The Paradox of Peace – Nicholas Smith
Over the couple of weeks there have been plenty of military metaphors flying around, on both sides of the Channel and either side of the Atlantic, with Presidents Macron and Trump along with Boris Johnson all talking about the war with Corona virus and the need to work together to defeat this invisible enemy.
Much of the work we do as consultants can be seen as true peacetime work, such as helping families with positive and pro-active family business governance and succession planning projects. However for the greater part we are working with families in conflict. Not the tensions that are an inevitable consequence of the complexities of family business life, those that can be diagnosed, triaged and treated through the application of good governance processes. Rather everyday examples of the sort of mental health damaging, family business threatening conflict of the sort described by former IFB Director General Grant Gordon and Nigel Nicholson as afflicting high profile family business in their book Family Wars.
Whilst our clients dealing with such conflict also faced external challenges in ‘peacetime’, preparing for Brexit etc., these challenges were relative hiccups compared to the events of last few weeks, such as the closure of significant export markets, with attendant cash flow difficulties. The most significant challenges they faced could be truly described as internal and stemming from family dynamics. It might be assumed that against this background that family firms like this will inevitably be casualties in the war against Coranavirus.
Not necessarily. Over the last week we have seen signs of a quite remarkable transformation. Paradoxically, when faced with an existential crisis for their family company, working directors previously at loggerheads have begun to collaborate and communicate to an unexpected degree.
How has this happened? Obviously we would like to claim a victory for the consultancy process. However whilst green shoots of communication have been appearing over the last few months these have grown considerably over the last weeks.
Can we point to a watershed moment? No, there simply seems to have been a realisation on the part of the clients that, as they put the position, ‘we are in this together and have to get on with it’.
Is there a deeper explanation? Possibly. There is much debate as to whether business families should take a ‘business first’ approach, concentrating on the profitability and financial stability of their family business, on the basis that without this there is no prospect of looking after the family. Advocates of the alternative ‘family first’ approach argue that the long term survival of a family business requires investment in looking after the business family and the wider stakeholder in the family business concerned. In academic jargon generating socio-emotional wealth, rather than financial returns.
Other academics argue that business first and family first are fluid rather than fixed concepts and that, in a hostile economic environment, business families are likely to batten down the hatches and switch to a business first approach to ensure the survival of their family firm.
We are not aware of a mirror image concept for socio-economic wealth for those business families that seem to invest their energies in destructive conflict. Perhaps psychological emotional deficit will do. Arguably what we have identified above results from a conscious or sub-conscious decision on the family directors to invest this negative energy more positively in working for the survival of their family business. In other words moving from a family (conflict) first to a business first approach.
Can we point to similar situations in the past? Certainly there are parallels with other clients around 2008, at the time of the banking crisis.
Assuming that our clients do indeed survive the war against Coranavirus (and we believe that there is every prospect that they will do so), will we witness a permanent change in family dynamics? The term ‘peace dividend’ was coined following the end of the Cold War to account for public spending no longer required for defence budgets. The challenge for family businesses of the profile described here is to make best use, during times of peace, of their Coronavirus war dividend: the improvements in their communication and inter-personal dynamics.
Is there some magic formula or approach that all business families can adopt to achieve a similar state of focus? If only. Whilst a lot has been written about good communication and conflict management, the basis of our consultancy approach is to work with clients to help them identify an appropriate solution for their unique family business situation.
But to put it no higher it can do no harm for business families to pause and reflect on their own priorities at this time.