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Peter's First Test
Terms in this set (44)
Based on Jim Collins "Good to Great", why do some companies settle on being good rather than great?
-being good is enough for some companies and they stop trying to be innovative
-ex of post office vs fed ex
T/F: In hedgehogs v. foxes, the hedgehog makes things complex for business choices and strategies.
False: Foxes make things complex.
What is the hardest part of the flywheel business concept?
- you have to use people and recourses to get the momentum going
- the flywheel is the new product or service that needs the momentum to get started
How can a family business apply "the seats on the bus" method to the family business?
-first who then what
-then assign roles (seats)
-hiring for character and competence
-the business needs to figure out who works well with the company (shares values) then they can figure out what they will do in the business
List the different types of owners and describe each one (6 different owners)
What are operative owners?
They work in the business and own it
What are governing owners?
They own the business but they aren't that knowledgeable on day to say business.
- they know more about the strategic/structural strategy
What are active owners?
They don't work there but they take interest in the company and they're aware and supportive
What are proud owners?
-they may not be engaged or know much about the bus but they still care and attend events
-they are proud but not knowledgeable about anything
What are passive owners?
-along for the ride
-pay little attention to the bus
-try to give bad opinions
-ex my uncles
What are investor owners?
-they don't get involved in strategy at all
-they just care about the money
Which of the following is not one of the Ps?
-Power (power is not one of them)
What are the three pathways?
-nurture the family
-steward the family enterprise
-cultivatrice human capital for the next generation
What do owners deserve?
Define psychic income in your own words
The emotional reward you feel when you contribute to the business
-if you do not feel this or the business is bringing bad emotions to your life, then something is wrong
List 7 characteristics of an effective owner
-they care about the bus and give it purpose and are proud of it
-they add value to the business
-promote family cohesiveness
-they become independent of the bus
-set out to be a force for good
Cohesive owners are....
What are four things that owners need to be cohesive on?
-what level of profitability is okay
-how liquidity can we be
Facts about nurturing the family
-shared family philanthropic and community service
-having regular family gathering and interaction
-climate of family openness and communication
-educate the fam
How is that family's are able to operate their financial and business entities?
(How can you steward the fam enterprise?)
-balance money and harmony
-have rules/guidelines on how to handle money
-family member policy
-"cleaning up the family so the family can do what it needs for the business"
List three ways to create capital for the next generation
-agreement on values about family wealth
-support for development of next gen leadership
-age appropriate education to teach financial skills to young family members
What is trust?
It is upholding commitments, not taking advantage of others, and it's the fundamental basis of cooperation
What happens when you build trust?
You get predictability, a relationship, and you build things together (ie a family)
What are the three bases of trust?
-calculus trust (the fear of consequences)
-knowledge based trust (the predictability of others)
-identification based trust (understanding the desires, needs and wants of others
What are the three stages in the cycle of trust within family firms?
-interpersonal trust (openness to outsiders)
-competence trust (transparent policies and systems)
-systems trust (communication)
What is proposition one?
Family firms in the early stages are likely to have high levels of interpersonal trust
What is proposition two?
As the fam bus grows, opening the family business system to external experience and knowledge can increase competence trust
What is proposition three?
As the fam bus grows, developing fam and bus policies that are transparent and consistently applying them enhance system trust
What is proposition four?
As family businesses grow to include more than one gen, higher levels of quality communication lead to greater interpersonal trust
What is knowledge based trust?
Trust based on the predictability of the other person and what they might do
T/F: Identification based trust is based on consequences or rewards
False: identification based trust is when you understand the desires, wants and needs of another person
Give an example of a growth vs. liquidly in a family business.
If there is a problem with how much the shareholders want vs how much the bus is able to give, then the bus needs to be very transparent about the money so the trust can be maintained within the fam
Why is it hard to have everything planned out in family businesses
Because you have to have certain levels of ambiguity which will allow the business to be flexible with liquidity
What is a paradox?
Going beyond an idea
What do family businesses focus on?
The past (legacy and values) and the future but public businesses only focus on the present
T/F: The family aspect in the business tends to be capitalistic
Define family business as a paradox
Paradox means self contradictory, so fam bus is a paradox because it's hard to be both a fam and a bus at the same time because you're "wearing two hats"
Define an "aha moment"
When you realize there is a challenge and there needs to be something done about it
List the 5 steps of the trust building process in order:
-vulnerability based trust
-provide context for meaningful action
-education for quality performance
-celebration and reflection
Info of inflection points
-an aha moment
Info on vulnerability based trust
Companies have to have trust in order to share the aha moment
-this is when we have check ins
What are three questions Peter goes over in his check ins?
-relationally: how are you doing with your relationships in the fam?
-personally: how is your own personal life going?
-professionally: how is it going with the business?
Info on providing context for meaningful action
There is something to work on (the context) or discuss
-this can be an issue or goals
Info on education for quality performance
-educating the fam on policies or the business
-first identify gaps then figure out how to fix those gaps
-builds mutual understanding
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