Sometimes someone writes an article, or gives a speech, that is noteworthy. Their thoughtfulness and manner of communication is remarkable. And you really can’t add much to what they have already said. But you want to share their thoughts with those important to you.

Such is the nature of the article, based on his commencement speech to the 2010 graduating class at the Harvard Business School, by Clayton Christensen. He is a professor at the school and was asked by the class to speak at their graduation ceremony.

I will briefly highlight some of his points — primarily to entice you to read the whole article, which can be found at this link.

Dr Christensen states that: “On the last day of class, I ask my students … to find cogent answers to three questions: First, how can I be sure that I’ll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I’ll stay out of jail?” [He goes on to report that two of his Rhodes scholar program classmates wound up spending time in jail.’

With regards to the career question, he states: “More and more MBA students come to school thinking that a career in business means buying, selling, and investing in companies. That’s unfortunate. doing deals doesn’t yield the deep rewards that come from building up people. I want students to leave my classroom knowing that.”

Regarding the second question, Christensen reports: “Over the years I’ve watched the fates of my HBS [Harvard Business School] classmates from 1979 unfold; I’ve seen more and more of them come to reunions unhappy, divorced, and alienated from their children. I can guarantee you that not a single one of them graduated with the deliberate strategy of getting divorced and raising children who would become estranged from them. And yet a shocking number of them implemented that strategy. The reason? They didn’t keep the purpose of their lives front and center as they decided how to spend their time, talents, and energy.”

He goes on to say: “Your decisions about allocating your personal time, energy, and talent ultimately shape your life’s strategy. I have a bunch of ‘businesses’ that compete for these resources: I’m trying to have a rewarding relationship with my wife, raise great kids, contribute to my community, succeed in my career, contribute to my church, and so on. And I have exactly the same problem that a corporation does. I have a limited amount of time and energy and talent. How much do I devote to each of these pursuits?”

Finally, regarding “staying out of jail”, he frames it as “how to live a life of integrity (stay out of jail). Unconsciously, we often employ the marginal cost doctrine in our personal lives when we choose between right and wrong. A voice in our head says, ‘Look, I know that as a general rule, most people shouldn’t do this. But in this particular extenuating circumstance, just this once, it’s OK.’ the marginal cost of doing something wrong ‘just this once’ always seems alluringly low. It suckers you in, and you don’t ever look at where that path ultimately is headed and at the full costs that the choice entails.”

I will let you read the rest of the article yourself so you can gain the full impact of his points.

Let me briefly add some supporting comments of my own.

Since I have the opportunity to work with business owners and financially successful individuals and families across the country, I am able to observe some repetitive patterns in families and relationships.

The most glaring theme is that there seem to be three types of individuals who are successful in business (or their chosen career):

1) those who are extremely successful largely due to a high level of commitment, drive and who have sacrificed most of the rest of their lives (physical health, family relationships, friendships, personal ethics) to achieve their goals;

2) those who have been able to maintain a sense of balance in their lives along the way due to a clear commitment to priorities in their lives; and

3) those who are somewhere in between, desiring to be balanced but often find themselves out of balance in their use of time and energy.

Members of Group 1 are often wealthy, sometimes famous, still “driving” toward career (or other) goals. They are largely unhappy, self-focused and highly insecure. My observation is that they usually are not very enjoyable to be around — they often have anger issues.

Group 2 members are usually amazing people, who are a delight to be around. They are humble, realizing that their success is probably a combination of perseverance and being in the right place at the right time. They are guided by a strong set of personal values. They have a giving approach to life and much can be learned from them.

Most of us (I think) are in Group 3. We have good intentions. We generally are going on the right path, but often need to make corrections along the way — with work/career or other pursuits getting out of balance. We need mentors, reminders and good friends to give us honest input and feedback.

Which group are you in? Where do you want to be? How can you get there?

Recently, I was working with a husband and wife who also own and run a business together. One of the issues that came up was their differences in communicating, and how this creates challenges in their relationship (both personally and as co-managers).

I used a “word picture” that helped illustrate the difficulties they are experiencing in communicating with one another. [Like most things, word pictures have their pro’s & con’s. On the one hand, they can powerfully paint an image that drives home a key concept. On the other hand, if taken too far they “break down” in their ability to communicate clearly.]

Women often say to me, about their husband, “He just doesn’t get it. He doesn’t understand what I am trying to say.” They go on to complain about how he is a poor communicator and a terrible listener. While this may be true, I try to explain the situation this way.

Communication is not “all or nothing”. Most guys can communicate some (give us a break here, gals). But how they communicate and what they communicate are often qualitatively different than the messages their wives send.

It is like this. There is a broad spectrum of communication media. In the old days (only used rarely now), there was morse code. Morse code is made of those beeps that make up dots and dashes on telegraph wires. Beep, beep, (pause), beeeep, beep . . . There is a single tone. It has no words (the sounds make up letters, which make up words) but it is a form of communication.

Then there is AM radio. More information is sent — including words and music. But the spectrum of the frequency of sound communicated is limited — it can sound sort of “tinny”. But it is a lot more full than morse code. We then can move to FM radio – a deeper, richer fuller sound and tone. There is a richness communicated in classical music (and classic rock) that AM radio just can’t do.

But we are still only sending audio information. So let’s move to television — starting with black and white, and then color. Now we have a whole new set of information being communicated — auditory + visual — we get pictures and moving visual images versus just sound. The breadth of information that is communicated has multiplied significantly.

Finally, let’s go to 3D movies (with THX sound, of course). Wow, now you are talking! Rich, loud sound. Beautiful color images that look like real life in three dimensions. The breadth, depth and scope of what is being communicated is amazing.

The problem is: some people (usually guys) are only built with the equipment to send and/or receive morse code or AM radio frequencies. So it doesn’t matter how hard their wife tries to communicate effectively in television or 3D mode, he only “gets” part of the information. The rest of the waves just harmlessly bounce off of his forehead. He truly doesn’t get it. And for many, guys. They just can’t. They don’t understand the depth of feelings and emotions their wives experience and try to share.

So now matter how hard he tries, or how hard she tries, there is an element of lack of connection. It (usually) isn’t because he doesn’t want to; he just can’t communicate at the same level — he doesn’t think that way (e.g. in color, if he is a black & white TV), and the messages don’t get through to him.

Sorry to burst some of your bubbles, gals (some of you younger wives won’t believe me yet) with a shot of reality.

So what is the answer? Several applications, really.

1. Understand the level of complexity at which you communicate. Then try to understand the level at which your spouse/significant other communicates. Do your best to match your communication with their style (”Just the facts, ma’am).

2. Don’t expect your AM radio partner receive and understand TV signals. Adjust your expectations to reality. (A special word of encouragement for those of you married to male, introverted engineers and accountants.)

3. Find others in your life — friends, sisters, mothers — who communicate at the same level you do, and experience your deeper life support and communication with them. Living a life in an AM radio world when you have color TV capabilities is boring and frustrating. Get your needs met in these relationships, and continue to communicate as effectively as possible with your spouse.

A couple of other suggestions. Morse code receivers cannot receive as much information as an FM radio. They can’t process it quickly enough and get overloaded easily. Too many words and too much emotion can do the same for guys.

Also, note that I have been largely talking about male/female differences, but these issues occur within same gender relationships as well. Some guys are wired more complexly than others, and are more reflective and aware of their feelings. These guys have a hard time connecting with those who are more “just the facts, ma’am” type. And some gals want to go “deeper” in their conversations and relationships than others.

Not sure how to end this, except: beeeeeep, beep (pause) beep, beep, beep. Hang in there, gals. I am sure there is a good reason why guys can’t communicate at the deeper levels you do — we just need to figure out what it is. [Kudos to my wife, who as a 42″ flat-screen HDTV, has endured living with an old FM tube radio for 30 years.]

I wrote about trust in business relationships a few months ago. But the issue of trust in relationships keeps coming up again and again in the work I do. Really, it is the lack of trust that continues to reappear. The issue is so foundational to healthy relationships, I feel compelled to write on the topic again – and explain the nature of trust more deeply.

What is trust, really? One definition is: “to place confidence in” or “rely on”.

Recently, I have worked with families, family businesses, couples, parents & teens, Boards of Directors (numerous ones) where a number of individuals within these systems don’t trust one another. And, unfortunately, the problem is that they have learned not to trust. That is, in many cases there was some level of trust previously that has now been undermined.

How does this happen?

Let’s first talk about some key components that are needed for trust to exist. One model defines trust as being comprised of three core components: competency, reliability, and looking out for your interests. Let’s look at each component more closely.

Competency. As I have stated previously, trust is situation-specific. Trust can only truly be defined within a context. No adult (except foolishly) trusts someone for all things in all situations. [Children may, but I have to think about that.] This is because no one is competent in every skill needed in life.

I may trust my financial advisor to develop a balanced approach to investing my savings, but I am not going to entrust my body to him to do heart surgery – because that is not his area of competency. We trust people in situations for which we believe they are competent.

Reliability. Part of trust has to do with the belief that a person is going to “be there” when they are supposed to. An employer expects a worker to show up for work day after day. A child expects their mother to “be there” when they need them. When we have a team working together on a project, we expect our team members to show up and be prepared for their role. Conversely, you may have a gifted and talented team member who really shines during presentations, but if they occasionally are late to meetings, come not prepared, or don’t show at all, then your trust for them in those situations is seriously undermined.

Looking out for your interests. If an advisor for your business is highly competent and reliable, but you are not sure they are primarily considering your interests in the work they are doing for you, you probably have an undertow of mistrust in your interactions with them. This is at the heart of the problem of trust in many business relationships – there are competing interests among various individuals and groups. And if you are not convinced that your interests are being considered (at least as highly as others’ interests), then it will be difficult for you to fully entrust your situation to others without seriously evaluating how they will benefit from the transaction.

From this perspective, trust is much like a three-legged stool. You can have two of the legs, but the stool won’t function without all three. Let’s examine each scenario:

Competency + Reliability – Looking Out For Your Interests. This combination leads to mistrust of the other person’s motives. No matter how well they can perform, you always feel like you have to “watch your back” so you won’t be taken advantage of.

Competency + Looking Out For Your Interests – Reliability. This is the “I just wish …” scenario. You have a competent individual whom you trust their desire to help you. But they just can’t keep it together to show up reliably (or on time), be prepared, and follow through on commitments made. You would like to partner with them, but you are concerned about the ramifications when they let you down.

Reliability + Looking Out For Your Interests – Competency. These are quality people who are faithful, will show up when they say they will, and they want to help you out. But they just don’t have the skills, training or experience needed to get the job done at the quality level you need. Often they are “over-reaching” their skill and ability level out of a desire to help (or to grow professionally), and as a result, often others need to come in and help finish the job.

Trust rarely is “all or nothing”. Remember, trust is situation-specific. In most of our relationships, our willingness to trust (or not trust) is not a black-and-white, “all or nothing” position. Rather, there are certain situations that we would be willing to trust the person, and there are other circumstances where we would not be willing to trust them.

This is an important point because in meetings I often hear people say, “I don’t trust him”, or “I’m sorry, but I just can’t trust her” – as if it is a carte blanche position. I work hard at helping people reframe both their thinking and their speech – to more clearly delineate “for what” they currently are unwilling to trust the other person. (“Currently” is an important word as well, because we want to frame the situation whereby the other person could potentially demonstrate they are trustworthy, and be trusted in the future in a similar situation.)

The Creation of Mistrust. An important question is: how do individuals come to mistrust others in their lives (family members, business partners, colleagues, suppliers)? The obvious answer is: “from a lack of one (or more) of the three requisite ingredients for trust.” And this is true. [I would propose that a lack of reliability is a common source of mistrust, especially in personal relationships, while doubt about the other person’s genuine concern for your interests is a more common source in business-related relationships.]

But a closer examination of relationships characterized by mistrust actually leads to some additional sources.

Lack of adequate, clear communication. Unfortunately, mistrust can develop through a lack of information communicated, or communicated clearly. How often do you hear, in the midst of a conflict, someone say, “Oh! I didn’t realize that”, or “Well, if I would have known that I would have reacted differently.”

Guilt by association. Some business professions have a reputation for being largely self-interested (used car salesmen, professionals who sell life insurance) – that their primary goal is to make a sale, whether the product is what you want , need or not. This puts trustworthy individuals in these professions at a disadvantage. They must work harder to demonstrate that they are considering the interests of the potential customer in the transaction they are proposing.

Misunderstanding of the other person’s intent. In situations where self-interest can be a factor, and where there has not been a long-standing trusting relationship, the misinterpretation of motives can easily occur. Many times people mistrust others because they have a misunderstanding of the potential benefits that might be realized, and think the person is acting primarily from self-interest.

Mismatch of expectations. Sometimes relationships are strained with one party’s expectations not met by another’s well-intended actions. If a friend volunteers to help decorate the banquet room for a fund-raising event, and the quality of the work is below your expectations, tension can arise. Often this is the result of lack of clear communication about what is expected.

A summary word: trust is easily lost, especially when people quit communicating with one another. Whenever possible, if you believe another person is struggling with trusting you in a situation, be proactive and find out what the issue is. I think you will find that the beginnings of mistrust can quickly be corrected either through an apology (if you have not followed through on a commitment made), clarifying your actions and intent, or coming to an understanding of unmet expectations and how these might be addressed in the future.

As many of you know, I do a fair amount of consulting with family owned businesses. One of the common issues I help business owners and their families work through is the sale of their business (either preparing to do so, or dealing with the results afterward). Recently, a friend who meets with a number of business owners starting to think about selling their businesses asked me to outline some of the key issues that I help families think through. Here is what I came up with:

Integrating Business Ownership Succession, Business Management Succession, and Personal Estate Planning. Most people don’t distinguish between ownership succession planning and management succession. This creates significant problems — especially when the owner wants to sell but the company doesn’t have the management ready to take over the company. Often we have to work to develop a “bridge plan” for getting an interim management team, so the sale can occur.

A second common problem is when the owners’ personal financial estate planning isn’t integrated with business succession planning. Business owners want to get their financial investment out of the company when they sell it, but if not done correctly, they can pay excessive capital gains taxes.

How will the sale of the business affect your family? The sale of a family business significantly impacts the whole family. This includes family members who work in the business and those who do not work in the business. There can be issues of “fairness” within the family — those who work in the business may lose their jobs (or the perks previously associated with ownership). But if they own some of the business, they can reap a large financial benefit while non-owning family members get nothing.

A secondary, but significant issue, can be the impact of the sale on the career development for succeeding generations. If the family has a large influx of money from the sale, this can create challenges (and disincentives) for career development for younger family members. How the sale is structured — and how things are communicated to the family — can help avoid these issues.

How do you decide how much money to give to family members? Key questions we work to answer are: How much is enough? How much is too much? In reality, we have learned these are not the most important questions. Rather, we have identified the key factors that avoid destroying family members with money.

What plans do you have to keep the family together in the coming years? Often families in business communicate primarily about the business when they get together. When the business goes away, many families struggle to stay together — they have no history or tradition for family gatherings outside of the business. So they need to answer questions like: What will be the basis for family interactions and gatherings? What type of communication process will be in place? How will you keep the extended family connected?

The most common “big impact” mistakes owners make when selling their business:
-Not involving their spouse in the process.
-Not preparing their children for managing the wealth they will be receiving.
-Not involving children’s spouses in the process.
-Not integrating the sale of the business with their personal / family estate planning, and paying unnecessary taxes.
-Not developing an adequate plan to finance buy-sell agreements
(between family members, or in the case of death).

The reality is: Most business owners and families need help both “thinking through” and “working out” a business succession plan. My advice to business owners: Don’t risk losing two of your most valuable assets you have spent years building (your business and your family) by making un-informed decisions. A little “pre-work” with a family coach can go a long way to saving a lot of heartache later on.

I just returned from a week in Istanbul, Turkey, speaking at a conference, meeting with families, and doing some sightseeing. And I was struck by the similarities of issues that exist half away around the world, within cultures that have incredible differences.

First, I need to let you know that Istanbul is a beautiful, beautiful city with incredible history, architecture, and stunning visual images. It is the only city that spans two continents — Europe and Asia, separated by the Bosphorus river (a salt-water river that joins the Black sea to the north and the Aegean Sea to the south). The metropolitan area is larger than you might guess — at least 15 million people (it reportedly had 400,000 people in 1970 and 10 million in 2000.) And it has a unique blend of numerous ethnic groups and nationalities — Turkish, Iranian, Russian, Syrian, French, Italian, German, British and more. You might remember that it was the capital of the Emperor Constantine (Constantinople) and the seat of the of the Orthodox church, and then became the capital as well as the trading and economic center for the Ottoman Empire from the 1300s through the early 1900s.

So the themes I noted that are similar across cultures, and seemingly across time, include:

Entrepreneurial spirit (when freedom of competition is allowed).

Both the modern Turkish economy (textiles, agrarian commodities, shipping industry) and the small shopkeepers in the markets (the Grand Bazaar, the Spice Bazaar, and individuals selling goods on the streets) demonstrate the vibrancy of the desire to make one’s life better through business. I was amazed at the energy and creativity I observed in individual’s and small businesses; and I appreciated their humor as well: “How can I convince you to leave some of your money with me?” “What would you like to buy that you don’t really need”? And, “Step into my shop and let me show you some genuine fake watches!”

The importance of family relationships.

Individuals and families repeatedly reported their personal stories of how important their families are to them. Young adults shared the dilemma they face of wanting to pursue career opportunities in other parts of Europe but also wanting to be near their parents, siblings and extended family members. Older adults discussed their desires for their children to join them in the family business, but also wanting their family members to pursue their career interest in a different area. And I got to see the joy of families enjoying time together — with their grandchildren, with the extended families of their siblings’ children and cousins.

The high value of education.

Time and time again, parents told me how proud they were that their children were doing well in the schools they attended (often private schools, at great personal expense to their parents). I believe that when individuals are faced in their day-to-day lives with the mass of humanity — in traffic, on the streets walking, in the marketplaces — they realize more intensely the need to “get ahead” through training and education. And the issue is not lost on the youth — they are quite committed to studying hard to do well in school, and appreciate the sacrifice their parents are making so they can get a good education.

The tension between governmental support and governmental interference.

Similar to the challenges our own country and economy are facing, countries worldwide are battling the tension of how much the government should set economic policies (both internally and regarding international trade) and how much they should “stay out of the way” and let the forces of capitalism lead the way. In Turkey currently, there is the additional tension of “being in the middle” of connecting with western Europe and the West economically, and remaining close to its neighbors and historical partners (Iran, Russia, Syria, Greece). In both the United States and Turkey, the answers are neither simple nor agreed upon by their citizens.

Differences.

So what are the differences I see? Mainly small ones — size, shape and the differences in appearance that are the result of differing ethnic backgrounds; clothing styles and preferences; types of food eaten on a daily basis; languages used to communicate with others; and historical heritages that bring different traditions to daily life and life’s events.

But underneath these surface variations, I still see people who love, who want to accomplish something in their lives, who learn and try to capitalize on available opportunities, and who are intrigued by those who are different than they are — but who try to be kind and helpful to strangers in need. Finally, life seems to be both enjoyable and difficult for individuals, families, and businesses on all sides of the world. Most of us experience both the wonderful aspects of daily life (the beauty of nature, loving relationships), along with the pain (illness, physical pain, death) that accompanies life in this world.

Recently, in a variety of settings I am observing the issue of trust impacting business relationships.

Obviously, trust is at the foundation for business transactions – that the vendor will provide the goods or services purchased, that the goods or services will be at the quality level described initially, and that the customer will pay for the goods or services in the time frame agreed upon.

Another area of business where trust is impactful is in the employer / employee relationship – where the employer follows through on commitments communicated to the employee and the integrity level of employees to be trusted to access to information and resources.

This past week I was talking to a business owner who described a situation where he had hired a sales manager (in early 2008, prior to the financial crisis hitting) who in turn started hiring a fairly high cost sales staff. Whenever the current owners or management team raised issues or asked questions of the sales manager, he reported replied, “Do I have to earn your trust or earn your mistrust?” (implying they should trust him until he proved untrustworthy.)

I replied that this was the wrong question. And, in fact, I find much communication around the issue of “trust” is not laid out properly. I do not believe that the question is: “Do I trust you?” (or “Do you trust me?”). This is too broad.

Trust is situation specific. The more appropriate question, I think, is: “For what do I trust you?” Or, “What am I willing to entrust to you?” (responsibility, privileges, resources). I may trust you to hire staff within a budget amount but I may not trust you to have total access to all of the company’s financial data. Or, I may trust you to pay bills with appropriate procedural checks and balances but I don’t trust you to have total access to the company’s financial resources without monitoring.

Think back to common family situations. Teenagers often complain to their parents, “You don’t trust me!” But again, the real issue is “trust you to do what?” I do trust you to choose good friends and to tell me the truth about where you are going, but no I don’t trust you to drive three hours late at night in a car with four of your friends on a snowy night.

Generally speaking, trust is earned — either from prior behavior with other individuals (that is why we trust professionals who have gone through training and certification in their profession, but we often also check references of people with whom they have worked) or in their behavior with us. We trust others (in the defined areas of responsibility) based on previously demonstrated responsibility in similar areas.

[I do admit that in many daily interactions we confer trust to others when we have no specific basis to do so, other than assuming most people are trustworthy in daily life transactions. However, this level of trust varies greatly across individuals’ own personal history and life experiences.]

I find that people (both business owners and parents) tend to get “burned” when they give more trust and responsibility to others when the person hasn’t demonstrated a basis for that trust.

A second area where I find business owners and managers tend to get taken advantage of by others in the business world is when they ignore early warning signs of mistrust. Partly due to the self-reinforcing tendency that we don’t want to admit that something may be wrong (and that we made a mistake in hiring this person), and sometimes partly due to people’s propensity to want to believe the best of others - we wind up overlooking early warning signs of a person not being trustworthy. As a result, we continue to entrust responsibilities and resources to the individual and find out later they weren’t trustworthy in how they handled the responsibilities - digging a deeper hole and creating more problems for the business.

So, where do we go with all of this?

First, I would suggest to accurately define the parameters of trust in relationships. Using a framework such as, “I am willing to trust you to…” Sometimes, it may be appropriate to say, “I am willing to trust you with… because you have shown yourself responsible by… ” Additionally, sometimes you may need to add, “…but I don’t feel comfortable yet in giving you the responsibility to …” Finally, it is helpful to clarify what responsibilities need to be demonstrated in order for you to trust the individual with more areas (this is really helpful in dealing with teens - versus the arbitrary “when I feel comfortable”.)

Secondly, I would strongly encourage each of us to pay attention to early warning signs of problem behaviors. This can take many different forms, including:

*the facts just don’t add up

*you are getting reports from clients and customers and other trusted team members, about some problems in a team member’s behavior

*the team member responds to questions and challenges with a “don’t you trust me?” type of response

*the team member is quite adept at making excuses, blaming others or circumstances versus admitting they made a mistake or error in judgement.

How should you respond to early warning signs?

a) talk to the individual about your concerns; often your concerns may be due to misperceptions or miscommunication;

b) obtain verifying information by an independent third party;

c) set up processes and procedures to monitor transactions

d) document the issues and behaviors which are creating concerns for you. Often the weight of evidence over time becomes significant, while no one specific incident is that large.

I think it would be wise for each one of us to consider the following old saying,

“Wise individuals see danger ahead and avoid it, but fools keep going and get into trouble.”

There is an increasing emphasis on the inter-relatedness between the process of making money (whether through active business activities or through investments) and also having a positive impact on one’s community (either at the local, national or global level). The focus, along with developing opportunities, applies to individuals and families, small businesses, corporations, and family foundations.

Let me share with you some recent developments from a variety of social arenas, and also resources available, if you are interested in finding out more.

At the corporate and business level. This past week Indra Nooyi, the CEO of PepsiCo, shared her thoughts about the need for corporations to redefine what true profit is. She suggested that a company’s “real profit” is revenue, less costs of goods sold, less the costs to society. Ms. Nooyi stated, “companies can do well, long term, only if the socieities in which they operate also do well.”

Additionally, others like Dov Seidman [author of How: Why How We Do Anything Means Everything…in Business (and in Life)], propose that companies who behave ethically will also eventually outperform their competitors financially. For an introduction to his thoughts, see the February 8, 2010 article in Forbes entitled “Why Doing Good is Good for Business.”

At the individual and family level. Given the disappointment with the banking industry, their struggles with ethical behavior and seeming lack of interest in anything except pure financial return, individual investors are looking for alternatives. Recently, I was exposed to the concept of community development banks — whose mission is to not only provide a financial return for their investors but also to invest in their communities. They do this at multiple levels — providing small business loans to help businesses grow, being involved in microfinance lending for start-up entrepreneurs, investing in community projects such as Boys & Girls clubs, providing education and training for small business owners, giving loans for education, investing in the local educational systems; the list goes on. An excellent example and leader in this area is Southern Bancorp, who is having a dramatic impact in the Mississippi delta areas in Arkansas and Mississippi. [Note: you don’t have to live in the area to bank there. For example, we are moving our personal money market account from a national financial institution to Southern Bancorp — where we will earn market-rate (or better) interest while Southern will use the money in community development projects.]

From the family foundation and philanthropic perspective. For decades, family foundations and private foundations have emphasized aligning their financial investments with their values. This led to the development of “socially responsible investing” — not investing in companies whose business was not consistent with the family’s or institution’s values (for example, who made products related to military weapons, whose processes seriously damaged the environment, or were related to alcohol, tobacco or gambling).

Further developments have included mission-related and program-related investments — where the foundations proactively invest in companies who are aligned with the foundation’s mission (e.g. companies who are creating technologies applicable for developing countries, or companies developing charter schools). For an excellent introduction, see the publication “Mission Related Investing” published by Rockefeller Philanthropy Advisors.

A third wave has been the focus on social entrepreneurs — helping individuals who are both entrepreneurial (in the business sense) but who are also impacting their communities at the social level — through job creation, education and training, creating products using local renewable resources. I have had the prvilege of working with Charly and Lisa Kleissner and their family over the past nine years, as their family coach. Charly and Lisa have become leaders in the area of social entrepreneurship — and I have gotten to see, hear and learn from them in their work in this area. Go to www.socialimpact.com for great resources and to gain an understanding of social entrepreneurs. [I can’t give a sufficient introduction here — it is too big of a topic.]

Finally, a new area of “doing good” while making money is the arena of “Impact Investing”. Historically, foundations viewed socially-responsible investments in their investment portfolio, as an area where they would be willing to earn less (say 2% versus 5%) on their investments. However, there is a new movement among philanthropic investors who are demonstrating that socially-responsible investments (e.g. in long-term sustainable timber production) that not only have a positive social return but also can meet or exceed the financial returns compared to their investment allocation benchmarks.

Again, Rockefeller Philanthropy Advisors, along with Lisa and Charly Kleissner, Raul Pomares and others, have produced a thorough introduction to the topic, entitled, “Solutions for Impact Investors“. Also, the Kleissner’s foundation website provides a great introduction to the topic. Go to www.klfelicitasfoundation.org and hit the button regarding their investment strategy.

I know I have thrown a lot of information and topics out there in this entry — but they are all inter-related and I wanted to give people starting points for investigating, exploring and learning about the new resources that are becoming available. (It feels sort of like doing the abridged version of all Shakespeare’s works in 30 minutes.)

Hopefully, I will be able to “circle back” and give a more in depth discussion of some of the areas. In the meantime, enjoy exploring!

In my role as a family coach for wealthy families, one of the common issues that arises is the parents’ desire to be “fair” with their children and grandchildren. (I put “fair” in quotation marks because it really is an unusual term that is defined differently by many people and is almost totally based on perception.)

For whatever reason, and I really don’t know exactly where it comes from, fairness is an extremely important issue in our culture that drives many decisions within families. Take, for instance, this past week’s events over Christmas — parents (regardless of their financial status) are quite concerned about giving the equivalent financial value (or perceived value) in gifts to their family members.

There are many challenges related to parents or grandparents trying to be fair with their family members. Let me cite a few:

The “givers” have their own perception of what is (or should be) fair. Most people have a hard time accurately or concisely describing what “fair” is, but they sure have a strong sense of it intuitively. Often it is described in terms of being “equal”, but when pressed about specifics or circumstantial differences, the concept of equal usually fades into the background.

The “receivers” usually have a different view of fairness from the givers (and from other receivers).Most of the family members with whom I work are genuinely grateful for any gift they are (or will be) receiving. The adult children and their spouses do not appear to be greedy, unthankful or have a sense of entitlement. They understand that the “givers” have the right to do whatever they want with their possessions. Nonetheless, when probing deeper, they often express a different viewpoint of what would be “fair” in how the gifts are distributed across the family — often not to their own benefit but out of concern for one of their siblings or in-law’s.

What is “fair” changes over time (pretty easily and often). Let’s take the recent volatility in the financial markets and real estate values. Suppose, in May 2008, some parents gave one of their children $100,000 in a blue chip stock; they gave their second child a house in Atlanta worth $100,000; and they gave their third child $100,000 in cash to use as they wished. Let’s assume each child wanted and agreed to the form of the gift they received (this isn’t always true, you know). So not only were the gifts “fair”, they were exactly equal in monetary value in May 2008 (which is an unusual occurance). But fast forward to May of 2009. The blue chip stock lost 40% of its value, so it is now only worth $60,000. The home in Atlanta lost 50% of its value and can’t really be sold for virtually any price. And the $100,000 in cash is worth $102,000 after they earned 2% on it in a money market account. Are the gifts fair now? Should the parents do some additional giving to make the monetary values equal?

When do you want fairness to exist? When do the givers want things to be fair. Now? Next year? When the business sells? When everyone has completed college? When dad dies and his life insurance proceeds create cash to equalize the gifts given? When both parents die and everything will be “equaled up”? “When” is an important question to answer — for a number of reasons. First, you have the most control over events closest to the present. So “now” seems to be a pretty good option. However, you may not have the liquid assets to make everything fair now, so “now” doesn’t work for many families. Secondly, the further out the “when” is, leaves more variables to chance and the likelihood of fairness not being achieved. Is it “fair” to your second child to wait until the business sells (say in 5 years) to make things fair, and they get divorced and become a single parent needing cash flow two years from now? Or is it “fair” to the eldest child who is running the business (and buying it from you) to wait to realize their inheritance when they sell the business (potentially) in twenty years? I can run a lot of scenarios that create problems.

So what do you do? Give up on the ideal of “fairness”. Maybe, but probably not. I try to help families (usually the senior couple or single parent) clarify what being “fair” means to them, to the best of their ability currently. Secondly, answering the question “when” is critical — and it differs significantly across families. Finally, I encourage family members to think more in terms of values, rather than fairness. Since fairness is a moving target across time and is perceived differently by almost everyone involved — I find making decisions based on what is important to you as a better guideline.

Is education for the next generation important to you? Then figure out a way to fund that. Is affordable housing important? Then figure out a way to help younger family members achieve this goal. Travel? Stay-at-home moms for your grandchildren? A financial safety net? Guaranteed health insurance? Whatever is important to you — pursue that as a gift.

You will eventually have to make some decisions about what you view as being “fair” — assuming you have more than one child. Do you try to equalize your gifts to your children? Or do you try to equalize them at the grandchild level (one of your children has two kids; his sister has three kids; and the youngest has one of his own and three stepchildren)? It’s not easy. But, hey, that is what I am here for — to help you think and talk through the issues, so you can come to a decision you can live with.

Remember, you don’t have to have a lot of money or “stuff” for this to be an issue. Dividing up the household furniture and belongings raises the same issues. Whatever you do, don’t let one of your kids or grandkids (who does have a greed or entitlement issue) “guilt” you into making decisions you don’t want to.

Until then, have a great and safe New Year’s celebration.

I started reading a good book this week — A Game Plan for Life: The Power of Mentoring by John Wooden and Don Yaeger.  It was recommended to me by a good friend, and I always try to pass on worthwhile reading to others.

The first part of the book covers the seven mentors that influenced Coach Wooden (for those of you who don’t know, he was one of the most successful college basketball coaches of all time, at UCLA). In discussing different types of mentors (professional, personal, spiritual, etc.), he makes a fascinating point:

• “I know that my life has been blessed with incredible opportunities, and as a result, I have a responsibility to reach out to others to share the insights, experiences, heartbreaks, exhilaration — all the lessons I’ve managed to accrue through the nearly one hundred years that God has given me on this planet… Knowledge is nothing unless it is shared.  I know that knowledge for knowledge’s sake is a wonderful ideal, but in reality, it is the transmission of understanding that is the very basis of civilization.” (p.7).

As I work with multi-generational families and family-owned businesses, one of the core principles we emphasize is the process of transferring knowledge, intellectual capital, and life experiences from the senior generations to their children and grandchildren. It is not an easy process — I think it is one of those “important but not urgent” activities that Stephen Covey emphasizes.  Part of my role as a family coach is to help structure activities and processes to help make the transfer happen.
And as we come upon the Thanksgiving holiday, I tend to think about how to best use our time together as a family.  What traditions do we want to keep doing?  Which traditions really aren’t that important or have lost their meaning?  What conversations do I want to have with my adult children when they are home?  What information or life experiences do I want to share with them?

Here are seven “lessons for life” that John Wooden’s father shared with him on a card given at his high school graduation:

1. Be true to yourself.
2. Make each day your masterpiece.
3. Help others.
4. Drink deeply from good books.
5. Make friendship a fine art.
6. Build a shelter against a rainy day.
7. Pray for guidance and give thanks for your blessings every day. (p.13)

Think about those who have impacted your life and the lessons you learned from them — both from direct instruction and from their modeling.

And then think about what you want to pass on to those who are important to you.  Maybe take some time and share a life experience with someone younger: “You know, I was thinking about … and a lesson I learned. . . . “

Have a great week.

Given that I have the opportunity to interact and observe with businesses across the country, it gives me the potential to learn from those whom I serve and interact. In preparing for a presentation to a chamber of commerce luncheon, I decided to share some of the observations I have gathered over the past months. I have seen businesses who are doing relatively well and those who are not (or who have closed their doors). And these are the patterns I have seen.

Businesses who do well in difficult financial times:

Are able and willing to make and implement tough decisions. Some companies who were not able to make tough business decisions quickly are no longer around. Those who hesitated and waited before making cuts have suffered and made the path more difficult for themselves. It is important to note that family-owned businesses often struggle in this area — either because they do not have the processes and decision-making mechanisms in place to make authoritative decisions, or because the “difficult” decision may be to let family members go.

Realize that marketing is a way of life. I am using the term “marketing” to essentially mean: a) letting people know what you do; and b) being easy to find by potential customers. Those companies who were doing well, had a large back-log for their services or products, and who had fallen asleep in their marketing, often had difficulties “gearing up” their marketing plan when tough times hit. However, those companies who had continued to actively market were in place to adjust their plan and keep going.

Combine focus with diversity. Although I firmly believe in Jim Collins’ “hedge hog concept” (knowing what you do well and using that product/service to drive your business, I also believe there can be focus with diversity. Many of the companies who are now doing well in this tough economy had some diversity built into their business plan — either a variety of markets to which they applied their product/service, or they had a secondary line of products that they could “ramp up” in response to a need that arose. A number of companies who have only one primary service or product line are struggling to survive and/or develop a new product or service in times where there is not a lot of available capital to do so.

Understand that the focus of “networking” is not primarily about finding potential customers but looking for opportunities to serve others. Given that I was at a networking event, this was an important topic to address. All too often (almost always, in fact) business representatives go to networking events (luncheons, educational seminars, receptions) with the primary focus in mind to meet potential customers, give them your thirty second “elevator speech”, and press your business card into their hand. And with what do most of us walk away from these events? A blurred memory of who we met and a stack of business cards. Consider the following scenario. How much would you remember the person who actively sought to hear about any needs or challenges you are experiencing and was able either to connect you with a resource that could help or introduce you to someone who may have the service you need? Now that is impactful.

Actively encourage their employees. I have been working on a project of applying the Five Love Languages (a book used in personal relationships) to work-oriented relationships.

Initially, when Dr. Chapman and I started the project, the economy was good and one of our primary applications was in “how to keep valuable team members”. For many companies now, the issue is how to keep your employees from becoming discouraged and burned out — they have more work to do and increased responsibilities with the same (or maybe less) pay and resources.

We have developed the Managing By Appreciation Inventory to help managers and business owners how to communicate encouragement and appreciation to their employees through non-financial means, and how to do so in a way that is significant and meaningful to the employee. Whatever tool or method you use, it is critical to find ways to encourage and show appreciation to your employees in these difficult times. Briefly think of what a discouraged employee looks like in day to day life, and quickly calculate the costs to your organization of having a discouraged team — loss of productivity, poor customer satisfaction, negative attitudes, increased mistakes.

So, if your business is still alive and kicking, take a minute and see if you can take any of these factors and apply them to your organization — and hopefully increase the probability of your survival!