Devin DeCiantis and Ivan Lansberg, the Managing Partner and co-founder respectively of Lansberg Gersick Advisors, run down their new book, THE ENDURING ENTERPRISE: How Family Businesses Thrive in Turbulent Conditions, including info on why family businesses are more resilient than others, managing risk, balancing identity and change, managing continuity vs growth, and why stability is a double-edged sword.

Welcome to Let's Talk Legacy. I'm your host, Gary

Michels and I am excited today about our show and the guests

that we have for you. Ivan Lansberg is the co founder of

Landsberg Gersick Advisors, and Devin DeCiantis is the Managing

Partner. LGA serves as a trusted advisory and education partner

to the world's leading family enterprises, and they've

recently released the book The Enduring Enterprise, How Family

Businesses Thrive in Turbulent Conditions. Welcome to the show,

you guys.

Thanks so much for having us, Gary.

So can you each give us a little bit of a

rundown on your backgrounds and also on the work that you do at

Lansberg Gersick Advisors?

Sure, I'll dive in first. I've been fascinated

by this topic of family business ever since I met Ivan nearly 20

years ago, and he introduced me to this new species of private

enterprise that nobody ever taught me about business school,

but that I have since come to understand is the dominant form

of capitalism around the world, which has been a terrific

journey for me. And I was instantly inspired by their

longer term planning horizons, their deep commitment to

stakeholders and communities, their strong emphasis on family

values and organizational culture, and as a reformed

investment banker, I was also really impressed by how they

tend to outperform non family businesses over the longer run

and over the years of our work together, advising enterprising

families around the world, along with our team, our travels have

taken us to some of the most affluent and stable countries,

like the US, of course, but also some truly exotic and volatile

places. And in recent years, we've actually turned our

academic lens to studying some of those differences, the

differences between these contexts, and quickly discovered

that at Frontier family firms take a very different approach

to managing risk given their long history of navigating these

kinds of moments of uncertainty, and as a result, they tend to

prioritize a different set of strategic objectives, for

instance, resilience rather than growth, which is the opposite of

what often gets taught in most western business schools and

gets practiced in most western boardrooms and and that's the

counterintuitive notion that became the foundation for this

book and for subsequent research, and which we're

excited to talk to you about here today.

So for me, the topic is very personal. I grew

up in Venezuela. I'm the son of an entrepreneur, and witness up

close the difficulties of not just building an enterprise, but

actually transferring an enterprise from one generation

to the next in a context that's sort of falling apart. So I went

to graduate school here. I My first job was at the Yale School

of Management, and when I got to Yale, I began to get interested

in basically two questions. You know? Why, if succession

planning, for example, or continuity planning, as we call

it, is so obvious, why is that so few people do it? And the

second question really had to do with what can be done? You know,

what can we how can we mobilize the internal resources of an

enterprise and of a family to be able to get them to do the, you

know, take the steps they need to take in order to continue the

enterprise that they work so hard to build.

I think it's interesting this topic. How did

the two of you guys start working together and start

collaborating? I'm curious.

There's actually a family story there

too, Gary, and it's this concept of families of choice, so to

speak, the familial networks that end up combining and

uniting disparate tribes into this fabric of of trust. I went

to grad school with Yvonne son. In fact, we're roommates, and so

for many years, would spend American Thanksgiving with Ivan

and his family as a Canadian, didn't have much to do that

weekend, and began to embrace that tradition as a byproduct of

socializing with with Dan and Ivan and their wonderful family.

And it wasn't until years later, over casual conversations, that

we first began to explore the possibility of training some

some of my consultative interests, training that lens in

the world of family enterprise, and I couldn't have asked for a

better friend and mentor and partner in that journey.

Yeah, no. I mean, I think we also share an

interest in economic development. Devin comes from a

sort of blended Lebanese and Italian background, and in my

case, my father was Dutch. That's why my name is not

particularly Latin sounding. So it was a joy to collaborate with

Devin and find, you know, common interests around this, you know.

So we put Thanksgiving to good use.

I love it. So I know you guys are aware that our

shows about legacy, I know that's a big part of the work

that you guys do, and one of the best. Examples of creating and

passing on a legacy is family businesses, as we're discussing

here, and you say that family businesses are actually much

more resilient and enduring on a worldwide level than other types

of businesses, and can withstand more turbulent conditions.

Before we go into why that is, if you could lay out what some

of the most common threats are that usually topple businesses

and and why resilience is important.

Absolutely Gary, in fact, what's

fascinating is in family businesses and non family

businesses, our attention almost always immediately focuses in on

on business oriented risks, operational risk, security risk,

safety risk, reputational risk, compliant risks. But it's only

this sort of the second order reflections that get us to

thinking more about things like ineffective governance or asset

concentration, where, in the case of family businesses,

disengagement and dependence and death and divorce and a whole

bunch of other DS and so forth, that could very easily derail an

enterprising family in its quest for legacy, but which are

obvious if you pay enough attention to them, and which can

be attended to proactively.

Yeah, for us, the issue of continuity is really

quite important because it often is a key priority. Enterprising

families make decisions not just for themselves, but for their

kids and for their grandkids even. So they have a as Devon

suggested, a long term horizon in terms of the choices and

priorities that they that they make. So it is critical.

Talk a little bit more about risk. It's such a

powerful one word, and you just throw out there several

different areas of a business where there's risk.

Oh, it's, it's absolutely essential for a

variety of reasons. One is, it's, it's a critical function

of any any enduring enterprise, any organization that aspires to

continuity, ought to attend to the things that could derail its

success. So the the real challenge of of managing risk is

essentially predicting and preempting crises, enduring them

effectively as quickly as one can, and bouncing back quickly,

and in that moment, reviewing and reflecting on what worked,

what went well, what didn't, so that when we bump into the next

risk, we have a bit of a playbook. And so in a way, you

can call risk management is, in a way, it's crisis prevention or

preparation and crisis recovery. It's the it's the thoughtful,

proactive, pragmatic, strategic approach to containing crises

which inevitably occur and and allowing an organization to

better metabolize those moments and escape on the other side,

possibly even better off than when they entered it.

You're talking a lot about risk management here.

Where does taking risks come into play? Because no risk, no

reward. We've heard that before, right? Do you see a difference

in a family run business than maybe not, a family run

business, and how they take those risks?

It's a terrific question. In fact, what we see

is a distribution of risk appetite across all of humanity.

You know, if you were to gather any number of humans, we've done

this countless times in classrooms and in large group

settings. And you sort of, you ask, you know, on a scale of one

to 10, where does everybody's risk appetite play out from

absolutely none, never to, you know, put all the money on black

and roll the roulette reel, and you'll find that there's, in

fact, a pretty normal distribution across human beings

as it relates to their risk appetite. You'll find that

entrepreneurs tend to skew a little more toward the risk

seeking behavior, maybe even excessively, so, some might

argue, and taking on those risks, but that's part of the

entrepreneurial spark that that is so catalytic in in a in a

free market, in our modern economy, and yet that same

impulse can get you into trouble if you're taking on too much

risk, especially when you're when you're anchoring or

tethering The risk appetite of the organization to a single

individual, and not necessarily reflecting the distribution of

appetite and the capacity to bear that risk across the entire

system. And we, we talk a lot about that in the book as well.

Yeah and one of the things that's unique about

families is trying, particularly families that endure as business

families, is finding an optimal balance between tradition and

change, basically between being able to harness their identity,

the way they do things, their connections, their resources,

while at the same time being conscious that with every

generation, you have to innovate if you're going to stay in

business, right? So being able, and obviously, sometimes within

the same generation, given the pace of change that we're

experiencing, striking a balance between those two is a real

skill, and enduring enterprises managed to do that very well.

You know, families can get very caught into. You know, very

caught up in into what they've done, and continue to try and do

it forever, but that that never quite does well.

So we often talk about a concept called SWOT

analysis, strengths, weaknesses, opportunity and threats. Do you

guys see that family businesses tend to do a better job at that

analyzation of that, are they more resilient than a typical

business that isn't tied together by family ties?

We'll say that enterprising families that we've

met, especially the ones that we've studied, that end up

standing the test of time, tend to be more attuned to the

threats, certainly, even perhaps more so then the opportunities,

not that they both aren't important to your point earlier.

You know, without taking on risk there, there can be no reward.

But enterprising families that succeed over the long term tend

to be or let's say, prioritized managing the downside risk more

so than they would prioritize chasing the upside. It's one of

the key differentiators between family controlled companies and

non family controlled companies, and that manifests in their long

term out performance. In fact, a lot of really terrific research

has been conducted that has demonstrated that, you know, up

to a third of all long term out performance is that the

contribution to that out performance comes from how an

organization manages through crisis. Because when you're

managing over 25 year cycles or 50 year cycles, crises are

inevitable, sure, and it's how they respond in those moments

that actually lead to their long term out performance. They they

understand that this is a marathon, not a sprint, and they

manage their resourcing accordingly.

I mean, it takes a mindset of of continuity,

rather than of growth. That continuity, in and of itself, is

a worthy goal to pursue. Obviously, you need to grow if

you're going to be, you know, viable in the markets in which

you operate. But how you grow matters if you're if you're

making decisions like many public companies do, you know,

quarter by quarter. If that's your focus and all of your

incentives are wired to short term results, then your ability

to not lose sight of the long term gets compromised.

Right. Well, most of our listeners are located in

the United States, which you would consider United States an

advanced economy, and that sounds like a good thing, but

you say that can actually often mean people are less equipped to

deal with the uncertainty or crisis. Can you explain that?

Yeah. Thank you, Gary for pointing that out.

It was one of the big counter intuitive insights that, for

that emerged from from our early work and study of this that

stability is, in fact, a double edged sword, while it can foster

prosperity and that predictability can allow you to

deploy capital with more confidence, it can also lead to

complacency and to a lack of preparedness. And advanced

economies, for instance, have enjoyed a period of stability

that has led to some immense prosperity, but in the absence

of any extended periods of uncertainty or crisis, they tend

to lack resilience. If you look back across the long, sweeping

arc of history, there's been a more or less 80 year period, a

golden age of stability, one might argue, that began after

the Second World War, and has led up until the last you know,

10 years or so, and it's only now, literally a lifetime ago,

that leaders are having to confront the kind of, you know,

sudden and unexpected regime change or shifts in policy or

macroeconomic conditions, inflation and so forth, that

have been, you know, that Haven't persisted for a

generation, and so we don't have the muscle memory for how to

deal with that. You contrast that with Frontier economies,

where they understand intuitively that building

resilience is essential for survival and success, because

they have to deal with this not once every 25 years, but you

know, once every 25 minutes.

Well, you're putting your finger on something

really important there Gary, because it's one of the

counterintuitive things about the book, is that advanced

economies in general, but businesses operating in advanced

economies have something to learn from the way businesses,

and particularly family businesses, operate in frontier

markets, right? You know, there's an analogy that we use,

that I think sort of works very well for this. There's some

research in biology that the closer you live to a developed

health system, the weaker your immune system is. It's sort of

the organizational analog of that very construct we begin to

take for granted all of the things that we have, the

institutional frameworks, the markets, the regulatory systems

that provide law and order and so forth and so on and and

before you know it, you you know you just assume that that's the

way life is. All of a sudden you get something like COVID come in

and. And then it turns your world upside down and and you

know, for for family enterprises that succeed over generations in

volatile environments, that's just a way of life. It's

chronic. It's not episodic.

Right. I always ask when I have our guests on a

question of the research and the work that you guys are doing,

how does it impact anybody? Because there's people that are

going to hop on to this podcast and they're going to go, that's

really interesting about family businesses, and there's other

people that are going to go, I don't have a family business. Or

how does that affect me? And I wanted to ask you guys why it

does matter?

Absolutely. Well, I mean, your podcast is

oriented around the concept of legacy. And so you know, if you

if you look to some of the longest surviving enterprises in

the world, that family businesses are

disproportionately represented in any list of those, whether

it's, you know, Google the world's oldest family

businesses, or you look up communities like Les Zeno quien,

which are a community the worldwide of family businesses

who have all been around for at least 200 years. I mean that

family even in the books of Jim Collins and porous A Good to

Great and built to last and so forth, family enterprises are

disproportionately represented among the samples of businesses

that are seen as the as the sort of the gold standard for for

continuity, for standing the tests of time. And that's

despite the fact that corporate life spans have been shrinking

for the better part of the last century that the in the context

within which all businesses taking place has become more

dynamic and complex and more challenging to navigate, and so

for for enterprising family to be able to demonstrate an

organizational solution that involves the transference of

power, of leadership, of of of control, of wealth, of culture

and values and so forth across generations is is truly

something that Non family businesses would ignore at their

own peril, and that family businesses can look to in the

case of many of the cases that we feature in the book as

exemplars of what what one could do and embrace within your

organization in order to achieve continuity, assuming, of course,

that's something that's that's of interest to you.

One other comment I would make in terms of what's

what's applicable, we've already rattled off a few. You know, the

long term view, the fact that family businesses managed to

bring together three constituencies that need to be

managed on an ongoing basis, the owners, the family itself, and

the managers and executives and employees that work in the

company, those three constituencies need to be

harnessed to move in a common direction, and there is a real

skill in managing those stakeholders in a coherent way,

and that's where governance come in, which we talk about

extensively in the book. But beyond that, family companies, I

think, are wonderful laboratories for learning how to

deal with paradoxes, you know. So you know, how do you how do

you deploy nepotism and excellence at the same time? How

do you long term at the same time, while you're managing, you

know, trying to be expedient and responsive to the demands of the

market? How do you think you know? How do you develop big

dreams, but yet attach them to deadlines and not hold

yourselves accountable to those big dreams? These are very

powerful ideas, and that's one of the reasons why we wanted to

document them and provide ample examples of families that do

this well. And you know, our aspiration, our conviction is

that these ideas are actually transferable to people who are

not in family businesses. Let me just make a caveat there,

because a lot of it single entrepreneurs are just family

businesses in waiting, essentially, if you succeed

right, and you build some wealth through your family through the

enterprise, you very quickly are going to bump up against the

issue, who do I leave things to? What do I do with it? And

clarifying that fundamental question of what is your purpose

and why are you in business together is one of the key

things that we find family enterprises that endure and

really invest some energy?

Yeah, well, you include some really powerful

real world examples in the book, including stories about family

businesses in Peru, Korea and Syria that all found ways to

flourish in times of hardship. Could you share a few of those,

or even a specific company in the United States that you saw

that I'm having some challenges, and with working with you guys

and kind of, kind of collaborating, there was some

growth there?

I'd love to share an American example, or a

series of American examples, just to provide some of the

context and in the US you mentioned it earlier. Gary, we

consider this to be, of course, not just us, but most of.

Economist an advanced economy, it is sophisticated, it's

complex. It's for the most part, post industrial and that means

that there are a lot of institutional stabilizers out

there. There are a lot of market mechanisms to provide access to

capital and so forth. But that wasn't always the case. You

know, we gotta, we don't have to look that far into history to

recognize that at one point, the American economy was an emerging

economy, and at one point before that, a frontier economy, truly

a frontier economy. And in all the ways that we might look to

Venezuela or Nigeria or Yemen or Syria and so forth today, and so

if you look back in the annals of American history, many of the

iconic family businesses that are around today were forged in

the crucibles of crises, as it were, you know that the Marriott

family enterprise was built, essentially was launched during

the Great Depression as a as a root beer stand, attending to

the needs of of the displaced during the Great Depression.

You've got organizations like Cargill and Mars that were

founded in the 18th century, during a time of tremendous

industrial upheaval and structural disarray, and yet

they are now among some of the largest businesses in the world.

And so, you know, in the American example, we don't have

as many in the book that are based in sort of the modern

experience of what it's like to operate in the US, because,

frankly, the the investments in institutional stability have

been made so that companies don't have to attend to all of

these and invest in all these risks. They can just focus on

the unbridled pursuit of profit. But you don't have to go back

all that far. In fact, you know only about 100 years or so to

realize that so much of of American capitalism was built in

these more frontier conditions, and it's part of what created a

lot of that early dynamism that led it to become one of the

leading countries in the world.

And today, you see, you know, the beginnings of

some destabilizing elements in American you know, society in

general, but the economy, the economy in particular, where,

again, part of our message through the book is to alert

leaders not to take those institutional stabilizers for

granted.