Rick has extensive experience with high net worth individuals and families, working with them in both a financial and governance capacity. He thrives on understanding the business and entrepreneurial journey of individuals and families and then using creative and strategic thinking skills to help them succeed.
The entrepreneurial spirit is at the core of many successful businesses. While the spirit may be reflected in a person, it is ultimately preferable to create a system. Ongoing successful businesses are able to transition from a person to a culture. Microsoft has not been run by Bill Gates for a while. More surprising, the passing of the super nova of Steve Jobs has seemingly not derailed Apple. Why?
The key is that an understanding of the entrepreneurial spirit permeates the company. How does this fit in with a family business? The challenge in a family business is to understand that innovation dwarfs all else. While some family members may have an entrepreneurial skillset, and as successors may ably run and grow the business, that is not guaranteed.
I have been with family businesses where the founder came up with a great product to fill a market niche and it worked—indeed, very well. The next generation fell in love with the success and drew the lesson that they must stick with that innovation. This could be a mistake. They should focus on the nature of the processes which lead to the innovation rather than the specific outcome of the innovation.
This is the difference between the entrepreneur as a super-talent with unrepeatable skills versus an entrepreneurial culture in which a team fosters the right environment. So, the exceptional gene seemingly can—sometimes—get passed on. But counting on it is a big risk. The entrepreneurial spirit must trump family, for the good of the family.
What is entrepreneurship? At the heart of entrepreneurship is innovation. As famed management guru, Peter Drucker, stated, innovation is the sine qua non of entrepreneurship. Further, the environment keeps changing and the entrepreneur must adapt.
Larry Farrell, a global entrepreneurship consultant, highlights the perils of not doing so. He talks about the half-circle “entrepreneurial life cycle:” start-up, growth, plateau and decline. He points out that companies must continually look to redo and reset in order to sustain growth.
Another aspect of the entrepreneurial spirit is opportunity obsession. Howard Stevenson provides the so-called Harvard definition of entrepreneurship: the pursuit of opportunity without regard to the resources controlled. Companies must keep innovating to meet new challenges. Harvard Business School does not teach graduates to “be an entrepreneur,” but rather how to engage in “entrepreneurial thinking.”
The practical consequence is that a family business, indeed any business, cannot be built on good feelings, tradition, or past achievements. There must be value as determined by the market. Businesses thrive because of prioritization of the core of innovation and the entrepreneurial spirit, rather than tradition or ossified past practices. For most people, their loyalty to Joe and his family running the beloved corner store ended when Costco and Amazon showed up.
Family businesses are like all businesses in most respects, but they have some unique dynamics, which can undermine innovation and creativity. So, the priority needs to be on creating an entrepreneurial culture, which can be done, with or without the gene pool.
This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Nicola Wealth is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities commission.