonMcInnes.

We’ve been deliberately developing a real physical heart, and so have invested our office space, in having administrative and marketing support, and in developing a cohort of people living and working in the same county, and almost entirely in the same city.

It’s like we are walking directly against the tide. And that’s confusing (although not unusual for us).

I wonder what organisational benefits we derive by having a home. Or are we just doing it because of the preferences of the people in the organisation, and if so what does that cost us and do we acknowledge that?

Also, do we gain competitive advantage? If we compete with a distributed firm, are we more likely to win or is the playing field level apart from the extra financial resources they have saved from central costs?

In theory, I would expect benefits to show up in areas like these:
– in trust, resilience and therefore quality under pressure in the relationships between team members leading to client retention, referrals and project profitability
– in people’s happiness and engagement at work (even as I write this one, I’m starting to question it) leading to talent acquisition and retention
– in communication between team members which then drives quality to clients and profits for the company through saved time (again, I can quickly think of counter arguments…)
– in pitching for clients business, and them having the comfort of the physical tangible sense of a team and a business (having seen the networked agency model many times I am actually more confident of this point for the time being though I think it will change over time)

Are there others?
Are these flawed, am I drinking my own Kool-aid?

The thing is, I know I want to be part of something and to me personally I like the physical part of that, the offline, the home. And I believe others do too.

But there is a tidal force here. And a string of benefits as well as costs that we are only beginning to understand.

Given all of this, I do wonder with some interest how the traditional physical centre of gravity at the heart of an organisation will change in this next generation of work.