This month’s title is borrowed from the warden’s speech in the iconic film, Cool Hand Luke (1967), as the warden sadistically tries to tame Paul Newman’s character in one of Newman’s most indelible performances as petty criminal, Luke Jackson, serving time on a Florida prison farm.

Every parent and every child experience a failure to communicate at some point in their family lives. But when a family business is part of their daily reality, parents and children can suffer an especially acute brand of communication failure. Careers, economics and egos burden what would otherwise be simply the stuff of casual, sometimes even comical, generational differences.

There have been volumes written (most often) about the controlling patriarch who founded the family business and is the frequent source of frustration to the succeeding generation. The constant, but simplistic, refrain is: Dad just refuses to let go of the reigns.

Much has been written, as well, about the patriarch’s reciprocal frustrations, who experiences, with mixed emotion, the next generation as born into privilege, struggling to come into their own, wanting to try new approaches, and hoping to make names for themselves–with many of their youthful urges floating atop the deeper, less recognized, currents of competition with the generation before.

Students of such dynamics must also consider how the senior generation’s private personal challenges may, unknown to the younger generation, contribute to the family’s generational tensions. Perhaps the patriarch is quietly wrestling, outside of the realm of business, with the physical and emotional realities of aging, that process of continual diminishment. The fast ball–not quite as fast; the once dominating physical presence–now found blending in, more than standing out.

And, in the business – yes, the business built by the patriarch, the one which has always taken care of family – little solace may be found. The tools by which the business is operated have changed so dramatically and with such speed as to conjure fears of a new brand of illiteracy. Where the patriarch used to keep track of the company’s sales force with a three-ring binder and three-hole punch, the succeeding daughter, who possesses neither, relies instead, on her smartphone.

Chants of ‘succession’ from the younger generation, echoed by a chorus of business advisors on the periphery, ring to the senior, not as sound business strategy, but as a final call to pasture. Making matters worse, as the younger generation’s nuclear families grow, the patriarch comes to recognize that it is primarily within the context of the business relationship that his connection with his children has been maintained. What will the contact be if the patriarch agrees to be put out to pasture? Is the reader reminded of the Harry Chapin song, Cats in the Cradle?

Despite all of the words floating in the ether, what we have here is… failure to communicate.

The reality in many such cases is that the combination of generations one and two, brought together properly, can result in a synergy much more powerful and effective than if either generation were to have its way without input from—or the involvement of—the other. It is the successful blending of generations, in fact, which can provide family businesses with competitive advantage.

Yet, the generations lack a process which might enable them to take advantage of what the other has to offer. They simply don’t know how. If only they had the right music, they might be able to dance. Instead, they are stuck in traps of trite assumptions based upon the other’s station in life.

For Gen 2, Gen 1 seems old, stuck in their ways, failing to recognize that times have changed, and their ideas may seem no longer relevant. Here, Gen 2’s knee-jerk assumptions may lead astray. The advent of technology has added to the rift between generations like nothing before. Best not to lose sight of the fact that technology is substantially a means to an end.

Consider that the Empire State Building, built in 1930, was completed in a remarkable one year and forty-five days. It was built, in part, by structural engineers who relied on mechanical slide rules to engage in the complex mathematics necessary to calculate loads, stresses, and the strength of materials. The same physical laws which those engineers struggled to understand and mediate in 1930 remain unchanged today. Their building has withstood the test of time. Would we say of those engineers, that what they knew about structural engineering is now obsolete? We would not. As Gen 1 is aware (but Gen 2 perhaps not) the same may be said of the basic principles of commerce.

For Gen 1, Gen 2 may appear too inexperienced, insufficiently entrepreneurial, and without appreciation for what went into the building of the business. What Gen 1 may be missing, however, is that the business is different today and different skills, processes, and ways of operation are called for. The special brand of magic which the entrepreneur founder brought to the task of creation is likely not the same magic necessary to bring the business to greater heights. Something more is needed. The slide rule must give way to the computer.

Both generations’ misapprehensions of the other are further encumbered by the weight and roles of their orbit in the parent / child dynamic.

Just as a pilot in flight may alter altitude to avoid turbulence, so too, the brand of family-business turbulence described may be avoided at higher orbit. That orbit is governance and it will require the introduction of non-family members into the development of strategy, processes, and accountability. Achieving such an orbit requires a guide, one practiced in both business and the business of family.

Each generation will have its own lane defined. Appropriate members of Gen 2 deserve to be respected, given adequate operational latitude, and be held accountable, not as children, but as executives—as independently as if they had different last names.

Members of Gen 1 deserve a respected seat at the table, not in a commemorative sense, but as a uniquely effective contributor to strategy and ultimately, once new behaviors have been learned, to the orchestration of governance.

This evolutionary dance is not one of succession. Rather, it’s one of continuity, a complex planning process of improved family relationships and organizational maturing. In such a process, Gen 1 will continue to play a pivotal role, not only in leadership but also in ownership and governance, while Gen 2 continues to develop and add its own strength to the company’s growth.

If achieved, what we will have here … is a truly cool hand.

Until next time…
The Owl

This edition is dedicated to George Jamieson, PWC Partner (retired) and mentor to many an Owl, whose shared observations inspired this piece.

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