CHAPTER 1

Two People Walk into a Conference Room

The moment you doubt whether you can fly, you ceasefor ever to be able to do it.

—J.M. Barrie, Peter Pan

The stage is set. Dim the lights. Cue the actors.

Scenario One:

John W. Owner calls his prospective son-in-law, Albert, into theconference room at his company's headquarters for a chat. GeneralEquipment Manufacturing (GEM) makes and sells conveyor systemsand was established by John's great-grandfather in 1897. It has beenfamily-owned and family-managed ever since, but now John is gettingolder. He's sixty-seven and in good health. He and his wife, Marissa,have one child, Rebecca, who is twenty-two and is engaged to Albert.Their wedding is three weeks away.

Albert is a fine young man who recently graduated with an MBAfrom a nationally known business school, but he has no businessexperience. His father and grandfather are lawyers and his mother is asocial worker.

John has already offered Albert a job with GEM as a salesassistant.

Albert thinks that John wants to go over some of the wedding plans.But John looks very serious and his brow is knitted with concern. Thebig smile on Albert's face suddenly disappears as John begins to talk.

Scenario Two:

In a variation of the first scenario, we still have GEM and John, butin this version there is no Albert. John wants to talk to Rebecca abouther future. Rebecca is in her senior year at a well-known liberal artscollege and is considering taking a year off after college to tour the worldwith her friend, Emily. She is majoring in philosophy.

Rebecca sits down in the conference room across from John andlooks expectantly at her father as he begins to speak.

Scenario Three:

This time we still have GEM and John, but there is no Rebecca. Johnhas had a very successful career in building GEM, but he and Marissawere not blessed with children of their own. The company has beenJohn's surrogate child. He has raised it, nurtured it, and presided overits growth. GEM today is double the size it was when John took over asCEO from his father, Jeremy, twenty years ago. John is getting restlessand wants other challenges in his life.

John has worked very hard to build a strong management team. Hehas a CFO, Elliott Spencer, who has been with him for fifteen years.His national sales manager, William First, has been with GEM for tenyears. The VP of Manufacturing, Paul Burke, has been with GEM forseven years. Jillian Stewart, VP of Marketing, has been with GEM forfive years. In addition to these four senior officers, John has broughtin strong middle management. He has assembled a team of sevenadditional key personnel who are in sales, human relations, marketing,and manufacturing.

John has called for a meeting with his senior management team.They usually meet every Monday morning to go over plans for the weekahead. But this is Friday afternoon and they are all curious what's onJohn's mind. They begin to fidget and squirm as John starts to talk.

Scenario Four:

In yet another version, John still runs GEM and has the samemanagement team. Rebecca is once more engaged to Albert. But thistime John isn't the one who initiates a discussion about succession.Elliott Spencer, CFO, and Paul Burke, VP of Manufacturing, are havinga cup of coffee one Thursday afternoon. They've worked closely togetherover the years and trust each other implicitly. Lately, they've seen hintsthat John is starting to slow down, and from offhand comments they'veheard him make, they think he may be considering stepping down oreven selling GEM. They have no idea about what role Albert may play.Elliott and Paul start to think about what might happen if John decidesto leave, much less sell the company. "Paul," Elliott says, as he looksdown into his coffee cup, "Let me ask you something."

Scenario Five:

John and Marissa have three wonderful children who all graduatedfrom college, and John is considering offering two of them, Biff andBob, positions in the business. The third child, Adriana, is going to lawschool. John is mulling over what he should do about inserting Biff andBob into jobs at the company and whether he should make provisionsnow for them to own stock. If so, what does he do about Adriana? Sohe calls a family conference for Sunday afternoon. He's not sure howto begin, so he starts to talk about his great-grandfather and how thebusiness got started. Biff and Bob look bored, and Adriana could careless. John stops giving the family history and stands up, puts down hisglass of wine, and starts to speak from his heart.

Scenario Six:

John has been building GEM over the years and is proud of hissuccess. He's built a strong management team and has rewarded themgenerously with annual cash bonuses for their performance. He's beenthinking about starting to make gifts of stock to his children—Rebecca,Biff, and Bob—but he just hasn't gotten around to meeting with hislawyer and his CPA. This morning John got a phone call from CharlesMorrison, CEO of one of his competitors,...