Resilience and Trust: What Leaders Can Learn from Family Businesses

Did you know that some 60% of the world's workers are employed by family businesses? Family businesses not only survive, but thrive during turbulent times, making it through market failures, environmental disasters, and even wars. Hello, I'm Chester Elton, and with me is my dear friend and co-author, Adrian Gostick. Well, thanks Ches. Our guest today will help us understand the strategies used by these great family businesses to create what they call islands of trust, resilience and prosperity amid persistent turmoil. Now, these are tactics that can be deployed by any business leader coping with extended periods of volatility and who isn't today. As always, we hope the time you spend with us will help reduce the stigma of anxiety at work and in your personal life. And joining us are our new friends, Devin DeCiantis and Yvonne Landsberg. Devin is a managing partner at Landsberg Gerstic Advisors, or LGA, an advisory partner to leading family enterprises worldwide. He holds a master's degree from the Kennedy School at Harvard with a focus in finance and economics. Yvonne Landsberg has a doctorate from Columbia University and taught organizational behavior at Columbia and then Yale before moving into consulting. You can't see us, but I wore a jacket with patches on the elbows. It's as close as I'll get to being a professor. I just wanted to give you a heads up on that. Devon and Yvonne's new book is The Enduring Enterprise, How Family Businesses Thrive is the enduring enterprise, how family businesses thrive in turbulent conditions. We are delighted to have you with us on the podcast. Thank you so much for finding the time. Thank you. Thank you for having us. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. chip companies as the drivers of capitalism, but you both say that family businesses are more enduring. I don't think there's a question in our minds, but maybe some others might need some convincing. Walk us through what we all need to understand about the impact of family business on the world. Thanks, Adrian. I remember when actually Yvonne first introduced me to the world of family business years ago. It was an eye-opening experience throughout business school, throughout policy school, and then ultimately working for some leading global institutions. Family businesses were rarely more than a footnote or were either lumped in together with other small and medium-sized enterprises or were possibly used as cautionary tales like the tormented families depicted in various HBO series and Hollywood dramas. But Yvonne really did help me to discover that not only are family businesses among some of the most pervasive organizational forms around the world, but they're also some of the largest and most enduring. And just search the internet for the oldest companies in the world and you're going to find that family businesses are disproportionately represented. You look at all these studies like Jim Collins and the good to great and built to last, and again disproportionately represented there. So outside of the US and UK, where many of us are based in the English speaking business world, and maybe a few other countries where there's strong centralized government, enterprising families actually represent up to 90% of all business activity, employment, research and development in the respective countries. And they're also deeply committed to the long-term and to their communities, which means they're more naturally attuned to the slower moving systemic challenges like climate change or rising social tensions and demographics and so forth. And as we profile in the book, given how pervasive they are, especially in emerging and frontier markets, they're also naturally attentive to managing risk and skilled at navigating through crises, which tends to help explain why they're represented among some of the more enduring organizations out there. Yeah, the other reason why we don't hear that much about them is that families often keep to themselves, right? So, you know, you, you know, as a client of ours once told us, happy people have no history. So it, you know, they go under the radar and as Devin says, they really do have some particular qualities that make them particularly resilient, like in addition to the ones he mentioned, the concern for quality, for instance, the fact that the family's identity and name is tied to the products that they make or the services they deliver, but also they are particularly attuned to the world we're moving into. That is, you can have a family business without developing your capacity to manage contradictions and paradoxes, right? So how do you deal with your relatives while at the same time impose on them standards of performance and accountability and all of the things you need to make a workspace, you know, functional and effective. So the tension between that leads to, you know, a capacity to deal with uncertainty and paradoxes that is unique to these systems. That is fascinating. You know, already we're off to a great start. And by the way, this idea of happy people have no history, you can't find Adrian Gostick anywhere, you know, three years ago. He just appears. An avatar, heard about you. You're doing something right. He has no history. So this is really fascinating, and Adrian and I have done some work with some really interesting family businesses that we'll share with you in a minute, but what can leaders who may not work in a family business learn about thriving, particularly during the times of your research? How can your research, you know our podcast is called Anxiety at Work, how can your research bring down anxiety for everyone, whether they're in a family business or not? You on, you wanna take that one? Yeah, I mean, to me, first of all, the assumption that the world is in fact unpredictable, that we've been living particularly in advanced economies inside a bubble, and that those bubbles have certain cyclical, they have a cyclical nature to them. So the very fact that you rise, you know, you raise your tolerance for that kind of uncertainty and appreciate when you have stability and try to, you know, find comfort in that, but not so much comfort that you then don't prepare for the inevitable downside of that stability. And I think that in itself gives you a sense of mastery and control over the risks that you're inherently taking, which is a much more effective way of dealing with it than just walloping in denial that these things don't exist. Excellent, what would you add to that, Devin? Well, I think that the first thing that occurs to me and this we capture in some ways in the book is the idea of the inverted u-shaped curve and the relationship between stress and performance. That too little stress ultimately can lull us into a false sense of security and complacency and too much stress can shut us down and paralyze us and so ideally there's some combination of resilience building of stress in your environment that keeps you on your toes and that's good for our bodies and for our families but also for our organizations and for society as a whole and I think that's one of the reasons why you're seeing a lot of writing and talking about resilience these days is that, as Yvonne has said, we have been over the past half century or more in a bit of a golden age of stability, if you will and during that time we haven't really experienced at least in the privileged few countries that make up the advanced economies of the world a protracted period in which we haven't had to face other than the occasional economic dislocation or turbulence and conflict far, far away. We haven't had to deal with the kind of stresses that are endemic to emerging in frontier markets and unfortunately which appear like they are looming just over the horizon even in advanced economies. Yeah, no kidding. It's kind of like the black swans as I think Nassim Taleb talked about. Yeah, that may be coming, who knows. But you say in the book that most organizations, most leaders are not prepared to deal with shocks and uncertainty. Why are we so maybe naive with what's coming or unprepared? Talk us through that a little bit. What we can do perhaps. Sure. The point is not of course to fear monger here and get everybody to shut down. The point is to appropriately attune everybody to the reality that we've been in perhaps one might say the eye of the storm. And so the exception to the rule is stability in the long sweeping arc of human history and many leaders who've been born and raised and live in New York, London, Toronto, Sydney and so forth, places we might describe as these privileged bubbles of stability and prosperity are really unfamiliar with how to operate under more turbulent conditions. For them, crisis is the stuff of science fiction, not the daily grind of management. They're accustomed, for instance, to reliable access to capital and to labor and to justice and to infrastructure and have little intuition for how to survive and thrive without these critical institutions. Much like our immune system, all organizations occasionally need to be stress tested and this ensures that they can operate not simply when conditions are smooth and standard but also when tested, the extremes. And we came across in our research this so-called hygiene hypothesis, which I think represents a really interesting perspective on this that probably connects most viscerally and naturally to folks, which is from biology and medical science. It turns out that the closer that we live to a well-developed health system, the weaker our immune system tends to be. And that's not, of course, by choice. We don't choose to have a weaker immune system, but simply as a proxy for our proximity to access to care, our bodies don't necessarily build in that resilience internally. We don't have internal coping mechanisms in stabilizing infrastructures. And now consider a less stable and predictable environment where shocks and crises are commonplace, and the business leaders there are more prepared to wake up one morning and discover that one of their manufacturing plants has been expropriated or that critical infrastructure was wiped out in a mudslide or that the local currency suddenly lost half its value or new trade barriers have been erected or the regime change that is plaguing the news cycles today in places like Syria and South Korea and parts of Africa. This is becoming a daily occurrence, but for us it happens far away and very rarely, and for them it happens, I don't want to say all the time, but certainly more frequently, and so they're better braced for that impact and are able to more agilely navigate through those tumultuous waters. You know, I think that is fascinating. I remember, you know, Adrienne and I both grew up in Canada, Devin is up in Toronto, and when I moved to New York, I was fascinated by how many Israeli companies were doing so well, and how they could navigate all the changes in the marketplace and ups and downs so well. And you just explained to me why, because they are constantly in a situation of threat. I wanted to share with you a story about a company that Adrian and I have done a little work with. I got to meet them in Italy when I was speaking at a conference in Bologna, and they have a family business in Venice. It's a glass company in Murano, Murano Glass. So I'm talking to them. It's the Seguso family, and I said, so it's a family business. They said, yeah. I said, so how many generations has it been? They said, 23 generations. They started their company in 1397, so I did the quick math. That's a company that's been around for 627 years. I mean, that's before Columbus sailed for the Americas. I want to put that in perspective. Now that you're talking about this, about the succession and bringing up the next generation, I'm really curious. We talk about the wars and so on, the research. Talk to us a little bit about the succession plans in family businesses. You know, Devin, you mentioned earlier that often you hear about family businesses because of the infighting and the drama. And, you know, they just were talking about Fox News and all that going through that family. Obviously, there's lots of family businesses that do it really well. What have you found in that succession planning that the really good family companies do that, you know, and companies that aren't family businesses don't do well, right? Maybe Ivan, you could start us off. I'm happy to talk about that. You know, first of all, the companies in Murano are amazing and many of them are, as you say, you know, legendary for doing these kinds of continuity activities effectively. First of all, they are wonderfully, they're in wonderful niches in the economy, right? So they bring a kind of artisanal mindset to the work and huge pride in being craftmen, you know, to, and the kids in these families grow up around these companies. So they're learning the business without even knowing that they're learning it. You know, they come in, they play the boundary between familial activity and work is very permeable, right? So work comes to the family and the family comes to the workspace, literally. I mean, they're physically next to each other. But also there is great pride in mentoring the next generation, right? So, you know, these are people who enjoy what they do and that kind of zest for the activity itself is contagious. So the next generation immediately, you know, get caught into, if you will, the momentum of producing beautiful art, you know, producing beautiful glass pieces. And then each family has its own trade secrets, as it were, you know, the things that we do because, you know, great granddad taught us to do it this way. And that's a unique, you know, sort of source of pride that also gets passed down. And of course, the very pride of ownership also glues the family together. So you have a kind of reinforcing cycle of familial activity and work activity that is a hybrid. Yeah, you know, it's so interesting because I've gotten to know the Seguso family quite well. And, you know, Pierre Paolo, you know, who is now the patriarch, his son Marco is what, 12 years old and he knows how to blow glass. I mean, and there's no doubt in his mind that he's going to be a glass blower and he's going to be in the business. It is fascinating. I really appreciate you bringing that in, the trade secrets, the craftsmanship, you know, the niche of their business and that their name is on every product, right? It's Seguso Glass. It's not, you know, American glass or the glass company from Toronto. It's Seguso glass. And there's that passion. There had to be somebody in the mix, though, who wanted to be a dentist or something. You know, and it had to be. You bring up a really good point, because families that do this well also don't make it a life sentence, as it were. They give it. Now, the notion is if you convey to the next generation the kind of enthusiasm that we're talking about, they will naturally gravitate towards the enterprise. But there are some who wanna be doctors and lawyers and scientists and artists in other fields and so forth. And then you don't lay a huge guilt trip on them, you let them go. And then they become proud owners, right? So they don't have to be involved in the actual making of the products, but they can belong to the tribe through the path of ownership in a way that's sustainable. You know, one last thing on this is, it's really interesting that several of the family did go off and had other careers. Almost all of them came back to the business at some point. So I think that's really interesting. They go off and get an education, they work in another business, and then it's kind of like, yeah, but I'm a glass guy, you know, and so I'm coming back to the business. Fascinating. Thank you. You know, one, one, one, uh, I had a student once who came from a family in Tuscany that had a, an olive oil farm that, uh, was around the same and that was founded around the same time, right? So in the 1300s in near Siena. And she just took great pride, not just in being a family member, but in connecting to all the other family members that are now in the thousands, literally, who have, you know, who have spread throughout the world and, you know, gone into fantastic careers elsewhere. So, the way she put it to me was, if one of my kids gets sick, before I call the pediatrician, I get on my roller decks for the family and I actually find who's a doctor and I call them first and they immediately pick up my call, give me their advice, and then I go to the pediatrician. The familial network is in itself an asset that they curate with great care. And you know, to this day, they come together in Tuscany to celebrate the pressing of the olives. And it's a sort of medieval festival with all the cousins that can come, and that gets sustained over time. Well, I mean, Ivan, isn't this your story too? I mean, you grew up in Venezuela. I remember reading in the book, but you were a part of a family business, but you went off to do something else. Tell us a little bit about your experience. And because I know your company, you were working on succession planning and you hit some hard times. Take us a little bit through what you were. Thank you. My father was originally Dutch. That's what my name is, so I'm particularly Latin sounding. He was born in Curacao, raised in Holland, and then came back to Curacao during the war and married my mom, who was Venezuelan. So he started an insurance brokerage business in Caracas. And the business grew to be very significant. It was one of the sort of main insurance groups of Latin America, they were well beyond Venezuela. So my dad was planning succession, I'm the youngest of three kids, my older brother was working with him, he's eight years older than I was, and the succession essentially didn't work. So I was in graduate school, seeing all this unfold in my family, and I got very curious about family companies, and back then there was no research in this area. So, but it did open my eyes to the very points that Devin was making at the front end of the call, which is, you know, family businesses are ubiquitous and they do face some inherent challenges, succession does pose an important challenge in many of them. And there's a whole distribution, some manage it beautifully, some do a terrible job of it. I mean, the middle, there is the proverbial bulk of family companies that with a little bit of help and education can actually do it better. So when I graduated out of Columbia, went to Yale, started doing research on this area and have devoted the bulk of my life to it. So that's essentially the story. Devin, you better tell us about Canada. That's a far left exotic, Adrian. You know, one of the, we know one of the safest places, friendliest, but that's got to have shaped your view on this topic too, where you come from. Certainly on the one hand, as with most who have again grown up in these environments, it does anesthetize you a little bit to some of the dramas that are attendant to growing up in a place like Caracas, you know, the murder capitals of the world. So growing up in the relative safety and stability of the Great White North, you almost have to actively seek out riskier environments. And some of those in the context of Canada are, you know, the great wilderness that is outside of our major metropolitan areas. And so I joined the Boy Scouts when I was younger and got involved in a lot of pretty adventurous stuff. And, you know, in that sense, I got an early taste of it. And then later in life, travel both for business and pleasure took me to all sorts of exotic locales, helping enterprising families as well as just exploring the world. So these phenomena are abundant in those places. And then when you come back home, it's really easy to perceive of the contrast. I can't tell you the number of friends of mine from around the world, especially emerging in frontier locales that visit or come to school in the US or Canada, and the first thing they notice is just how safe it is. People aren't locking their cars, how they can walk down the street and not have to look over their shoulders or feel like their kids can go out and play without having to worry about their safety. And it truly is fundamentally different to live and work and play in these environments. And that's something that unless you go and see those other places, it doesn't necessarily come naturally to you. So I've experienced risk through contrasts. And though I don't live in some of these exotic locales, I do often visit them. And so it's always an eye-opening experience both to go and to return home. And with your proximity to good health care, I'm guessing you have almost no immune system. With a couple of young kids in school, my immune system is being built up anew, even though I'm pretty close to the hospitals here. But, you know, even though he grew up in Canada, he also comes from a Lebanese family, so a Lebanese-Italian family, so he's got uncertainty in his blood streaming out. Excellent. If there's anything epigenetic about this, I've certainly inherited some of that too. Hey, listen, where can we find more about your work and your book and your consulting practice and all that good stuff? Fill us in so our listeners can get a hold of you. Yeah, sure. This is really the culmination of almost 10 years of research at this point. I remember the first time Yvonne and I presented at an industry conference when we were first laying out some of the early hypotheses that hadn't yet been tested. I think it was back in 2014. So there are, you know, videos and articles floating around the internet about some of this stuff, but all of that research really has culminated at this point in the book that we've just written. And we've tried to gather all of our latest thinking. Of course, it's at a single point in time and so forth, but it is probably the best place to see the ideas and cases which we hope in fact will provide some fresh insights for leaders everywhere as we enter this new age of uncertainty. And those interested in learning it of course pick up the book or listen to the audiobook and then we'd love to hear what folks think, you know, if these ideas resonate, what we got right, what we might have missed, because this is a work in progress and we recognize that there's still much for us to learn and we're happy to be conduits of that information, gathering it from those who are interested and then sharing it with those who are similarly interested in finding out more. And I should say in the website to our firm, there is a whole library chock full of articles and videos and you name it, all applied to family enterprises. The bulk of our work is really helping families, you know, organize themselves, a bus, the CEOs, basically. So most of our work is with the owners themselves. And many of the companies we work with are companies that have been in business for many generations. And in one case have as many as 1500 descendants of the original founders. So they're like little public, privately owned public companies, if you will. Like 1,500 cousins running around, some of whom are owners, some of whom are in management, and all of whom are friends. That Christmas card list is just ridiculous, yeah. Give us the website again for your company. It's lga.global. Excellent. Hey, this has been such a great energizing conversation. I've learned a lot and taken lots of notes, but give us something to close on. Ivan, we'll start with you. Just give us a couple of takeaways after going through all this research that you'd like our listeners to take away, whether they're in family business or not. What have you learned that maybe we need to take to heart here? I think some of the key lessons that all organizations can learn from family companies operating in these environments are things like, you know, it's critical to build a shared narrative, you know, that spells out why you're doing what you're doing. You know, companies, particularly if they've been around, you know, the purpose of the company begins to fade into the background. And before you know it, the owners themselves don't understand why are we in this business? So taking the time to really flesh that out, put it front and center, make sure you got an answer for why are we together? That matters enormously. It's important, particularly if you're, you know, beginning to hit hard times that you also take care of yourself, right? If you're in a leadership role, these leadership roles, you know, you are a little bit of a lightning rod for all of the stress that gets kicked up by the system. So, you know, just like we say, when you board an airplane in case of trouble, put your oxygen mask on first before you start helping other people. Make sure that you find moments of renewal. If you are in a troubled area of the world, take some short leaves, you know, so go somewhere you can sort of calm down and sort of take some distance from the immediacy of your stressors. And very importantly, manage your stakeholders in a thoughtful way. You know, one of the great things about families is that they are networks and they really do look after their employees. They're almost like, you know, sort of adopted members of the family. They look after their partners. They look after their providers and their clients, of course. So making sure that you're thinking strategically about how to curate your network of stakeholders, I think, are all very important lessons. Wonderful. Devin, what was that? Yeah, I couldn't agree more with Yvonne and in addition that I just had two other thoughts one is that all leaders and frankly all of us as employees the citizens of the world ought to treat crisis as Endemic, you know just stay vigilant Don't be lulled into a false sense of security by the current stability that you might be enjoying It doesn't mean you have to hyperventilate and worry about the worst-case scenario scenario, asteroids falling from outer space and shark attacks and all the other things that, you know, that represent the long tail of risk, but that we should plan proactively for disruption and recognize that that could happen at any moment, even if it's ten years from now, it's best to have the plan and not need it than to need the plan and not have it. And the other is to find a way to balance growth and resilience. It comes very naturally to most organizations to pursue efficiency and profit in the shorter term and ultimately in the longer term aspirationally. But oftentimes that forces us to lean into the blind pursuit of profit if you will without beginning to plan or prepare for longer term survival. So we tend not to invest in some of these broader structural risks that we know that are looming just over the horizon. Excuse me, whether it's climate change or longer term demographic trends or geopolitical tensions, these are things that might seem like a distraction in the daily grind of the work that we do, but at some point in some part of the organization, somebody needs to be looking at those risks and tracking them so that if they do become more pressing and prevalent, that we've got at least a playbook to begin to respond and we're not making it up on the fly as a... The only other thing I would add is that, you know, planning is everything, you know, but sometimes people say plans are worthless, but planning is everything. And I truly believe in that construct. Because when you exercise planning, you're anticipating things that are already, strengthening your immune system psychologically to be able to respond effectively because you've already saw that that might be a risk. So that becomes a very important component. Wonderful. Hey, this has been so enlightening and so engaging. Thank you so much for the time. Their new book is called The Enduring Enterprise, How Family Businesses Thrive in Turbulent Conditions. Pick up a copy wherever fine books are sold. Thank you so much for your insights, for your enthusiasm, and for your wisdom. We really appreciate your time. Take care, my friends. Thank you for having us. So, Adrian, you and I have a little business. We sometimes call it the family business. We have not been in business for 627 years, although sometimes it feels like it. What were some of your takeaways from this? I found it fascinating. Me too. How do I even start? I'm going to start with something Devin said, that we've got to start realizing stability or the exception to the rule is stability. We've got to plan, we've got to be ready for turbulence because so many of us find, oh my gosh, you know, there's been a downturn, there's been this, that, or the other. We've got to be more ready for a lack of, like you said, capital, labor, justice, whatever happens to us, let's start being more thoughtful, not panicky, but just more thoughtful. Yeah, the crisis is endemic, you know, isn't it interesting? And you do, you think about, you know, we've lived in the States, we've had this prolonged, you know, era of prosperity. Even through the pandemic, we managed it so well. We've got Devin up there in Canada going, yeah, no, listen, it's safe. We don't lock our cars or any of that. I really found it was interesting, that succession planning about the reason that family businesses survive is because of the pride they have in the product. Often their name is on the product and that means so much. The quality has to be there, the delivery, the experience, whether he's talking about Olive Pressing or the insurance company or Seguso Glass. I thought, you know what, that's right. When you join a company and it's transactional, you work somewhere for five years, you go to another place for five, there's not that emotional connection to the product. You know, we experience this, right? Every time we write a book, it's Gossikin-Elton. We take great pride in that. It's just not another book, it's our book. Yeah, yeah, if you put your name on it, it changes things. Yeah, and this is, I think what John, or Yvonne talked about, it was building a shared narrative. Why do we do what we do that often gets lost? And I met once a competitor of Yvonne's, John Davis of Harvard, who was a family business expert too. And he says, often family businesses fall apart in the third generation. Right. Because the second generation sees how hard mom or dad had to work, but the third generation don't. And that's where you start your work. So do you have a shared narrative to understand why we do what we do, how we make the world a better place? Yeah, and just my last thing here, I thought it was hilarious when he said, you know, there wasn't a lot of research about family companies because they're kind of private. They kind of keep it to themselves. Happy people have no history. I thought it was hilarious. I'm going to put that on a plaque somewhere in my office. It reminds me of a burger company, one that's extremely successful, that you went in and gave a talk to, and you said, hey, can I write your story? And they said, not only can you not write it, if you do, we will sue you. Right, yeah, right, right. Yeah, it's happened more than once with family businesses. Hey, you've got a great story, can we tell it to you? Nope. No. Not, no, not even close. Okay. Yeah, their PR person is there to keep the press from away. Yeah. So I just thought that was great. I thought, yeah, so much to learn there that brings, I know it's anxiety inducing sometimes to talk about these things, but I think what they learn can really help all of us. So, you know, what a great session. Wonderful to learn from Devin and Yvonne. Big thanks to you from all of you who have listened in, to a big thanks to our producer Brent Klein, to Christy Lawrence, who helps find amazing guests. If you like the podcast, please share it. We'd also love you to visit thecultureworks.com for some free resources, right Jess? Yeah, you know, Brent and Christy, we could call them family. I think we could. Absolutely. Absolutely. And by the way, we love speaking to audiences around the world virtually in person on topics of culture, teamwork, and resilience. Give us a call, we'd love to talk to you about your event. Adrian, as always, I'll give you the last word on this fascinating conversation we just had. I'm just really excited about that. Yeah. It's fun to have really cool, innovative thinkers with us. And hey, everybody, thanks for joining us today. Until next time, we wish you the best of mental health.