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Generation Next
Family-owned companies account for more than two-thirds of all business around the globe. In fact, most of the world's largest and most influential business organizations are family-run. In the United States, for example, firms such as Motorola, Nordstrom, Bechtel, the Marriott Corporation, and The New York Times Company are all family enterprises. Yet until recently, the phenomenon of family businesses has attracted little formal attention in academia.
Building on a long tradition of research on family companies, HBS has started launching programs to serve the needs of these businesses. Last November, the School offered a new Executive Education program, Families in Business: From Generation to Generation. The five-day program, designed for teams of two to eight members of a family business, examines pivotal issues and provides state-of-the-art knowledge about family-run companies.
"Since well before biblical times, the basic unit of commerce has been the family," explains HBS senior lecturer John A. Davis, coauthor of Generation to Generation: Life Cycles of the Family Business, who helped create the program. "Family companies can be the most powerful competitors you'll find. But they're also highly vulnerable systems. This program helps leaders of such companies understand the special dynamics inherent in family business so that their firms can become even more high-performing."
The program, which will be offered again at Soldiers Field this November, addresses topics such as the life cycles of the family business, dilemmas inherent in working with relatives, grooming the next generation of company leadership, governance of the firm, and managing the impact of wealth on the family. "We spend much of the time wrestling with the knotty interpersonal issues that families bring to company situations," says HBS professor Louis B. ("By") Barnes, who, with Davis and Howard H. Stevenson, taught the program. "We try to help family members develop specific action plans for both themselves and their organizations," Barnes notes.
The 1997 session attracted members of eighteen different family companies from nine countries. Among them were several family owners and managers of the Stroh Companies, Inc., the parent company of America's fourth largest brewery. "We're now in our sixth generation," says Suzanne Gerber-Stroh, a representative to the Stroh Family Council, the governing body of the Stroh family. "Attending the program was something of a departure for us - we're not used to going outside the family for answers. But it proved to be a wise decision. We gained a tremendous amount of perspective by hearing other families' experiences. We also acquired a lot of technical knowledge about how to manage our family and to excel as stewards of our business."
Representing a company on the "younger" end of the spectrum was Michael L. Carricarte, the president of Amedex Insurance Group, a Miami-based insurance company that he started with his father in 1986. Today, Carricarte's two sisters also help run the firm, which is now the largest provider of insurance services to Latin America and the Caribbean. "The program gave my sister Jenny and me some important insights," Carricarte says. "For instance, we learned just how key communication is among family members when running a business. As a result, we've planned several family retreats. It really hit home for us that if you don't have a healthy family outside the business, you won't have a healthy business, period."
"The new program is part of a larger HBS effort to develop research on family businesses," says Davis. "We're building on the work that HBS professor emeritus Renato Tagiuri and By Barnes have pioneered over the past twenty years." Toward that end, the School now offers a new MBA elective, Management of the Family Business, taught this past year by Barnes and Davis. This summer, a modified version of the Families in Business program will be offered in partnership with the Universidad Adolfo Ibañez in Santiago, Chile, and in São Paulo, Brazil.
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