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E13 Success Of Family Businesses ft. Marianne Saghbini

May 2024

68 minutes

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Episode Notes

Family Businesses are the lifeblood of the global economy, yet the vast majority don't make it past the 3rd generation. In this episode we are joined by Family Business expert Marianne Saghbini, where we discuss how families can manage messy relationship dynamics, governance issues, succession planning and much more. A must listen for leaders and family members of all generations in a family business.

is a global, leadership-strategy consulting company. 3Peak creates the roadmap that aligns behaviours, relationships and Functional Human-Systems™ to achieve your business strategy.

Co-Founder holds a Ph.D. in Neuroscience, and did extensive research in Consciousness, Trauma and Physical, Emotional & Mental Health in various Institutes and Research Centers around Europe.

Co-Founder is one of the most sought after therapists in the world, mastering diverse modalities and opening wellness centers in Istanbul, Santiago, New York and Berlin. Her approaches bridges transpersonal psychology, meditation, bioenergetics, family- and business-constellations and more.

Co-Founder has extensive experience advising Fortune 50 and FTSE 100 C-Suite Executives in leadership, strategy, team dynamics, and organizational change. Before coaching, Mino worked in finance, management consulting, and mergers and acquisitions (M&A).


Mino Vlachos: Hello and welcome to the three peak master leadership experience. My name is Mino Vlahos and I am one of the co founders of three Peak Coaching and Solutions, where master leaders build healthy systems. Our company provides coaching and workshops to executive leaders and leadership and well being workshops to employees. Our topic for today is family businesses, which is one of my favorite topics. And I'm very, very excited to have a very special guest on today, Marianne Sagbini, who is an expert and has substantial experience in family businesses and family and ownership governance. She's worked for over 15 years with a number of medium to large, multi generational families and family business owners of companies. She helps them establish the structure for their governance, helping them uphold and honor their family values and sustain their wealth across generations. And so I'd like to welcome Marianne to the podcast. Thank you so much for joining us today.

Marianne Saghbini: Thank you, Mino, for having me. I'm very excited for this discussion.

Mino Vlachos: Yeah. And for the folks listening, this is our first guest. So we're very excited to have Marianne on and to share her expertise, because we do love to collaborate with people and see what other perspectives we can add to the expertise that we're sharing from the three peak side. And so, to kick us off, Mariana, I would love to hear you've worked so extensively with family businesses. Really a trusted advisor that supports them with their governance. What are some of the things that you really enjoy about working in family business?

Marianne Saghbini: It's actually inspiring to see generations come together to carry on a legacy, witnessing the passion and the dedication they have for both their family and their business. That's inspiring. And I enjoy the time I spend getting to know the family members from the senior generation, like the founder, to the rising generation, creating a safe space for them to voice their concerns and passions in a confidential setting, which is very important. It's rewarding to see their realizations. When sensitive topics or things they never thought of before are brought up, it feels a light bulb has turned on. Their eyes just light up. And I enjoy helping them navigate through those difficult conversations and decisions and navigate between the family dynamics and the business vision that they have. It's like always solving a puzzle where every piece matters. You cannot leave anything behind. It's not just about profits for them. And that's what I like. It's about preserving a family's identity and values through their business achievements. So it's seeing also the dynamics of family relationships play out in the context of business decisions is fascinating.

Mino Vlachos: Yeah. What I've seen is that there's, of course, some of the, I don't know what to call it, the highest highs. Because you can have this trust because it's a family member, right? You can have this shared commitment, this ability to create something with your family, to hand something to the next generation, to create value, legacy. So it's almost a lot of things that we can find enjoyable about work. You can have even more heightened, elevated enjoyment out of those things in the family business. But on the flip side, what I've also seen, and I think you started to allude to it a bit, is all of our dynamics in family can spill into business, and all of our business dynamics can spill into family. And so I've seen with some family businesses where there's an argument at the family table and then they go to work and they have this huge argument in front of other leaders, in front of customers, because it's actually from the breakfast, something happened, I don't know, someone threw out something or something silly, and then vice versa. I've seen where something serious is happening in the business, and then it creates a real weight on the family when they go home and they're interacting with each other. And I have stories of CEO's that are in family run businesses where they have these huge fights with the father, the mother, and it really weighs on them because this was a chance for them to get to relate as family. But they're arguing about the business on a Sunday. And so I know you've done, you do a lot of amazing work to start to understand some of the family dynamics and the business dynamics and how they start to interact. Is there any way to actually separate these two systems out, the family and the business? Or is it always just going to be dramatic and conflict ridden?

Marianne Saghbini: I mean, separating family and business dynamics can be really challenging, and it's one of the common reasons family businesses face difficulties. So it. But it starts, and there is a way to overcome this. It starts with communication, clear communication and boundaries. So if you encourage open dialogue and you define roles and responsibilities, then you know, you're minimizing conflicts and you're maintaining the harmony. It's blurred lines and family businesses between family relationships and business decisions. So the family ecosystem includes the owners, the family, whether they are owners or active members working in the business or non active members, and the business itself. And these components often overlap, so members may find themselves in two or three of these roles simultaneously. And it's important to have separate governing bodies for each component. So each component has to have their own policies, expectations, topics that, that you can discuss within these forums and the decision making mechanism. I think once they recognize and are conscious that the family dynamics can influence the business decisions, they understand the importance of separating family matters from business operations, basically to maintain this clarity. But the issue, as you mentioned, so sometimes it arises when family gatherings, they transition into business meetings. So you're sitting, having lunch, but then the discussions just spill over and you start discussing professional matters. So it's common, but it's important to recognize when discussions are shifting from personal to business matters and conflicts can be avoided by setting clear expectations and those boundaries and implementing regular meetings to discuss family meetings to discuss non business related matters, and having ownership matters discussed at shareholders assembly meetings and having business discussions in the appropriate forum. So it depends where the family member stands. But like board of directors meetings or management meetings, these are effective strategies that could help overcome these conflicts that may arise. I think it's more also about fostering a culture of this mutual respect and professionalism within the family and the business. But you want to still value the family bond and relationships. Without that, you cannot achieve much. So it's. I think it can be you can overcome. You have to create channels for open communication, establish governance structures, implement conflict resolution mechanism, and then I think they can effectively manage both family and business relationships.

Mino Vlachos: Yeah. In a moment, I'm going to ask if there's maybe a tip for family members, but I'll share a quick personal story again, to almost highlight the pros and the devastation sometimes. Both of my grandparents, my grandfathers in Greece, had family businesses. And so in one case, where one of my grandfathers started a business with his brother and his brother in law, and they had a big falling out and they, our family still, I think it's been 50, 60 years, we still don't talk to each other. So the cousins we still are having, it's not even. I can't even call it a conflict because we don't even know each other at this point, at my generation level, from the failure of that business. But then I look at my other grandfather, and when he was sick, my grandmother stepped in and helped run his small shop in Athens. And in our family, it's considered that was a tremendous success, where the family were pulled together to help run the business and support him while he was very sick. And so I see kind of both sides where from a very personal thing, where it can be almost devastating or life changing to have family support within a business. If you know on this topic about kind of having these healthy boundaries and healthy communication, if you were to have individual come to you, an owner of a company, and say, every time we get together on Sunday with the family, we just end up talking about business. What advice would you have for him.

Marianne Saghbini: And the other family members, recognizing that it's shifting again, that the discussions are shifting from personal to business matters, making sure that you're not taking decisions and big decisions when you're having those discussions out of this forum, the relevant forum. So if you're discussing it, fine. If it got mentioned, it's okay. But try not to take the decisions, then just keep it for later. If it's a business decision, if it's an ownership decision, wait to be in the right meeting where discussions and decisions are being recorded. You keep track of your decision making mechanism so that you can even. This is how you mentor the next generation as well. You set the right example, and then you make sure that you are documenting the decision making process so that they know how come we take these decisions? How come our father or the founders or the older generation are taking these decisions?

Mino Vlachos: Basically, I think that's absolutely brilliant advice. And even as you were sharing, I was thinking, even in non family businesses, that would be still very good advice, because often people bond as friends and they end up making decisions outside of the formal meetings, and they form these little cliques or clubs. And especially when I speak with women that are in business, they tend to be sometimes around these boys clubs where they're making the same kind of decisions at the golf club or even in the bathroom. So what you said, if a family can do it, then a non family should also definitely do it. It's very good advice. And so I want to shift us to a little bit of, when we look at family businesses across the generations, we have different studies on the outcomes of those businesses. So there's no one unifying answer. But what we tend to see is that the overwhelming majority of family businesses rarely survive beyond the third generation. And there's a lot of sayings in every culture, right? Like about the first generation building it, the second one maintaining it, and the third one losing it. There's all kinds of little quotes about this phenomenon. Some studies, again, this isn't definitive, but some studies in the past have shown it can be almost up to 90% of businesses. And again, there's some studies that show it's probably also could be lower context dependent, geography dependent. But it's tough. It's a tough thing to transition businesses from one generation to the next. And yet, I know that's what owners almost desperately want, is to protect the legacy and to take care of the kids. What have you seen personally? You've advised so many family businesses. Where do you feel like they kind of either go wrong or they're making some mistakes that jeopardize the long term ability to transfer it to the next generation?

Marianne Saghbini: I think that the most common issues that you see with families revolved around several key areas. You have the one you mentioned now, like, they struggle with successfully transitioning leadership from one generation to the next. So it's the succession planning or the lack of formalized succession planning, identifying the next leader or leaders, assessing their readiness, preparing them for their role. This is often overlooked because it's crucial to invest time and energy into mentoring and grooming the rising generation, and which sometimes doesn't happen efficiently. I mean, that's one of the main issues. Another key area is the communication and trust. When there is. If there's lack of communication and trust or communication breakdowns between generations, this also may lead to conflicts among family members. And there's sometimes a power struggle where it's difficult for the senior generation to pass on the baton and give up control, and at the same time, the second generation wants to take over but doesn't know how. So. And what can lead to misunderstandings and conflicts are those generational differences in values, preferences and business practices. Like you're used to a certain way of doing things and then it changes. Another topic that is very common, it's family employment policies. If you don't have these clear employment policies or remuneration standards, formal ways to evaluate performance. This can create tension and it's very difficult to evaluate family members performance in families, usually in family businesses. But it's essential to establish these guidelines, ensure fairness, transparency, which are really key in the process. Another thing would be having a unified vision or a lack of a unified vision, because not having a shared vision can lead to fragmented goals. So each one has something in mind and is working towards a goal which is different than the others. But aligning the family on a common vision, a set of values, is very important so that you can maintain this cohesiveness between the members. What if there is a conflict also? So when there's a conflict and there is no conflict resolution mechanism, this is where the family can. Conflict can spill over and have a negative impact on business operations. Right. If they're not addressed properly. So you really need to have a structured conflict resolution mechanism to make sure that every family member's voice is heard and they have a forum where they feel safe to go and open up a point that we discussed before is also one of the main issues, was the separation between family and business dynamics. So if you don't separate these two, it's also gonna create a conflict among family members at a certain point, and one more. And it's very important because nowadays the market is changing, right? Like, you need to adapt to market changes, and they're facing new challenges. It's complex. It's not the same landscape that they were used to before. It's evolving. And you need to adapt to globalization, technological advancements. They need to integrate new technologies to remain competitive. And even the consumers preferences are shifting. So if you're unable to adapt and innovate, they will fail. And that's also a very important topic that many family businesses and family owners are focusing on nowadays, because it is part of the transitioning from one generation to the next and the way of doing things. But I mean, family businesses, there are so many that succeed and do not fail, and they thrive across generations, which is good, and we need to learn from them. And these family businesses, they tend to prioritize succession planning, communicating openly, transparently. They have those shared values and the unified vision that we were talking about. So they establish solid governance structures. I would say when you define those clear roles and responsibilities and policies, so it helps them manage both the family and the business dynamics. So I think they're always committed to continuous learning. They are willing to seek outside expertise whenever needed, and objective advice, because it's a very subjective matter, very sensitive topics. And I think they are willing to seek outside expertise and advice that would provide them with new perspectives and solutions to their challenges. Basically. I mean, as a family business advisor, it's important for me to ensure that family is aligned towards the idea of family business continuity planning. They have to all be aligned that we're going to do such an exercise. And I consider it more than just succession planning, because succession planning is just one part of the broader continuity and sustainability plan of a family business, including all family members in the process. You have to, because if you don't include everybody, certain people will feel left out. It's an unfair process, but. But it's supposed to be a fair and unified exercise. So I start by assessing the current status of the family business, and then through the workshops with family members, we discuss major topics and develop the family constitution or the family charter, which outlines the values, the policies, governance structure. So there's always a way to overcome these challenges, but you need to put the effort in doing that. So it's very important to develop these rules, the family charter. But I think it's even more crucial to implement it. And this is the main challenge with family businesses. They often start the process, but when it comes the time for implementation, they just fall back. And you can't establish those rules and policies and not live by them. You need to really take consistent step forward and ensure that the guidelines are actively followed and integrated into your daily operations, into the way you're dealing with other family members. And you really have to live by those rules that you're setting and regulations.

Mino Vlachos: And I just feel called to quickly add, because some of our viewers are in the United States, in the US, sometimes we forget how many of our big corporations are actually still family businesses. So Walmart is still a family business. The Disney's are heavily involved in Disney Corporation, the Murdochs, obviously in News Corp, the Trump family. Like, there's so many family run businesses and even empires that are still being run by families. So it's still a very important topic. Even if I think in the US, my, I don't know for sure, I haven't looked at the statistics. I have a feeling we might have overall, less corporations run by families than maybe other places in the world, like Europe, Middle East, Asia, but we still have quite a few here. So it's a very important topic. I wanted to, I know you, I know you listed many kind of very big topics that are kind of very important. But I'm going to double click for the sake of time into one of them. And then maybe we do a part two where we double click into some of these other topics. But the one thing I want to talk about is actually succession planning a little bit or a little bit of the dynamics in the generations. So, you know, any family member could start a business with any family member. So there's no rules that it has to be, first generation is the father and then the second generation is the siblings. It doesn't have to be that way. But I'm going to use that actually as the example is, let's imagine we have a mother or a father that starts a business. Then second generation is siblings and then the third is cousins. So if we just start with the siblings, I know for me personally, I have a younger sister who I love dearly. I really love my sister. And if we were to somehow inherit a business together right now, we would probably have a really, really difficult time working with one another. We have decades of lived experiences of loving each other, fighting each other. We have different personalities, different motivators. And so if we talk about a business going to another generation of siblings. What helps prepare siblings to work with one another to run this business? How do you ensure succession amongst the sibling kind of cohort?

Marianne Saghbini: You need to understand first if the next generation and the siblings are willing to work together. One of the points that is during the assessment phase, when you're getting to know the members, is getting to understand from the next generation if they want this family business to continue, if they want to be involved or if they have other aspirations, if they feel that they can do it together. And how do they see the relationships among each other? They recognize sometimes the difficulties among siblings in certain areas, but they can work on that. So if they are willing and they want to do it, there are always ways around it, like trainings, development, leadership skills, communication, workshops, that you can do everything to make sure that they understand each other the way no one. We have different ways of working. Right? Like you work in a different way than I do. You have your strengths, you have your weaknesses. And then I think that the most important thing here is to really understand each person's strength and how they can add value and not stepping on each other's toes when they're working together. So again, having those clear boundaries, the roles, is very important. So it makes things easier on siblings to work together.

Mino Vlachos: And so when you do work with family businesses, and I know you've done a lot of interventions, and, you know, I work with a lot with clients as well. So I know that sometimes through no fault of our own, some businesses, some leaders are more willing, receptive, motivated to accept support, and some are less so. And so some things might work, some things might not work, but not even because of the intervention itself, but because of the people that are receiving or choosing not to receive in this instance. Having said that, what are some of the things that when people are receptive and they say, yeah, we're going to go for it, we're going to do the intervention, what are some of the things that you've seen support family businesses the most to be kind of functional, healthy places between family members?

Marianne Saghbini: First of all, when they are, they start the process, it's that they are willing to go through it, and everybody is aligned on that. And that is very important because you want to include everyone. And as I mentioned before, it's an inclusive process. You cannot leave family members left out. And I think when they are doing the assessment and when we ask them a set of questions and they realize that they never thought about this before, this is where they're intrigued to understand more what's going to happen? What if I pass away? What's going to happen to the west? Are the next generation ready? How much should I. Am I supposed to transfer Wes to the next generation? They have so many questions, whether it's the founder or the next generation taking over. So I think the exercise itself of sitting, talking privately in a confidential setting with every family member also is the first step that enlightens them. The second is gathering those family members together in workshops and discussing those topics together. Making sure that we are setting the rules and the guidelines for our family, for our family business. And we're doing it with the help of an advisor, but we're doing it. I'm not there to dictate what they should do, but you're there to see what is relevant to them and what makes sense once they're aligned. I think this is how they can prosper, because they are moving forward towards the same vision now and the same goals. And that's how they feel that they're adding value in the right place. They understand where they fit in the ecosystem of the family business and what are their roles and responsibilities and how they can impact and have an impact on the family business and in the world, basically.

Mino Vlachos: So this is where we do a little plug. Whether you're a family business or even a non family business, if you're looking for some support on some of these things, Marianne and us at three peak, we really love to help businesses with setting a clear vision, creating alignment, how to make clear decisions, communication, conflict resolution, and of course, really understanding proper roles and responsibilities, which can sound like a very dry topic, but is probably one of the most crucial, I think, elements of running kind of a efficient, functional operation. And so now we're going to turn to another topic, this one to me at least, and I could be totally wrong, but it feels complicated, which is one of the key dynamics that I've seen in family businesses. And also it's a generational, I believe, dynamic that exists across our society. So on one hand, you have these, if we call it the first generation, maybe even the second, but let's say first generation, they build this business and they've been there and started it from nothing. They understand this like the back of their hand. And then the next generation comes in and they have their own ideas, they want to start changing things. And on one hand you can say, okay, well, maybe they have some interesting ideas. Maybe they are spotting trends that the old guard might not kind of see. But then I really understand the first generation where it can potentially feel a bit disrespectful that someone new is coming in, not caring, potentially, to find out how the business runs or why we do things the way we do things. They just want to change everything and don't understand the root reasons of why we made certain choices in the past and in the present. And so this kind of conflict between the old and the new, the maintenance and. And the change, is probably as old as time itself. But I'd love to hear from you, Marianne. What is your experience in seeing these dynamics play out? What does it look like when you're in a family business, advising and this comes up?

Marianne Saghbini: I mean, yes, intention can definitely arise in these situations. Like, resistance to change is a common theme, and in family businesses, it's a generational problem. So, as you're mentioning. But most of the time, the younger generation lacks influence in the business. But maintaining also a status quo present a significant risk and danger. And I think the senior generation, the older generation, are realizing that more and more we are in an era of rapid technological change, and it can be dangerous to resist it. So, because the role of technology and the success and sustainability of a family business is not going to go away, it's just evolving. And you need to also make sure that you foster a culture of mutual respect and collaboration. So, yes, things are evolving, but the respect is there. We're collaborating. And you need to strike a balance between tradition, respecting the past and how things were set up, and the innovation, and making sure that you're paving the way for the future. So it's important for the sustainability of the family business. And I think this can be achieved by facilitating this intergenerational dialogue and acknowledging the strength of both perspectives. So if we try to understand what are the fears like the older generation has, they fear that if they make changes to their successful business, as you mentioned, it will stop being successful. And they emphasize the importance of preserving the practices which were time tested. And this is what they know. But to mitigate the risk of conflicts, they both, both generations, they need to listen to each other, and they need to give each other the chance to communicate their fears, their concerns, their suggestions. And I think one of the exercises I like doing with the client is I ask them to form two separate groups, the older generation and the rising generation. And each group, they put themselves in the other shoes and they articulate what they believe the other group are. The other group's fears are their concerns and their expectations. And then both generations come together to present their findings. And I think this exercise helps help them establish this space for open communication, which is crucial at the beginning of my work with the family. So it's nice to see that, oh, they realize what are the other generations expectations or fears. They just have to think about it a little bit and make sure that they voice it out and then show the other generation that we are there, we understand we're listening and we're going to work together so that we meet all of these expectations and those fears and we overcome them together. So I think it's good to make sure everybody understands everyone, but at the same time, we need to create kind of forums to help them communicate later on in the business. So, for example, we also help them develop a rising generation committee or the next generation committee. And this, I believe, can also help bridge the communication between the generations. So whether they are active in the business or not, next generation members, they can meet to discuss ideas and voice their perspectives to the older generation, for example. And you pave the way by giving them this space or forum to discuss those things. And then maybe the head of the committee can represent the committee and convey the message to the shareholders at the shareholders assembly meeting, for example. So when and if that's whether they're working or not in the business, and when younger family members are also working closely with the older generation, they should present their ideas, right? And, but they should not fear presenting their ideas, but they should present them with facts and, and not just theories. So you cannot go to the older generation and just say, listen, I'm changing this and that and that's it. No, you have to demonstrate how those proposed changes will advance the business and how implementing it will positively impact the profitability of the business. And then this is where it would make sense. So they should have a clear plan. You cannot just say, we're changing because it's hard, and resistance to change is there. So I think that the rising generation today, they want to work and be part of a business that makes a positive impact and difference in the world. So they are focusing on new ways of working. They're focusing on ESG, environmental, social and governance practices, impact investing. So this has shifted. It was not the focus before, and now it's, it's changing. So it's increasingly important for the senior generation to recognize that. But as I said, you need to find common ground and leverage each generation's expertise, because both have definitely a lot to add and to provide to this business. So you can always bridge the gap between tradition and innovation. And that's, I mean, change should not be seen as a threat, but as we say, it should always be seen as an opportunity for growth. And I like, there is one quote I like. It's like it's Mahatma Gandhi's quote, and it says in a gentle way, you can shake the words. So beautiful.

Mino Vlachos: I think they, I want to take two scenarios on this topic. So I'll start with the owner, and I'll just use myself as an example. So as I've helped to build three peak, what I notice as an owner is a lot of people around me want to give me advice or tell me, do this, do this, do that. But they lack context of what I'm doing and how I'm doing it. I find that unless you really are walking in my shoes or you've been in some entrepreneurial path, it's easy to generalize and give advice, but it's very difficult to understand how to give advice within the context. So I'll give a very quick example. I've had people give me advice on marketing, and we're a startup, and so I've had people who say, oh, you should make advertisements like the Mercedes commercials, where it's like the beautiful picture of the car going through nature. There's no words, it's just music. And I'm like, that might be really good for Mercedes. For a startup. No one will know what the hell we're offering. No one will know my services. I need to tell people what I do. So as beautiful as that advertisement is, it's for a different phase of a business than the one I'm in. So people lack context. And so what I find, for better or worse, over time, is I'm becoming a little bit less tolerant to just random advice from people when they don't know what I'm going through. And so I can very much imagine, you know, I picture myself in a couple decades, two, three, four decades, whatever it is. And if I were to give my business to someone else and it was some young kid, you know, I'll put it that way, kind of comes in and starts telling me, you need to change this, you should change that. This is how you're backwards. And they weren't there when we were building it, right, when we were getting our hands very dirty, when we had total ambiguity, when you had no systems, no money, like we had, all of these things happen, and then someone wants to come in once it's already established and say, no, it needs to be changed. You know, and especially if I were to have a child and they were saying that I would lose it and I would find it very difficult if I put myself in their shoes to say, like, you, ungrateful person, like, I built everything, and now you're telling me needs to be completely different. It. So if I were to think about that kind of archetype of an owner, that's like, I built it with my two hands. It was difficult. I have context. These young kids, they don't know what they're doing. They have all these ideas. They're on the tick tock all day. I don't know. I'm getting in the shoes of an older person. What can a younger generation member do to prove that a new idea, like you said, is not just theory or that it actually, how do you influence an owner, a father, uncle? How do you influence them so that some form of innovation that's probably healthy and needed can take place?

Marianne Saghbini: I mean, it depends on your role in the family business, right? Like, where is it that you fall in the ecosystem? So are you an owner? Are you a family member working in the business? Are you a family member not working in the business? Where do you stand, and what's the message that you're trying to convey? If it's someone who is working in the business, in the operations, and has a job, nine to five, and he's dealing with the family members, the senior family members, and it's also different whether they're working as employees or in leadership positions. So it's really, it really depends. But the main idea is to do it with respect and make sure that when you're coming up with the idea, as I said before, it's not only theory. Back it up. Prepare your plan. Have it ready. Have numbers show. How could this benefit, maybe introduce them to family businesses who have done this or other people who have done this and that have benefited from it. So take success stories and build on it. It's very important for family businesses to learn from each other. And now there are really great forums for networks and networks for family businesses to come together and learn from each other. And I think this is where you can take that to the senior leadership and say, okay, listen, if we do this, it will work out. Other families have done that, but it failed. So let's just learn from other people's experiences as well. But, I mean, you also want to convey the message in the right forum, so just don't go. And while the person is sitting having lunch, just jump on them and tell them, you know what? I want to do this, and let's do this. And we're gonna change that. I have an idea, it's amazing. And then just leave and expect him to give you an answer or a decision on the spot. No, just put it again, take those decisions in the right forum, in the right meeting, and make sure that you're not doing, doing it very randomly, so that they don't feel that you're overstepping the boundaries and your role and your responsibilities. So I mean, it can be a good idea, it can be a bad idea. And they need to be able to know as well the next generation that even if they are going to be heard, they are going to be assessed on that idea. So if they come up with an idea of opening a new subsidiary, a new sector for the business to go in, present your idea, have the board of directors approve it, and this authority matrix clear on who is taking the decision and who is approving it and who has to be informed. And then you move forward with it cannot be decided by only family members. It has to be decided by the professional governing body that is leading this organization.

Mino Vlachos: And so one more on the same topic. The other question I had is, if I give another example is I have a friend, a very good friend, and they're in a family business. The business is currently being run by the third generation, and he is the fourth generation. And the CEO operator of the company is his father. And so he's working with his dad. And what I've noticed, and I love my friend dearly, and there's times where he's a bit of a dreamer. He can have completely crazy ideas that might be good, but are so different than what the main part of their businesses that I can truly see is like. That's a very alien concept. And then sometimes he has ideas that are actually quite small, practical, but very good in how to increase revenue. But on the, on the third generation, the owners, there's a lot of resistance to change. It's like, look, this is the way we've done it for over 100 years. We get keys. Just keep, you don't understand this business. Keep doing it the way you're going to do it. And what I've noticed is that this fourth generation, and now his brother, has also hopped in, they're struggling to find their footing, to find their role. Like what is their place in the business? Because they want to work there, they want to improve things, but it's not clear what their position is or should be. So my question is really around what are some indicators that that next generation is ready to start taking on more responsibility to have their ideas be taken a little bit more seriously. Are there certain signs that you're, that you as an owner or kind of operating generation, I have to call it, you leading it, say, you know what? They might be ready to take a little bit more on. Are there indicators of that?

Marianne Saghbini: The willingness to take control and the responsibility that comes with it? You have certain family members that, you know, when you sit with them, just feels that they are willing, but they're not really willing to put the effort into it. It's more like of a, okay, if I'm gonna take this business one day, and if I'm gonna inherit those shares one day, I might sell them, I might keep them, like, there. It's not clear what they want to do with it, but you want to make sure that there's willingness. And then they recognize, I believe that next generation recognize that they can add value sometimes, but they still require development for their leadership skills. And they're probably not 100% ready. I cannot generalize because there are families I've worked with where the second generation was really ready to take over. And actually the father was kind of involving them pretty much in the decision making. They were pretty much handling operational day to day decisions and businesses, but the father was not ready to let go completely. And that's because he felt that, you know, they're still, they're still learning, and he can still kind of add value as an advisor where we say, you know what, give them the chance. And you, if you want to set step aside, do it. But you can always play the role of an advisor to the family. As the founder, they're always going to go back to you and get consult you basically to make sure that the decisions they're making are, you know, correct. You're there to mentor them. But if there are really, like, signs, I think it's in the character of the family members, whether they're. They have, like, the leadership skills, like, you know, sometimes it shows that it can. He can be or she can be a charismatic leader. They have a presence where they are accepted by all other family members. They're usually heard from everyone, and their point of view is taken into consideration. It's the way they communicate. They're close to everyone. They keep and maintain the relationships among family members. So sometimes you notice these in family members and you know that, okay, this person can lead and is being recognized, maybe by the others. In other instances, you see that there's no one else. It's only this person who will be able to lead one day, maybe, or these two people, but they still need a lot of training and development and mentoring, and you can work on that to make sure that they're ready on time.

Mino Vlachos: Yeah, I'll add a couple things. Just that I've seen from my perspective is one, I really liked how you've kind of given the advice to demonstrate things, so do trials. That's my own advice to people, is to try little experiments that aren't gonna. Experiments that are not gambling. A gamble is something where if you, you're really rolling the dice, you don't know, and then the consequences in the outcome could actually be quite devastating. And this is what I've seen in people that might not be the original founder or might not have enough experience, is their radar, their detector, their gauge of, is this a gamble or not? Is not fine tuned. So do the smaller the experiment, especially in the beginning, the better to demonstrate and build some proof of, like, yeah, we can make some changes, some improvements, some innovation, but we're not gambling the entire business on this venture. And so the second thing, which, which might sound a little bit harsh, but I'm going to say nonetheless, which is from my perspective, many founders, they, over time, learn how to put the health of the organization first. To some extent. It's so vital that this thing that's outside of me is running well and healthy. And when there's more, when I say either young or immature, but I'll say maybe immature next generation folks, the honest truth is they might be placing their personal desires or personal motivations above the needs of the business, above the needs of the organization. So in the example of my friend, and I'm going to keep picking on him a little bit, some of the more eccentric ideas, which are probably pretty cool and maybe could work, but I think they're more about fulfilling his own inner desires and his own inner motivations, rather than him saying, regardless of me being in this chair or not, what's good for the business, what's good for this entity, and sometimes these. And I get it, and there's no right way to run a business. So if you want to do this, power to you. But some family businesses become the piggy bank. They go, the kids can go, and they can get what they need to go live their life. I go and I get money, and I go and do this thing around the world, that thing around the world. Or, you know, I'm going to start a pet project under this business. And if you want to do that consciously and with awareness as a family power, to you, like, like, have fun. I hope the kids enjoy. I hope they get to do all their projects. If that's within the scope of the business. I'm not here to tell you how to run your business, but if that's not with awareness or that's not the objective of your business, to kind of fund your kids, then we need to look at is this something you're doing because it just feels good to you, for you, or is it actually good for the business? And I believe that comes with maturity. And maturity does not have to correlate with age. But there's some folks that say, yeah, I'm actually here for the good of the business. And I would be much more inclined to listen to their ideas and their prospects for innovation than a next generation member or any leader in my business that's kind of out for themselves. And so that's one thing to potentially assess for. And then, yeah, of course, I think experience really matters. And so I know there's a big debate, and this is a topic for another podcast, but a big debate around what roles should next generation have before they're ready to take over the business. Should they go work in a different business? Should they have a role within the business? And there's this whole debate. And what I would say just from my professional experience and the research I've seen is any CEO should have at least two executive positions before becoming CEO. I'm not here to solve the debate if it's inside or outside the family business, but everything I've seen is you should have at least two executive leadership roles before you run the whole thing. If you're not the founder. And so have the next generation get experience, learn the business, understand that there's this entity that they're in care of and need to take care of and help them build the skills to do that. And then at some point, let them try, try trials that are not gambles and to experiment and try things and demonstrate. And over time, you know, time is inevitable. They will take it over at some point. So there needs to be a way for them to do that. And I love how you suggested even having a period where the founder is an advisor so that they still get the wisdom, but the next generation can try and run something and make their own mistakes and learn. And in running a business, you're never going to stop learning. You're always going to be learning. So if that's the threshold of like, I'll give it to them when they stop learning. I mean, that's never going to happen. You're always learning. So the question is not when they stop learning, it's when do they have enough maturity, experience to take it over?

Marianne Saghbini: In my humble opinion, I totally agree. There are also, you know, there's a family which decided to do one thing, and it was amazing, actually, because they had the means and the funds, and they decided to give all the next generation family members, each one of them, a certain amount of money, let's say for the sake of the discussion now, it was like 500,000, which was not a small amount, but it was a substantial amount. And they gave it to them, and they start observing how these next generation dealt with this amount. So you have the person who just took the amount and put it in the bank and then just started living on those, you know, interests that were, he was getting from, but he was, like, playing it safe. He did not do anything with it. The other family member who just took it and then blew it away, going out, whatever you want to do with it, you can imagine, so that everything was already spent. And then there was another family member who just started investing and thinking of opening a smaller business for himself using this amount of money. And this is how also this family tried to recognize how these next generation think when it comes to wealth. How do they deal with it? What's the mindset? What's their risk tolerance? And I thought that this was a very good exercise that they've done because we also, I don't want to dismiss family members who do not work in the business. Right? So you have the family members who are working, but you have family members who do not work in the business but are still involved, and they're part of the ecosystem, and everything can spill out on the business if it happens in the wrong way outside. So we usually define with families that you have family members who are extremely brilliant. Like, really, you have these family members who are geniuses, and you don't want to miss out on working with them. You don't want them to go work outside. You prefer that they work inside with you and within the family business, under the family business umbrella. And you have family members who are really sometimes, and I'm not saying in every family, but sometimes you see those family members who are not continuing their education, they're not able to find a job. They're just like, they're not really able to find their path into the professional sphere. And you have the middle. In the middle, you have the average person, the family member who is good, who can be talented, who is educated, who can be trained and, you know, you can develop his skills and knowledge, so you don't want to dismiss any of those. And what families sometimes do, and we sometimes recommend to, for example, if a family member is not working but he has a brilliant idea, where does, where does he fit? Is he someone who wants to do something under the umbrella of the family or he wants to do something on his own, but you think he can do it under the umbrella of the family and the whole family business can, you know, take advantage of that? So, yes, then you give him the opportunity to join, you join forces with them if their business plan makes sense and if to like in a kind of a joint venture. So you can work with them and they can run this business that they want. They can get a profit share, private equity. What, you can find a formula around that, and then that's it. He's there, but he's working with you under the umbrella of the family business, and everyone is benefiting from it. On the other side, if someone wants to do their own thing, you know, like, I don't want to work with the family business. I don't enjoy being in the hospitality sector or whatever sector we're in. I want to open my own, I don't know, small restaurant or small cafe. Then they do some formulas around giving them a loan and a once in a lifetime loan. But they have to have criteria. They have to be educated. They have to have a bachelor's degree or a master's degree. You get the criteria, you put the guidelines around it, and then they take this loan, you are helping them open up something that they are passionate about. And afterwards, if they're not, you know, if they can repay you without any interest, this is the advantage of being in a family business. But then that's it. They're doing something they like, and you were part of it, and you made sure they're doing it right. They can get, you know, the advice from the founders, from other family members working. They can get a push into doing things better if they wish. But that's also a way of making sure that everybody feels that they have a place in the family and that they are taken care of.

Mino Vlachos: Yeah, I really love everything you just mentioned. I think it's such a fun topic, and it's why I really respect you and your work, because I see how much care and intention there is around taking care of both the family and taking care of the business. And if I'm being just very honest, I tend to skew more towards taking care of the entity, the business. And so I really respect just how much you work with the family side of it. So that because there's two systems at play, and I think this is going all the way back to the first kind of part of our conversation. There's what's good for the family and what's good for the business. And sometimes those are the same thing, and sometimes those are not the same thing. And so if a family chooses to have a business for the good of the family, that is very beautiful. And a lot of our conversation, at least when I'm speaking, I'm not talking about that necessarily, because if you want to give each child money and pet projects, and that's amazing, I think that's very cool. I am taking the lens a little bit of what's good for the business for the sake of the business, and how does the family support the business. And so sometimes my answers get skewed through that perspective. And I just wanted to make that clear to anyone listening is that's where I'm coming from many times, like, what's good for this organization and not necessarily what's the best thing to, for the family. But when you have a family business, those are so intertwined that there's no right answer to that formula. You can choose your family, and that's very great.

Marianne Saghbini: One point again. One thing I wanted to add was when you're, when we're in the beginning of the exercise of family business continuity planning, one of the major questions that we ask the client at the beginning is what comes first? Is it the business or the family? And this is also another for another session, maybe because it's a long debate on what should come first, because there is no right or wrong answer, but everybody thinks that it's the family. And of course it's the family. Family comes first. We're always there for each other, which makes sense. But then if you're putting the business second, then you're overlooking what's best for the business, what makes sense, so that the business can sustain and can make sure that all the family members can continue living within a certain lifestyle and being taken care of because the business is doing well. If the business is done doing well, the family will not be doing okay. But then, yes. So it's interesting as well to see the families I've worked with. They have different, different responses to these topics, and after a few discussions, they change their minds and they shift from one place to the other. So it's interesting.

Mino Vlachos: Yeah. And I'll just share where my bias is coming from is it's hard to run a business. It's hard to align people. It's hard to lead people. You're getting a bunch of people to behave in a similar way and go in a certain direction, work with each other. This is a very hard thing. It's why Marianne and I have jobs is because people need support to be able to do that. And what I find is that, for instance, in a nonprofit, the mission is typically pretty clear. So I have a target population I'm trying to help. That mission is clear. It's actually very. It's much easier to organize people in a business. The motives are already convoluted. Are we here to make money? Are we here for a mission? And then if you add the family dynamic in, it's very hard to organize and coordinate people when there's too many missions and visions floating around. And so if the. I tend to put the business first because I say you organize this and you're leading other people, because typically these family businesses, especially as they get larger, there are also other people that work there. It's not just the family members. You employ people, and they have families too, and they rely on income. And you basically called all these people together to go work towards a mission. To me, if it's just a piggy bank, I respect it, I acknowledge it. I'm like, good for you. But there's something above and beyond you that other families are also being supported by. There's something above and beyond you that's helping organize and coordinate these people to move in a direction. If there's so many different motivations floating around, I don't know how you can sustain that over long periods of time, especially across generations. I see that as one of the examples that likely may end in the business not surviving past the third generation, because each generation is using it for their personal kind of gain, which, again, is cool if you would like to do that. But that's not. Yeah, I just personally have a different bit of a bias on it. And so with that, I want to start to kind of bring us to some of the final questions for our session today. And so imagine in like a magic world, you got to teleport a message to family businesses across the world. Maybe they get a WhatsApp, friendly WhatsApp from your friendly advisor, Marianne. Maybe it's a thought that just gets kind of planted in their head. What's one message that you would love to deliver to family businesses around the world?

Marianne Saghbini: To family business owners? I would say cherish your legacy but also embrace change as an opportunity for growth. And never lose sight of your core values that built your business. But don't be afraid to innovate and adapt to new challenges. I mean, as we mentioned before, balance tradition with innovation, because nowadays this is critical. And keep nurturing your family bonds. Prioritize open communication, strategic planning, succession planning, and continuous learning, because you will never stop learning in this field.

Mino Vlachos: Lovely. And so today, we've talked about a wide kind of range of topics. In a quick summary, we've talked about from how to manage the familial relationships to the business relationships. So we have these two kind of systems. So how do we separate family and business? We've talked about some of the ways that the family businesses and end up not making it to the next generation or failing along the way. We've talked about some of the interventions that really help family businesses. The topic of kind of maintenance versus change. And so, as we start to bring this to a conclusion, I'm going to ask each of us to offer a little bit of our final thoughts. Just anything that's present around our conversation today, which I very much enjoyed, and any last things you want to leave us with. So, Marianne, I'll ask you to go first. Any final thoughts for us?

Marianne Saghbini: I mean, we all know that family businesses play a crucial role in our economy, right? Like 70% to 90% of businesses in every country are family businesses. But preserving the legacy requires constant effort and readiness to talk about sensitive topics like death and wealth. And although these subjects can be difficult to discuss, I mean, postponing them is not an option. That's what I would love for family business owners to realize. Do not postpone discussions around those topics. And I once had a client who said, oh, I never thought I would die. Literally said that. And, well, nothing lasts forever. And change is the only constant, so embrace it. But I would also say to those family business owners, as you navigate the complexities of these family dynamics and business strategy, remember that you're not alone. So seek guidance, learn from others experiences, and just stay true to your unique identity and value so that, you know, it gets transitioned as well to the next generation.

Mino Vlachos: And for me, the last thing I'll just share is, if you built the business, you likely didn't do it by accident. You likely put lots of intention and effort and sweat into building your business. And so don't leave succession to accident either. Put in proper supports so that the next generation have the maturity and experiences and the skills to take over your business. Every business needs to reinvent itself. I don't know of a single business that's still doing the same thing today as it did when it first started. If it's a bigger business or has a longer tenure, like if you look at every business that's 100 years old, what they do today and what they did 100 years ago is different. You're constantly reinventing yourself. It is the natural life cycle that we're in and that governs us and the universe. But don't leave it to accident. So allow your folks to get the training and the skills with intention so that they have the ability to take over, to run it the way that it's supposed to, to reinvent it if it's needed. And ultimately preserve the legacy and preserve this amazing gift, this inheritance that you've given to not only the next generation, but the employees that work there and the communities that rely on your services and the world at large. And so with that, we're going to conclude our podcast for today. I want to thank Marianne for making the time to do this, and thank you so much for listening. We'll see you soon.