The Three Seasons Every Family Business Goes Through

A few weeks ago, I included a small chart at the header of my weekly blog outlining three distinct seasons any family business goes through while they transition leadership to the next generation. My son, Kile, is currently leading a Cornerstone Cohort of G2 sons who will one day be taking over their family business and helping them navigate the transition. 

Today, I’m including a recent blog that Kile wrote based on what he’s been working through with these young leaders. 

I often say to the cohort of G2 leaders who are working in and working towards taking over a family business, “Remember, this is uniquely rewarding and uniquely challenging.” It’s not for the faint of heart, but can reap tremendous benefits both relationally and financially if done well. 

The first thing I do with any G2 leader who wants to walk this path with intentionality is to help them understand the three basic, but distinct seasons they will go through over the coming years. While these three seasons have blurred lines and can overlap for a few years on either side, the heart of each time period is uniquely different from the others. 

Richard Carlson said, “Maintaining a family business isn’t just about sustaining a company, but nurturing relationships and building a legacy.” You’ve got multiple aims here.

It may seem hazy for a few months or even years, but eventually it will become clear which season you are now in - and that is perfectly fine. 

Season 1.0 - G1 Leads, G2 Develops

Every G1/G2 pairing begins the journey of successfully transitioning the family business here. It is imperative that G2 leaders focus intensely on two things here: 1) dominating their current job; and 2) growing into the future leader their organization needs them to be. 

It is critical in this stage for there to be another leadership voice other than the dad/mom in the business who can mentor, edify, and give feedback to the G2 leader as they develop in the organization. Getting clarity on how long this season may last is a crucial first step once G2 gets their feet wet in the company. I recommend bi-annual check ins for my cohort participants with their fathers to discuss any big things related to this season and the next. 

Season 2.0 - G1 and G2 Both Lead 

This is a transitional season where both G1 and G2 are leading the organization - in terms of role and title, compensation and wealth, and vision casting / future planning. G1 may be President while G2 is CEO. To use EOS language, G1 may maintain their “visionary” role, and G2 steps into the complex “integrator” seat. 

Titles aren’t incredibly important here, as long as both generations are providing meaningful enterprise value to the organization. Gone are the days of G2 just learning the ropes and sitting idle in strategic meetings. The time has come for G1 to let go of a few key decision points and G2 to step into the ring. 

Communication is key here, as this season requires great clarity of responsibility and respect for final decision making - which is often mutually agreed upon by G1 and G2. 

Season 3.0 - G1 Shepherds, G2 Leads

Steve Martin said, “A father carries pictures where his money used to be.” It’s not exactly like that but in family business, it often gets to the point where the parent carries influence where the authority used to be. 

The capstone of every family business transition is the (hopefully) sweet passing of leadership officially from G1 to G2. This season, if handled correctly, is full of honor for G1 and respect for G2. Often G1 takes the role of “advisor”, “board chair”, or “silent partner” while G2 steps into one of the more traditional leadership roles like CEO, President, or Owner. 

In this final season of transition, the ultimate decision-making authority rests on the new generation of leadership while they seek counsel and advice from G1. What you aim for is a give and take of honor and respect that flows naturally between G1 to G2 in this season. Does this always happen? No, of course not. Family dynamics are challenging, and so are business dynamics, so you’re layering two challenging things on top of each other. 

But it’s possible. Whether it’s counseling, a law firm, a new executive leadership team, or something else altogether, it’s possible. And particularly, if you’ve taken care in each season along the way.

It’s challenging, but it’s rewarding. Honor the legacy before you. Leave your unique finger prints on the work ahead of you.