(Dirty) family business secrets
Over many years, my team and I have advised many families and their businesses the world over, getting them from good to great to extraordinary.
Among them, many Southeast Asian and Philippine household names and some of the biggest conglomerates and wealthiest families.
What have I learned? That most families in the region can profit immensely from changing some of their ways to make their lives—and businesses—easier and, on top of it, earn more money. I will share some of these with you in this article.
Of course, space doesn’t allow me to go into detail but I will outline some of the most common mistakes I have seen over the many years.
If some of the mistakes I outline sound like you and your family, then there is only one thing to do if you are smart. Get expert help. Or lose a lot of money, time, sweat and tears.
Secret #1: You don’t talk enough
Most families don’t talk enough. This is by far the most common and the biggest mistake that we see. I mean open and honest conversations. There could be a huge elephant in the room and no one would talk about it. They would talk about everything else but that elephant. Let me give you some examples.
The 90-year-plus patriarch of a very big family empire who would not hear a word about the possibility of him dying one day. Behind closed doors, that is all the kids would talk about. But when he was around, they were playing the “dad is going to live forever” game.
You can guess how that turned out. No wonder I rejected working with this family—they first have to get their act together.
Or the two siblings who both lead a family business that is a record-breaking powerhouse, a goldmine that prints money—a true market leader in its industry. Both talk to me in private about each other. But they never talk to each other about any of their issues.
As a result, the most important s … never gets done. You cannot tiptoe about the elephants in the room and expect them to magically disappear. It just doesn’t happen that way.
Truth is: the elephants get bigger.
In this case, we had to rescue the brothers from reaching a point where their differences would be irreconcilable and really hurt the business.
‘Overcommunicate’ and tell it like it is
If you don’t agree with someone else’s management style or leadership, and you are both part of the same family, you have to say it. I know that is hard. Why? Because everyone is afraid of conflict.
Truth is: conflict starts out as constructive disagreements and only grows into full-blown conflict if the real issues are not addressed early.
The most functional families who also have the best businesses talk through everything, even if it means spending hours or days till conflicts or disagreements are resolved. Everything is openly addressed.
I know for a fact that one of the all-time richest families in the Philippines actually makes a special point of gathering every executive family member in a room and then addresses disagreements openly. Most however, do not do this. The solution is always the same: “overcommunicate,” meaning talk more than you think is necessary.
Secret #2: The family head gets the wrong respect
Too much respect for the family leader leads to blind spots. Then the family members do not tell the head of the family when she or he is wrong, and do not openly address her or his blind spots.
Difficult topics are not addressed, such as mistakes or potential death of the family head.
Family gatherings are “nice and friendly” on the surface, but actually “teflon meetings”: everything gets deflected.
I remember many examples. The family where the son had no motivation or willingness to go into the family business, but was forced and never revealed his true feelings to his dad.
Most of the time that family head lives in a complete bubble. Surrounded by “yes” men and women, including his or her children. Everybody nods. Nobody dares speak the truth to the patriarch or matriarch.
But the truth is: How can this family leader make the right decisions if he doesn’t see reality clearly because nobody tells him the truth?
When a family gets us on board to professionalize their business and to establish clear swim lanes within the family, we often see jaw-dropping reactions from the head of the family when we finally tell him or her what’s really going on.
Respect is good, but not if you keep the main patriarch or matriarch in the dark.
Secret #3: Succession—the oldest is often not the best choice
Face it. Just because someone is the oldest does not mean he or she won the gene pool lottery.
Often, the oldest is not the best choice. Yet this is how things are still done in most Southeast Asian countries. A bad choice.
Meritocracy should be your goal: Let the best one win. Otherwise, you are gambling with your empire. Who should assess who is the best? Neutral expert outsiders who are not biased. If you are the head of the family, the last person to assess your children should be you. Chances are, you are 100-percent biased.
I remember one Filipino family where the oldest child was clearly not interested in running anything except for marathons—and still got the CEO job.
When her father approached us for support, to increase profits, future-proof the business and professionalize it, we had to tell him the truth: His daughter should not be the CEO.
Secret #4: Sibling feuds must be 100 percent resolved
This is the best for the business, best for the family: Open communication.
Often, sibling feuds are swept under the rug, only solved “superficially” because no one wants to upset the head of the family. In reality, they hate each other and never really talk things out.
This is why I tell our clients: The “nice and happy” family lunches on a Sunday where everyone comes together and plays nice are often the biggest lies.
If you are at the top of the family, if you are the leader, don’t trust the false sense of harmony.
Encourage constructive disagreement and open conversations. It’s the best insurance policy for your business and your family.
I remember a family where the brother and sister had a strong disagreement and product and marketing, but swept it under the rug—for 10 years! Only when my team and I came in and established clear and open family communications, together with a complete overhaul and future-proofing of the business, they managed to clear this up. And suddenly had 17 percent more sales in three months!
Secret #5: The best businesses invest in getting the best advice
The best and biggest businesses, the ones that grow fast and even become regional or global players, invest in getting expert global advice. Don’t succumb to the “island” mentality. Get help.
All the major Filipino businesses do that, as do our clients.
The reason why they are so successful is because they understand that the most important investment you can make is to see reality clearly and to know where your biggest challenges and opportunities are.
You cannot put a price on your legacy.
