Top Ten Family Business Facts | Fact #2: The Cluster Model Helps Capture the Evolution of Your Family Business Over Time

cluster-modelTraditionally, family businesses are described as constituent of three overlapping circles:

1) the family,

2) the business, and

3) the ownership (Gersick, Davis, McCollom Hampton, & Lansberg, 1997; Tagiuri & Davis, 1996).

Recently, Michael-Tsabari, Labaki, & Zachary (2014) suggested the Cluster Model to update the two and three-circle models by providing a more detailed picture of the circles’ evolution over time.

While the original bivalent two-circle model appropriately describes a family that owns a firm (Tagiuri & Davis, 1996), Michael-Tsabari et al. (2014)’s study addresses the inaccuracies of the circle models when it comes to describing a family that owns more than one firm and suggests a more detailed perspective allowing to include in the analysis the different firms that the family owns to different extents.

Lesson #2: Putting on the lenses of the Cluster Model might help you better capture the evolution of your family business over time both in terms of the descendants driving this evolution and its outcomes.

Wondering what the Cluster Model means for you and your family business? Do you need some guidance on seeing your family business through this lens? Contact a Family Business Matters consultant today. Through conferences, continuing education programs, family business retreats, speaking engagements and private family business consulting services, Family Business Matters has assisted more than 450 family-owned businesses around the world chart their way through family business issues of all shapes and sizes.

This post is the second in a series by Rania Labaki highlighting the Top Ten Family Business Facts. To view the previous post in this series, follow this link. To review the full Top Ten Family Business Facts and to access a list of original resources, please visit our Family Business Facts page.


Rania Labaki — Author Bio

Rania Labaki

The Importance of Trust in Family Business

trust_fallTrust in family business is a critical issue. Strong relationships which are based on trust and communication build equality and respect - not power and control. Trust can be built, measured, tested and repaired. It is a way of reducing uncertainty in interpersonal and organizational settings and is necessary for cohesive and productive professional relationships.

Families Who Learn Together Stay (in Business) Together

A+One way to build relationships is for family members to learn together by attending conferences, workshops or classes. When multiple family members attend family business education classes together, they learn new skills and ideas and they can discuss those ideas with the rest of the family and determine how those ideas may be of use in their own situation.

The Glue that Holds Families & Businesses Together

Successful family business relationships are key to holding a family business together. Some of the qualities families in business must have to be successful include: shared values, shared power, traditions, willingness to learn and grow, activities to maintain relationships, genuine caring, mutual respect, ability to support each other, privacy and boundaries.

Is 10,000 Enough?

The 10,000 hour rule summary implies that it takes a minimum of 10,000 hours of focused effort to develop a skill and even more to get to the point where others call a person gifted at that skill. In a normal job, a person works 2,000 hours in one year, and 10,000 in five years.

Consensus Decision-Making in Family Business

Strategic business decision making is related to consensus decision making in family business. Families that use a strategic business decision making process are committed to discussing issues until there is full agreement to move forward and implement a decision. If a family is committed to working together for the long term, it is best to embrace this model.

Talking Business & Values at Family Firm Institute’s Annual Conference

I was privileged to be a featured speaker at Family Firm Institute’s 26th Annual Conference in Brussels, Belgium this month.  This was my twenty-third year presenting at the Global Conferences of the Family Firm Institute (FFI)!  Throughout my career, I’ve always enjoyed connecting with audiences through these speaking engagements.

I presented my session with Dennis Passis, owner of Gate Enterprises Inc., a mid-sized family business.  Passis and I met at last year’s conference and our conversations about professional orientation led to the joint presentation.  Our talk, “What Informs Your Work with Family Business?,” resulted in a lively, 60-minute interactive session with the audience.

Jesus Casado, FFI Board member, said, "This was the best session in the entire conference!"

During our session with the audience, we spoke about how the values and fundamental beliefs of family business counselors provide the foundation for their work with family business clients.  We discussed how those beliefs set the quality and tone for client-consultant engagement and become a determining factor in creating successful outcomes for the family business.

Thank you to Family Firm Institute for once again bringing together such an interesting group of experts, as well as owners and members of family businesses from around the world!

Does Your Family Business Need Help?

Family Business Matters has extensive experience assisting family businesses. With many decades of experience, we understand the wide variety of challenges that families face as they work together to build, grow and sustain a thriving family business generation after generation. Through conferences, continuing education programs, family business retreats, speaking engagements and private family business consulting services, Family Business Matters has assisted more than 450 family-owned businesses around the world chart their way through family business issues of all shapes and sizes.

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Creating the “Elegant Agreement“ for Family Business

In my last post, which you can read here, I gave the background of the Yost family, with whom I worked as a consultant.  The Yosts own a group of successful car dealerships.  Brothers Alan and Charlie make up the third generation of this family business, and both worked in the business.  Alan is determined to find the easy way through everything, and he never excelled in the business.  Charlie, on the other hand, transformed the dealership into an award-winning business with great profitability through 20 years of hard work.

When Charlie reached the breaking point and decided that Alan had to leave the business, it created a contentious situation that threatened to tear the family apart.  The brothers had a buy/sell agreement that stated that Charlie would have paid Alan just under $10 million for his share of the business.  Alan wanted more than the buy/sell would give him.  He hired an adversarial lawyer who worked on a contingency and promised Alan he could “get a lot more.“

I worked as an advisor with the Yosts to help them make their way through this buy/sell agreement.  In my meetings with the Yosts, I discovered that one of the most important core values of the family was their commitment to function from a place of integrity.  This principle was demonstrated by the actions of the brothers’ grandfather, business founder Fred Yost.

Integrity: Firm adherence to a code of especially moral values, incorruptibility.

Alan had a wonderful, loving relationship with his grandfather.  During Fred’s latter years, he and Alan had lunch once a week.  In those lunch meetings, Fred told Alan the stories that only a founder of a business can tell.  Those stories all contained a […]

When Family Business Leads to Family Conflict

When family business conflict affects a family, the result can be catastrophic. In order to prevent family business conflict from destroying family relationships, it can be beneficial to engage a family business consultant to help the family work through the difficult process of coming to an agreeable resolution to disagreements.

Values-Based Leadership — The Next Big Thing for Family Business

Family business leadership and values-based leadership is the next window of development in the family business arena. It's important to make sure everyone involved in the family business understands the business mission and values. When a company takes the time to define its core values, a positive shift in the company culture can occur.