Moving from Fake Harmony to Constructive Conflict

By Josh Baron and Rob Lachenauer

Sierra Nevada is a family-owned beer company. Their tagline, which shows up on every can and bottle, is, “FAMILY OWNED, OPERATED & ARGUED OVER.” Ken Grossman, Sierra Nevada’s founder, says, “It’s funny, but it’s the truth. We can get together and argue over what’s best for us as a company moving forward, but we all do it in good faith, knowing that everyone wants what’s best overall.”

Can you say something similar about your family business? If not, you may find yourself in a difficult position precisely because you have avoided conflict. Take, for example, the experience of one family in the retail business. Throughout the years, tempers would begin to flare – not because there was too much disagreement, but because important decisions were avoided rather than dealing with potential disagreement. For example, while every member of the third generation worked in the business, there was a major discrepancy in their commitment levels and contributions. Those who worked overtime to get their work done began resenting those who showed up at their leisure, but the family resisted setting any standards that might alienate someone. Eventually, the leaders of the business decided to sell the company rather than tackle the disagreements that would threaten to disrupt family harmony during the transition to the third generation. Unfortunately, selling the business did not solve the problem, as there were grievances about how the proceeds were divided and a feeling among many that they had given up the family legacy too easily. And without the business to keep them together, the family started to drift apart. Within a few years, many family members looked back on the sale as a mistake. Both the business and the close relationships are now gone.

There is, however, a better path – what we’ve come to call “The Goldilocks Zone” of conflict, where disagreements can be constructively aired and discussed.

If, like this family, you find yourself on the “too little” side of the conflict spectrum, here’s some advice on getting into the Goldilocks Zone:

• Agree on meeting ground rules to help guide healthy discussions. For an example, see the box on Sample Meeting Ground Rules. You should agree on these ground rules before you get into substantive discussions. And then review them before each meeting. When someone’s behavior deviates, gently but directly use the specific ground rule to call it out.
• Start with building shared purpose. Talk about what you are trying to accomplish by owning the family business together. Doing so helps create the foundation for collective action and sacrifice. You can also articulate a “negative purpose” – identifying outcomes you are trying to avoid by dealing with them now. Use this shadow of the future to help motivate action and retain cohesion.
• Create “beachheads” to build momentum. Oftentimes the sheer scale of change is daunting, and it can be valuable to have a small place to start. It’s usually better to be evolutionary rather than revolutionary. With one family, we were exploring ways to integrate in-laws into the governance structures. There was a reluctance to put them in the Family Council, so we used a Next Generation Taskforce to create a starting point. Make sure you work with the current sources of authority, rather than trying to overthrow them.
• Focus on principles rather than people. Try to avoid making decisions with particular people in mind, since each person’s position will be shaped by how it affects them. Instead, start with broader principles that you can then apply to a particular situation. Try to develop the principles before you need them. For example, it is valuable to come up with a Family Employment Policy (See Chapter 10) well before the next generation is ready to enter the workforce and people get positional about their children. If you are having to deal with a “live” issue, try to generalize it as a precedent that could ultimately affect anyone in the future.
• Graft new ideas onto existing ones. There is a lot of research on how ideas spread, and one of the key findings is that new ideas are more acceptable if they are added onto existing ones rather than being seen as brand new. Change is hard for most families, and it can be easier to accept when it is perceived as being connected to already accepted wisdom. This is the notion of “grafting”, of consciously integrating the new idea into what is already in place. For example, we were trying to help a family to change one of the rules set down by their father. It was easier for them to accept it when they were able to connect this change to exceptions he made previously on the same subject.
• Affirm the value of what came before. In a change process, resist the tendency to make the case for what has to come next by denigrating what came before it, as it tends to create defensiveness among the people who created the current system. Instead, start with identifying why what exists today is entirely rational given the prevailing set of circumstances when the choices were made. Then point to the change in circumstances that makes those approaches no longer viable.

No one aims to have conflict within a business – and even worse, within a family. But some conflict is actually healthy. It provides a chance to clear the air of lingering resentments and potential issues, and perhaps to even find a productive process for disagreeing and still making decisions. Conflict doesn’t have to destroy a family – managed well, it can make the bonds even stronger. But when it’s allowed to fester, the descent to irrevocably broken relationships can be swift.

*Adapted from the Harvard Business Review Family Business Handbook by Josh Baron and Rob Lachenauer. Pages 221-223.

Josh Baron is cofounder and partner at BanyanGlobal Family Business Advisors. He works with the leaders of family businesses to define their purpose as owners and establish the structures, strategies, and skills they need to accomplish their goals.

Rob Lachenauer is a cofounder and managing partner of BanyanGlobal Family Business Advisors. Lachenauer works around the world helping families thrive.