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Our recent blogs about family values and how they can be a genuine competitive advantage for small and mid-sized firms (e.g.: “Why Family Controlled Businesses Outperform”), have garnered the expected reaction from the large-C capitalists in our professional network. After all, what place could this folksy, feel-good rhetoric possibly have in a for-profit business anyway? (Yes, we are followers of Warren Buffett’s wisdom!)
Our response is that ALL successful businesses – including closely-held firms – are ultimately guided (whether documented or not) by variations of the more common values of wealth creation, reputation, fairness, responsibility and hard work. The differences lie in the extent to which a company’s workforce shares these corporate values. We maintain that the connection to shared corporate values is generally much stronger in family-controlled businesses than in larger, more widely-held firms.
This matters for three good reasons:
In short, the family’s values become the foundation of more meaningful family AND business actions.
Most successful business families document a values statement and review it annually as part of their normal governance process. After that, the most serious family conflicts tend to arise not from disagreements about business actions, but from a violation of these shared family values. The act of regularly discussing values becomes a tool for both clarifying and transmitting them down through the generations.
Clear family values also help make ownership and management succession transitions a great opportunity for the next generation to identify new and better opportunities and strategies. Should clarifying and documenting shared values sound like a daunting task, remember that professional outsiders – even a long-time customer or supplier – are often able to pinpoint the family’s values more accurately and with more meaningful language than the family itself might use.
So, what do you (or Warren Buffett) truly value?
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