In February, the Rawls College Alderson & Griffin Center for Family Business & Entrepreneurship welcomed family business expert Matt Allen, Ph.D., of the Kellogg School of Management at Northwestern University for an interactive and thought-provoking session as part of the McCoy Family Speaker Series.

Providing opening remarks, Brian McCoy, board chairman for his fourth-generation family business McCoy’s Building Supply, shared how their family’s legacy embodies the spirit of entrepreneurship.

“My grandfather, Frank McCoy, founded McCoy Roofing Company in 1927,” he said, “and it was my father, Emmett – a classic entrepreneur – who transformed our company into McCoy’s Building Supply.”

He continued by emphasizing their excitement for the series while echoing the values that have guided his family for generations.

“We are so excited to join with David Alderson and Mark Griffin to help support the Alderson & Griffin Center through the creation of this speaker series because we believe the business community in America is essential to our way of life and important to who we are as a country,” he added, “and family businesses are so often at the forefront of serving the greater good.”

Introducing the speaker, Mark Griffin, chairman for the Texas Tech University System Board of Regents, explained the purpose of the Alderson & Griffin Center.

“The center works to provide insight, exposure, understanding, and tools to the family as they work toward their goals,” he said. “To that end, today’s speaker, Dr. Matt Allen, will lead us in a talk about entrepreneurship, values, and the deeper elements of family business and what makes them truly work for generations to come.”

Before handing over the mic, he went on to share Allen’s background. Having guided iconic families like Bush’s Beans, Pillsbury, and the Rockefellers, Allen is the John L. Ward Clinical Professor of Family Enterprises and executive director of the Ward Center for Family Enterprises. His expertise includes family learning, family entrepreneurship, and next-generation development, and his research is published in top outlets such as the Harvard Business Review and Entrepreneurship Theory and Practice. With personal experience in family business, he also founded the Institute for Family Entrepreneurship at Babson College. He holds a B.A. from the University of Utah, an MBA from the University of Notre Dame, and a Ph.D. from Cornell University.

Taking the stage, Boston native Allen opened his presentation, titled Entrepreneurship & the Next Generation: Igniting Ambition for the Future, by first outlining how families can instill an entrepreneurial mindset and build a thriving legacy, then began the discussion with a question to the audience.

What is the one concern that family business leaders have about their kids?

Leaning in, the audience related to the query. After all, it’s a real and honest fear of parents in general – one that transcends financial outcomes and touches deep family values.

The answer?

That they will be good human beings.

He says the question he’s asked most by family businesses is how they can ensure their children don’t take the business success – wealth and awareness – and turn into something they don’t want them to become or that doesn’t fit with their family values. The big question then becomes: how do we ensure the next generation doesn't lose sight of those values and that they don’t change what makes the family and the business so special?

To answer this question, Allen said one first must understand what entrepreneurship is and where it comes from. In his generations study to determine if family businesses are made of entrepreneurs, of the thousands of responses from across 50 countries, he determined that the majority of entrepreneurship across the globe is found in family businesses. To put it another way, families and their dynamics are the engine driving business growth around the world.

However, Allen’s research also helps provide understanding that not every member of a family business has the traits of an entrepreneur. Diving into this, he asked another question.

What are attributes of an entrepreneur?

Obvious answers of risk-takers, leaders, and hard workers were offered by the audience, but Matt argued that the answer lies not in what they are, but what they do. He says most people, 90 to 95 percent, share this approach when doing – learn then act – but entrepreneurs behave opposite of everyone else – they act to learn.

To explain this, he posed a scenario to the audience: imagine you’re exploring a cave, and your light goes out. What do you do?

Some people said scream. One person said feel. Another said listen. Allen said all were valid responses but, eventually, you have to move to work your way out of the cave. You don’t take off running, but instead you take small and, probably, awkward steps. His point was, in the absence of data, you have to act to learn.

He says entrepreneurs make decisions with limited information knowing that action creates learning. However, he adds, even with data present entrepreneurs will act to learn – they make assumptions and test them by acting. It was a philosophy that resonated with many business owners in the room who had taken risks based on intuition, often without knowing the full scope of what lay ahead.

Taking the talk deeper, he continues by saying entrepreneurs aren’t only about risk — they also react differently when something goes wrong and turning every failure into a steppingstone.

“While most people judge success on outcome, entrepreneurs judge the outcome on what’s learned,” he said. “When the focus shifts to what’s learned, the fear of failure is diffused and, therefore, failure becomes less daunting.”

Allen says when a family business can focus on failure as a lesson, it can then build intrinsic motivation in its younger generations. This is a drive that comes from within and when it is based on the knowledge that the journey is about growth and not perfection, you are forming a culture in which entrepreneurship thrives.

One way to do this, Allen went on, is to structure big responsibility over small things versus giving small responsibility over big things. For example, instead of placing your third-generation child straight into the C-suite, have them begin by working their way up the ladder. Echoing the cave analogy of small steps and steady growth, rather than running in the dark and rushing to the top, the idea is instead of expecting immediate results or handing over the reins too quickly, family business leaders should provide opportunities for their children to build competence and autonomy.

“You have to help your kids prove themselves to themselves and the earlier you can get them involved in the family business, the better,” he said, “but you have to give them space to grow and to learn through action and from failure.”

When a family business is focused on learning and has a structure for intrinsic motivation, Allen says it can then use entrepreneurship as a tool for family harmony and dynamics and to empower and create opportunities for growth. In doing so, it is important to use the family’s values and legacy to maintain a slow, but steady, speed and keep the business pointed in the right direction. To accomplish this, families should consider what they believe in and generalize it across generations.

“Think about your family’s values – if being a hard worker is important and that’s defined by hours spent in the office, remember that work in today’s world isn’t the same as the older generation’s traditional 6 a.m. to 6 p.m. office grind,” he explained. “The younger generation might work different hours in and out of the office – balancing family, networking, and exercise – so being a hard worker, then, becomes not when someone works, but how they work.”

Allen closed by saying while family businesses might evolve, their core values should remain the compass guiding their growth. The future of family business is a balance between tradition and innovation, between values and new ways of doing things, between focusing on learning instead of outcomes, between intrinsic motivation and succession, in using entrepreneurship as a tool. Success is the goal and with a framework for growth, learning, and legacy, the generations to come can succeed not by mimicking what came before, but by understanding the core values that built the foundation and, thereby, not losing sight of being good humans.

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