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The fabric of successful business families: Emotional roulette or emotional compass?

    “The rise and fall of the House of Seagram”, “Dethroning the King : The hostile takeover of Anheuser-Busch”, “Steinberg: The breakup of a family empire” or “Gucci Wars”, to cite a few, are documented storytelling books about the successes and failures of business families. Standalone from the actual facts, what strikes the reader most is the key role played by emotions in defining or shaping the family and business behavior.

    Understanding what processes lead to a particular behavior has been traditionally subject to debate among thought leaders beyond the world of family businesses. Recently, the Nobel laureate in economics Daniel Kahneman offers an analysis of our “Thinking, Fast and Slow”, revealing that our economic decisions are not made emotionless and that our behavior is governed by two cognitive systems: fast and intuitive on one side, slow and deliberate on the other side. In a similar line of thought, the bestselling author Malcom Gladwell argues that a “Blink” (intuition) is by far more effective than a cautious decision. Added to this, the Professor of psychology and behavioral economics Dan Ariely suggests that positive and negative behavior can be “Predictably Irrational” and the award-winning business reporter Charles Duhigg observes that “The Power of Habit” can derive its sources from emotional rewards and lead to unintended consequences. Moving from the macroeconomic perspective of Gladwell’s “Tipping point” showing how a small change can have unforeseen effects, it is possible to identify with the professor of positivity Barbara Fredrickson an individual’s tipping point of positive to negative emotions that marks the difference between human flourishing and floundering.

    Yet, given the relevance of the emotional dimension in family systems, one might ask : How valuable are those insights for understanding business families behavior? To what extent the successful behavior of business families is the product of instinct (emotional roulette) or well-thought of processes (emotional compass)? To what extent emotional change by reference to a tipping point might lead to the business salvation or destruction?

    Looking at the family therapy literature, one realizes that families are fundamentally emotional systems that can be of several types ranging from disengaged families to enmeshed families. Recent research by Rania Labaki et al. has translated this stream of thought to the family business by “Exploring the Emotional Nexus in Cogent Family Business Archetypes”. The identified archetypes are characterized by a certain number of emotional features, such as emotional norms, emotional capital, cohesion and adaptability, that contribute to defining behavior given the degree to which the family and the business interact. Family businesses are viewed on a continuum with two extremes of “Enmeshed family businesses” with blurred family and business boundaries on one side, and “Disengaged family businesses” where each system has distinctive values, modes of functioning and goals, on the other side. “Balanced family businesses” are placed in the middle of the continuum suggesting healthy emotional interactions between the family and business systems that favor an adequate adaptation to change while maintaining cohesive relationships in the advent of stressful events.

    As Lao Tzu inspires us, “If you do not change direction, you may end up where you are heading”. Depending on their emotional archetype, change in direction is sometimes a much needed endeavor for business families. Still, the question of the direction to opt for and the tipping point to consider is rather a challenging one.

    Let’s take the example of some standard norms that are widely accepted today and whose explanations originate way back in the past. Looking at the width of train railway tracks, Paulo Coelho questions in one of his novels the curious distance of 143,5 cm. Investigating the reasons behind these standards brings him back to the Roman Empire where the wheel distance of the war chariots was equivalent to the distance between the two horses driving them. This distance has been progressively replicated in the construction of roads to become the standard width for most modern railways today. One would ask: what does the railway tracks’ width have to tell us about business families behavior?

    Tracing back the family history may help us understanding the current generation’s behavior. Building on Murray Bowen’s family systems theory, families are viewed as multigenerational units where emotional patterns can be transferred across generations, some of which can be largely dysfunctional. Understanding the origins of certain patterns is an important preliminary stage for the family to deal with existing dysfunctional emotions where it is stuck. Connecting these family therapy’s dots with the Power of habit’s allows us to reflect on how a family habit driven by an emotional reward may inform the family’s self-image. Once the emotional sources of habit acknowledged, one may agree that it becomes easier for the family to change the habit towards more functional outcomes. For the change to happen, in the sense of Lao Tzu, family members need to be aware of their historical emotional baggage before choosing to engage in a new direction.

    The family business emotional archetype and patterns inform the family about the proper timing and direction of change in light of its tipping point. Notwithstanding Aristotle’s arguments about “things happening due to chance or luck”, the insights of this article go beyond “the emotional roulette” to set the stage for “the emotional compass” that business families might follow to prevent or rescue themselves from a behavior of an emotionally devastating nature.

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