Business Conflict Myths

by Doug Gray | Dec 19, 2024 | Business, change, Coaching, Consulting, Family Wealth, Financial Professionals, Leadership, Personal Development, Uncategorized

… and Succession Facts

You know the myth: Business succession is difficult and full of conflicts.

The myth is that outrageous Hollywood movies like Succession, The Godfather, Dallas or Dynasty are the norm.  The myth is that tax advisors are never able to minimize taxation, that estate attorneys are well intentioned but haphazard, that more wealth leads to more conflict.

The fact is that most wealth transitions occur quietly when there is shared understanding of decision making.  That’s called governance.

Good governance is the reality for ALL of my clients- or they wouldn’t hire me.

Good governance can be taught and developed.

Let’s start with two definitions. Then I’ll share 4 steps that really work.

There are two types of conflict:  Interpersonal conflict is usually bad, and Task conflict is usually good.  

Interpersonal conflict is based on emotions and should be managed carefully, even if you dislike that cousin who just said something outrageous.  But how do we self-manage? We are emotional animals driven by fears. Threats are everywhere. !Right?! Behavioral psychology research confirms that we think faster or slower depending on the stimulus and the situation. When I’m inclined to speak impulsively, I often massage the back of my head. Why? Because I want to slow down, think, and respond with care. We can all practice self-management. The oldest part of our brain is in the back of our skull. The prefrontal cortex, our executive center, is in the front of our brains. So, on good days, we practice self-managing to avoid interpersonal conflicts. (Or not…)

Task conflict is based on different understandings of information or roles.  When one cousin wants to invest in a new digital marketing program, and another cousin wants to invest in a new building, they will have task conflict. Task conflict is usually good because it may lead to innovations. I define innovation as “new ideas applied.” One reason for agendas and information packets before board meetings or family meetings, is to share information so that the participants can make smarter, more informed decisions. There can still be emotional moments- full of drama- but the focus of the meeting is on decision-making to address the task conflicts.

One reason for a facilitator with expertise in behavioral psychology (like me) is to minimize the interpersonal conflict and maximize the task conflicts.

As a species we all want to create order out of chaos. That’s why we construct processes, and (occasionally) organize our closets. That’s why we ask experts for advice. When we require a healthcare assessment we expect nurses to collect data, so that physicians using AI can diagnose and treat our evolving needs. Right? When we require a transfer of assets we expect attorneys and wealth advisors to assess needs in a deep discovery process, then recommend next steps. Right?

I organize teams of advisors to serve families because I know what works. Holistic advising is here to stay. And my clients deserve a team of experts. They also deserve a cleanly defined process. Something useful.

Here are the 4 steps in my Family Capital Discovery Process (based on my research and decades of consulting).  Think of these as 4 phases in any engagement together. Notice the verbs in bold font. Perhaps you can adopt these?

a.        Assess the current and future Family Enterprise ecosystem. I call these states the Now and the Next. Each ecosystem has unique history, values, legacy, stages, visions, and risks. A Family Business may generate assets, like a golden egg or a core business. And there may be multiple businesses over time, called a Family Enterprise. Think of Cargill or Walmart. Or think of the nearby franchise owner or car dealership in your city. Perhaps you know that over 60% of our GDP and job growth is driven by Family-Owned Businesses. How do you assess those unique strengths and weaknesses? Lately I’ve been using AI tools to accelerate that assessment process.

b.        Develop a Family Manifesto that describes the Family Purpose and reasons for working with multiple advisors. Most families have a verbal understanding of what the founder, Elder or owners want. When that verbal understanding is written and shared, teams can evolve. For example, in a recent series of meetings, I conducted interviews with the Elders, took detailed notes, and shared their asset map with the Next Gens. They had never seen one list of their capital and financial assets- and there were plenty of rumors! Finally, they were able to draft a manifesto that accelerated succession planning. After decades of avoidance and mystery, they were finally able to make crucial investment decisions. Four branches – over 50 people- were relieved. When verbal or unstated assumptions become written and shared, family businesses can evolve. That’s called organizational maturity. And that process is not too difficult. Perhaps you know a family that can benefit from a Family Manifesto? Perhaps you can accelerate that process?

c.        Define the four Family Focus Pillars. These are 4 critical questions used by families with over $50M in investable assets, who may have a Family Office to organize their legacy. (With credit to my friend Peter Vogel and his team at IMD). My experience is that these 4 questions can be useful for any family, with any amount of wealth. Perhaps you can answer them this weekend when you sit down for your next family dinner. Who we are? What do we own? How do we function? What is our impact on society and the environments and legacy? Yes, I’ve had these discussions with our nuclear family. Yes, you can do so also!

d.        Organize more effective work guidelines with a team of advisors. We all need a little structure at times. We can’t play football without yard lines and goal posts. We can’t have a swim meet without lanes and a timing system. I recommend the least amount of structure in the moment. Families need to evolve. The reason I wrote the Success Playbook for Next Gen Family Business Leaders (2024) is because clients asked me to do so. It’s a playbook of books, structures, and great resources. Perhaps you know someone who needs a little structure or a loving nudge?

Bottom line: Now you know what works. Please share this post with those who would appreciate knowing what works.

1. One fact is that succession usually happens quietly, without conflicts.
2. Another fact is that good governance can be taught and developed.
3. Another fact is that we can each minimize interpersonal conflicts and maximize task conflicts.

Any thoughts or comments?

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