A Framework for Building Family Business Champions

Arthur Bell, born in 1888, and his older brother Henry were sons of a California doctor. Both brothers left home to work in a cotton factory at a time when doing so was an opportunity to make a good living. After a few years of this work, Arthur and Henry moved back to California and purchased an olive grove. The year was 1912, and this was the beginning of what would become Bell-Carter Foods — a family business that has grown and thrived for more than 100 years.

Like Bell-Carter, some families succeed in building family businesses that are "sustainably successful" over many generations. Cargill, Mars, Bechtel, Bank Santander, Heineken, Samsung Electronics, and TATA Steel are among the largest and most successful businesses in the world. These are true family business champions. Other families, at some point, sell all or a part of the business to nonfamily members — sometimes remaining active in the business (on the board, in specific management positions, etc.) and sometimes exiting the business entirely. Ford Motor Company, Simon Property Group, Samsung Electronics, Bank Santander, and 99 Cents Only Stores, for example, made the transition from family-held to publicly held, with family members remaining active in the business. Other family businesses last no more than one generation. Like a rock band with one hit song, these companies are a "one-generation wonder."

What are the secrets of those family businesses that grow and thrive over multiple generations to become family business champions? Is there a formula for long-term success? What can be learned from businesses that experience difficulties and last only one generation or decide to sell and exit (sometimes because family members cannot work effectively together)? Do they point to pitfalls that can be avoided?

This chapter provides a framework for understanding the challenges of building family businesses that last for generations. As we shall see, family businesses face all of the challenges and problems that other businesses do, but they also have problems and challenges that are unique to their "species." Here we provide criteria for assessing the extent to which a family business has the systems, processes, structure, and family dynamics needed to ensure its long-term success. We build on this framework throughout the book and explain how it can be used to promote successful family business development and create family business champions.

What Is a Family Business?

The typical perception or stereotype is of a small and unsophisticated company. Small family businesses are sometimes referred to as "mom and pop." However, as we shall see below, this stereotypical archetype is rarely accurate.

It should be no