Saturday, April 17, 2010
Sunday, November 15, 2009
Something very unusual happened today. Several friends of mine had stared a housing project for us to live in the same neighbourhood, and had asked one of the members to take care of the discussion forward. Unfortunately, the land that we had negotiated and partly paid for fell into litigation due to multiple claimants. This is nothing unusual in certain parts of the country. The discussion, litigation and uncertainty have been going on for the past few years and some of the friends did not have any idea about the progress on the project. Some thought that it has taken too long and their priorities have changed. Since the friend who was taking care of the negotiations was not keeping all the members regularly informed about the constraints and progress, some had developed apprehensions about the future of the whole project.
He called all of us for a briefing session today when he explained everything in detail and said that he wanted to return our initial deposit back with interest at 10 percent per annum. All of us were aghast as except for two, nobody wanted to take the money back; people wanted information, that is all. He said he had sold personal property and raised the money to repay us for the time being and welcomed us back into the project once the legal matter was settled, with the same terms that we had originally. He said he has been feeling morally obliged to do so as he has been feeling very disturbed about the lack of progress of a project that he had initiated and in which people joined because of him. I mentioned that he should not return neither the principal nor interest because he had done everything as a trustee for the members. So long as there is consensus in purpose and transparency in deeds and thoughts, there was no question of him alone shouldering the responsibility for lack of progress in the project. All of us felt very sad about his decision to distribute the money from his pocket since he had already spent most of it to fight the litigation. Finally, we all were forced to accept the money for the time being with a proviso to restart the discussion soon.
To me, my friend behaved more than like a typical steward. He not only owned up personal responsibility for the slow progress of the project but also wanted to ensure that his friends were totally protected from any down side effect. This is sacrifice of the highest order.
Saturday, November 7, 2009
Sunday, September 13, 2009
I have seen three categories of FB members: one, those not at all aware of the possibilities of having a unified and wealthy family business; two, those aware of the benefits of having good overnance principles etc but do not know how to go about practising them; and three, who do not start doing anything though they are aware of what to do. Hence there is a social need to "sell the concept" of healthy family business.
I asked the audience to start the practice of good governance at home immediately without a lengthy agenda. I suggested that they identify a list of key areas of concern that they are bothered about and start discuing the reasons. This way they will be able to find solutions to major challenges soon. If this exercise is continued on a regular basis for about six motnhs, they would have identified the major building blocks of a constitution. Never start writing a constitution first; what you need is to identify solutions to pressing problems and execute them effectively.
Sunday, November 9, 2008
Sunday, October 12, 2008
A close look at the history of the company would reveal that it started losing the trust element, that is the core of banking. One of the core values of such an organization is stewardship, which means that the individuals involved, particularly the leadership, feel themselves as stewards, who are there to offer selfless service. The core value of a family is also the same. Families that last generations honestly believe that they are the trustees of their respective family’s wealth and play only a custodianship role. They own nothing but have a responsibility to preserve the wealth and grow it to transfer to the subsequent generation, but not to destroy it in anyway.
With the passing over of the management of Lehman Brothers into leaders who, unfortunately, did not share the same core values of trusteeship, the organization was inviting trouble. Incidentally, the Wikipedia link (above) gives a lot of information on recent developments. One quote that reflects the lack of trusteeship value from it is reproduced here:
On October 6, 2008, CEO Richard Fuld testified before Congress. Rep. Waxman pointed out that Fuld had made nearly $500M since 2000, a salary incomprehensible to the average taxpayer, while Fuld was guiding Lehman to bankruptcy. Waxman said to Fuld, "My question is a simple one. Is this fair?" Fuld did not give a straight answer to the question, but only a meandering reply.
It is difficult to imagine a family member who is proud of the family’s reputation and integrity doing the same. We all know that the root cause of the current crisis is extreme greed to show quarter-to-quarter performance without looking at the implications for the people whose money banking institutions hold.
Families and businesses that are built to last have a combination of values and processes: trusteeship, otherwise called stewardship, coexist with strong systems and processes. All their decisions are guided by the core value of trusteeship but they do not lose sight of their commercial competitiveness.
The lesson for family businesses is clear: Remember the trusteeship role they are expected to play while taking business and family decisions. Family and business will naturally perpetuate. As noted by Prof John Ward of Kellogg School of Management (http://www.johnlward.com/), family businesses that last several generations are not driven by short term performance goals but long term growth and asset creation goals because they are clearly guided by the values of trusteeship in their members.