Over the recent holiday, I was watching a film version of Charles Dickens’ A Christmas Carol. In this popular tale, Ebenezer Scrooge is visited on Christmas Eve by the Ghosts of Christmases Past, Present, and Yet to Come. The Ghosts take Scrooge on a journey showing him what has been, what is, and what may be. Upon awaking the following day, Scrooge has completely transformed, reset his priorities and beliefs, and dramatically altered his behavior. This story demonstrates that our view of time and frames of reference can have a powerful influence on our decision making process and strategic choices.
There is a growing recognition that family firms are often different than non-family firms with respect to the role of time in their decision making.
With respect to the past, family firms are generally older than non-family firms and the tenures of family firm managers tend to be longer than their non-family counterparts. Family firms have more of a past and longer memory. In family firms, the presence of multiple generations (sometimes lingering like ghosts) can heighten the influence of past events on current decisions.
Looking towards the future, family firms often have different goals than non-family firms. Family firms are defined by the desire to maintain future family ownership and control through succession. They tend to have longer investment horizons. They often focus on an enduring mission and strive to maintain the family reputation. All of these factors can serve to make the future more real and salient for family firm managers. This increases the likelihood that long-term considerations will play a greater role in shaping current decisions.
It is safe to assume that the most influential time consideration for many companies and individuals is the present. Most decisions are made with little consideration for past events or long-term consequences and are just made to address more current concerns. This is evident in entrepreneurial start-up companies, which have no past to speak of, and are often focused on surviving to the next day and not running out of cash. On the other end of the spectrum are large, publicly traded companies. While often having long histories, these companies are often criticized for overly focusing on the very short-term outcomes of quarterly earnings and meeting analysts’ projections.
Sometimes, to their detriment, managers of family firms can become engrossed in the present, and ignore past and future considerations. Recently, I was working with a founding owner-manager of a family firm. The founder was contemplating whether or not to sell the business or to go through with a succession to a daughter who also worked at the firm. Following some conflicts between the two, the founder was fed up and had decided to just sell the business. He was frustrated and focused on a quick way to exit a painful situation. I asked the founder to “sleep on it” before making a final decision. I also asked him to think about all that he had accomplished in growing the business over 30 years (the past) and what he wanted his legacy to be (the future).
Lo and behold, in a transformation not much different than old Scrooge, the founder called me the next day and had completely reversed his position. He was now re-energized and excited about keeping and growing the family business. In thinking about all of the challenges the business had overcome in the past, going through the succession process no longer seemed like such a difficult obstacle. By thinking in terms of his legacy, the family business was now viewed a as a vehicle through which he could positively influence future generations. After incorporating past and future considerations in his decision process, his family business was no longer a “Humbug” but something to celebrate.