You might say that the stories businesses tell about themselves are a side-issue, concerned with the image they want to promote and not something central, a question of PR. But a fascinating study by Nadine Kammerlander from the University of St Gallen and several colleagues suggests that the stories a business family tells round the dinner table can have a huge impact on management style, and its ability to innovate, and therefore to survive.
The academics interviewed members of 41 family-owned wine-making companies from Sardinia and asked them what sorts of stories they told about the family, and the business. The academics say the stories fall into two types. The first concentrated on the business’s founder. “When I was a child, I always perceived him as a 'superboss.' Even later, I recognised him as a strong figure who had left his mark on the vineyard,” went one typical quote from such a family.
The second type of story was family-focused, and tended to focus on the age of the firm and tradition. “Our firm was founded in 1938 when my grandfather inherited three hectares of vineyards,” said one in this category. "We are a tight family, and I feel responsible for our vineyard. Even though my firm is small, I am proud of being the third generation involved [and] will continue the business,” said another.
Which kind of story a family tells has huge implications, firstly on decision-making. In founder-focused firms “the founder and his values and beliefs were considered to provide direction for strategic decisions and were followed in an almost literal way even if the founder had long departed,” write the academics. One family member in this category said: “In my office, I have an old grey picture of my great-grandfather on the wall, and every day when I start my work in the firm, I look at that picture. I think that my behaviour is... influenced by him.”
In such firms the presumed superiority of the older generation was reflected in the management structure and “all decision-making power was concentrated in the older generation”. Older family members were reluctant to step aside.
“When my father retired, only on paper; he still works within the firm, a succession took place, but it was just a symbolic, non-substantial event. I remember this period as being one of the worst periods for my brother and me in the business,” said a third-gen in a founder-centric business.
The founder of such a firm explained: “Conflicts happen when my son does not listen to me about what is right to do. He is too young to understand that experience is everything in this industry.”
In contrast, family-centric firms tended to have more collaboration between generations. “When we make decisions, it is relevant for us that not only my brother and me but also my father are present,” said a third-gen in such a firm. “It is not the case that there are no conflicts between us, but we always find a shared solution,” said another next gen.
Interestingly, the management style also affected the approach to innovation. Founder-centric firms tended to be hostile to new ideas, and even an offence to traditional ways.
“I remember when I proposed to my father to modify the production by introducing new machinery to harvest the grapes. He was staggered and told me that I did not understand the essentials of producing wine. He said, “Your grandfather would turn in his grave if he heard this request!” . . . Consequently, our way of production has remained the same since the beginning of the firm,” said a member in one such family.
Family-centric firms, unsurprisingly, tended to be more open to innovation. A member of one described the firm’s motto as “an ancient tradition - a modern present.” Another said: “What my grandfather told us is like a wonderful vintage novel that needs to be adjusted to modern times. What happened is our history, and we are proud of it, but the present is different from the past, and [the story of our family firm] needs to be written over and re-invented.”
Families that don’t want to change presumably see themselves as heroic, or pure, and their stories reflect that. After reading this study it is easy to conclude that they might soon be telling stories about the businesses they used to have.