Keep four separate rooms, and your ‘crocodile brain’ in check: how to thrive while leading a family business

Keep four separate rooms, and your ‘crocodile brain’ in check: how to thrive while leading a family business

Published 27 February 2014 12:20, Updated 28 February 2014 11:56

Josh Baron and Rob Lachenauer

We’ve seen both ends of the spectrum. At one end are family executives who hate their jobs, their businesses and their families, who feel exhausted and underappreciated, and who want nothing more than to sell their businesses and get out. At the other are family executives who thrive with rewards that are richer and more profound than a leader of a publicly traded company could possibly derive. Their companies flourish, their kids prosper and their families have a collective purpose that unites them.

Why do some executives thrive while others wilt?

Family businesses are inherently messy. Work and life are almost inextricably intertwined. With so many things going on concurrently, family executives either get swept up in a virtuous cycle or a vicious cycle, and there’s very little gray area in between. Leaders who thrive in this environment embrace and use this messiness. They can be all sorts of people – introverts, extroverts, operations-oriented folks, great sales people, men, women. But what we see in common in thriving family business leaders is that they get four things right:

FOUR SEPARATE ROOMS

Life in a family business can really be a pressure cooker, because the workday doesn’t end at 5 p.m.: Business discussions continue around the dinner table and in the bedroom. Sometimes there isn’t a clear separation between family and work, home and office. The CEO might leave a meeting at the office with the CFO, his daughter, and go home to his wife, a co-owner of the business. This entanglement of relationships runs so deep that the only leaders who thrive are those who have learned to explicitly compartmentalize their lives into four separate rooms: one for the business managers, one for the board of directors, another for the owners and a separate one for family members.

Consider your own home: You have different discussions in the kitchen, the bedroom and the living room. Of course there’s some overlap: Nothing is hermetically sealed. There are doors and windows that open, but there are rules – spoken and unspoken – regarding what can be discussed where. And things must be discussed. Owners, for example, need to talk about ownership issues away from board directors, family members and employees. Thriving leaders know how to get their own houses in order. They build discussion rooms – not silos – and teach others to work within the spaces they’ve created.

THE CROCODILE BRAIN

Thriving family business leaders know how to manage what neuroscientists have dubbed the “crocodile” brain, so named because it is controlled by gut emotions; thought processes are limited, and impulse control is nonexistent. The crocodile brain is the reason that people are not rational actors; it explains why decisions should never be made without trying to help people process their feelings, passions, rivalries and egos.

After placing people in the right room, thriving leaders deal explicitly with the irrational side of decision-making. Think about it: In a family business, owners can never decide to buy or sell a business based entirely – or even primarily – on the basis of money. When they are on the surface deciding whether or not to acquire a company, thriving leaders in a family business are really thinking about that acquisition’s impact on the identities, roles, relationships and personal finances of others.

Thriving leaders don’t ignore the crocodile brain and are not afraid of the crocs’ behavior. We see these leaders putting the croc issues on the table for careful conversation. We hear them making comments like, “Gosh, it hit me, this acquisition could really change your role in the business. Let’s talk that through.” They make the emotional side of business safe.

A PLACE TO LAND

Thriving leaders in family businesses help to create places to land when their gig is over. They build for themselves and others a number of attractive paths forward after the day-to-day spark goes out of life in the C-suite. Often in corporate businesses, you’re either in that executive suite, or you’re out – you go to work at another company. By contrast, in the best family businesses, the aging executive doesn’t just move over to the curb. He or she stays around as a board member, shareholder or adviser, or to work on special projects. Thriving leaders embrace the reality that they can still add real value after their stints as business executives are over. Their identities are not all tied up with living and working in the C-suite.

This is the other side of succession. Thriving executives don’t just ask, “Who is going to be our next CEO?” They also ask, “What can I do next?” Recall the four rooms mentioned above. Once thriving executives depart the C-suite, they still use their wisdom and experience to make valuable contributions in the other three rooms. They can transition to the board, to the shareholders’ council or to a family leadership role. They may also decide to take up a philanthropic role in the family foundation. Thriving leaders appreciate that all of these roles are vital and necessary in family businesses.

PASSION AND WISDOM TO DEVELOP THE NEXT GENERATION

Thriving leaders’ greatest joy is in seeing their children succeed in their business and as owners. They recognize that their own role, while central, is temporary. For example, in a recent cross-generational ownership meeting with a client, a 26-year-old introverted next-generation member surprised the eight owners in the meeting with a fundamental insight into the future of their business. You could feel the leadership baton starting to be passed. The current generation, three seasoned business executives in their late 50s, beamed with pride.

Developing the next generation is really tricky. These thriving leaders have great wisdom in how they do it: They don’t coddle; they challenge. They recognize and accept that their kids’ leadership style will be different from their own. They provide real jobs with real challenges. They let their kids fail and then help them back up.

Ultimately, it’s a very different approach to leadership than in corporate environments – but the rewards are different and deeper. These thriving leaders find meaning, money and mentoring in ways that aren’t available outside of family businesses.

Josh Baron is a partner and a co-founder of Banyan Family Business Advisors, and the author of the forthcoming book “Great Power Peace and American Primacy: The Origins and Future of a New International Order . “ Rob Lachenauer is the CEO and a co-founder of Banyan Family Business Advisors and a co-author, with George Stalk, of “Hardball: Are You Playing to Play or Playing to Win?”

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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