challenges confronting family business find solutions at Kellogg,
thanks to a powerful research center and a leading expert
on the world's original business model
Joan Hall for Kellogg World
probably think twice before spending Thanksgiving dinner with
your boss, no matter how fond you might be of that person
who paged you three times last weekend while you shopped for
tile at Home Depot. Yet a significant portion of the world's
business community not only breaks bread with their CEO, they
may also ask her which color tile looks best in the bathroom.
to the world of family business, replete with fascinating
challenges largely unknown to those treading the halls of
family businesses, you have manager relationships that last
a lifetime," says Professor John Ward, co-director of
the Kellogg-based Center for Family Enterprise. Ward is an
international authority on family business who has written
three textbooks and a dozen substantial booklets on the subject.
"I've concluded that the characteristics of the family
more profoundly affect the outcome of an enterprise than the
classical business issues," he adds.
the point, imagine General Electric CEO Jack Welch holding
court in the corporate boardroom, fire leaping from his tongue,
his eyes flickering with another cost-cutting stratagem. Now
imagine Welch is your father and you're one of his senior
executives charged with the task of convincing the corporate
legend that his latest idea belongs in the ashcan. It's not
a picture that inspires yogic tranquility. But this scenario
does reveal the complex, and emotional, governance issues
that Ward says confront family businesses.
issues, succession issues, product life cycles." Ward
ticks off a list of hurdles that distinguish family business
leaders from their public company peers. These challenges
make family business a compelling study for Ward and Lloyd
Shefsky, clinical professor of managerial economics and decision
sciences, and the center's co-director.
In a Kellogg
course titled Family Enterprise: Issues & Solutions, Ward
and Shefsky introduce students to an arena unfamiliar to many.
The course was launched last year as a five-week program and
is already so popular that its length and enrollment have
doubled. "Family business studies at Kellogg will provide
valuable tools to faculty teaching a variety of seemingly
unrelated subjects," says Shefsky.
be surprised to learn that family business is not just some
mom-and-pop pizzeria tucked into a crumbling row of brownstones
back in the old neighborhood. Many family businesses are actually
household names. "Levi Strauss is a family business,"
Ward explains. "So are S.C. Johnson, the New York Times
and Ford Motor Co. Family businesses make up a huge percentage
of the biggest companies in the world."
classroom, the professors not only identify the issues facing
family business, they develop theories about how these companies
behave. Ward and Shefsky are especially interested in how
family character and values -- including ethnic or religious
structures -- shape the conduct and strategy of a business.
The class draws significantly upon live case studies. Shefsky
notes that there's a "desperate lack" of these studies
for family business, so the research at Kellogg affords the
school a chance to grow its reputation in this area. One case
used in the course features a Kellogg alum who is part of
a business that transformed itself from a traditional publishing
company to one that includes a high-tech component. "This
is a great case that lets us explore how businesses are born
within businesses," says Ward.
Ward didn't invent family business -- the institution goes
back thousands of years -- he has popularized the subject
as an academic area. Two decades ago, Ward, a strategic planner
by training, grew fascinated by his initial foray into family
business and wanted to learn more. "So I did what any
good researcher would do," he recalls. "I went to
the library to read what had been written on the subject.
What I found was that virtually nothing had been done in this
area. That fascinated me even more."
that the "major institution" in the world's economy
had been ignored by most academics for two key reasons: the
intensely private nature of many family businesses, coupled
with a bias against these companies among scholars.
1930, the attitude of business education was to professionalize
business," says Ward. "This became a powerful paradigm
that not only made the inference that family businesses were
poorly run, but that the role of schools was to prepare people
for careers in publicly owned, professionally managed businesses."
has changed today, in part due to the efforts of people like
Ward and Shefsky, and the Center for Family Enterprise, founded
in 1998. The center studies every aspect of family business,
including successorship. "One thing that's unique for
leaders of family businesses is that typically they're following
in the footsteps of a relative, a parent perhaps -- maybe
a real hero," says Ward. "There's a legacy effect,
but there's also a great challenge of following someone who
was a great founder."
legacy is measured with a cultural yardstick that varies from
that used elsewhere. If an American family business matures
through three generations it's considered "high risk,"
says Shefsky. In some countries such a company would be considered
fledgling. "While teaching in Japan, a man asked me a
question about his family business," the professor recalls.
"I asked him what generation he represented. The 14th,
he told me. I was dumbfounded. I replied 'That's older than
to growing the Family Enterprise course, Ward and Shefsky
have worked to produce a groundbreaking executive education
program. Classes will begin this fall with a Nov. 27-30 course
on family governance at the James L. Allen Center. A weekend
conference is slated for next May. A major goal for the center
involves identifying and developing a network of alums worldwide
and establishing a database of family business scholars and
professionals. "A big priority for us is building a proprietary
Internet communications system for alums to reach each other
and to exchange ideas and share questions," says Ward.
passion for family business stems from his belief that these
institutions play an important role the world over. In most
societies, he contends, the leaders of these businesses are
also the leaders of organizations that provide community stability.
a social dimension to all this," Ward says. "It's
not just about the fascination of learning how these organizations
overcome their challenges. The deeper question is: Are family
businesses good for society? My opinion is that having a rich
diversity of ownership systems is good."