Differentiation and the Life Cycle

The first challenge of differentiation is attending to the challenges of human development at each of life's cycles as children grow up; this is how the “self” emerges. Life cycle theory¹ suggests there are primary tasks a human must accomplish during different stages of his or her development in order to become a fully mature adult. It is believed that failure to accomplish a primary task at any one of these stages will result in behavioral struggles later in life.² A successor who fails to differentiate has likely struggled to accomplish one or more of these tasks. In many cases, a successor's ability to successfully move through each life cycle, from dependence to independence, is shaped largely by his or her parental influence. Here is a brief overview.³

Overcoming the Successor's Curse

All successors carry a burden. They most always are appraised in relationship to their predecessors and their family. This is called the successor's curse. Failures are often magnified in comparison to the predecessors, and their successes aren't seen as their own. Differentiation is the curse's cure.

To lead the company that his father built from one restaurant to a chain of restaurants to a manufacturing juggernaut, Joe Perrino had to map out his own path to leadership. He had to assert himself—take risks. This requires the pursuit of differentiation, discovering one's true self, and is the foundational work of becoming a generative successor.

Differentiation follows a unique path for each successor, based on a composite of personality, family patterns, biology, generational influences, education, and societal context. Joe's never-back-down personality and tenacity for trying new things chaffed against his father's more conservative personality. These qualities in part were innate and in part shaped by the socioeconomics and time period to which each were born. Unlike his father, Joe grew up on the proverbial field of dreams. America afforded limitless possibilities. And while he heard the stories of his ancestors scraping by through the Depression, he only knew the prosperity on the other side. Business ventures that seemed risky and irresponsible to Nick were necessary and fundamental investments in the future according to Joe. For Joe to lead the way his father had would have been inauthentic, and, possibly, detrimental to the family business. Both Nick and Joe had their own context and time.

As Massimo Ferragamo, successor to Ferragamo USA, pointed out: The danger of thinking that you can be just like your parents is a failure to “understand what your calling is in life, what you should be doing, and how to improve on what has been given to you.” Each successor must undergo a crisis of identity. In this crisis, the emerging leader faces the risk of losing herself in their predecessor's myth. The leader will be forced to confront the impression that he or she is a carbon copy of the predecessor. At this pivotal moment, a successor can choose to step away from the myth and towards his or her authentic self. It is first an internal shift (that demands self-reflection) and then an external shift (that requires experimentation) away from the self that is scripted by the myth.

Successors who shortcut this process are commonly ineffective leaders. They capitulate to external influences as well as the expectations others have of them. They are emotionally immature and manifest behavior more typical of tyrants:

• They are volatile and highly emotional in conflict.
• They crave the approval of others.
• When criticized, they become highly emotional, subject to big mood swings.
• They allow others to excessively influence their decisions.
• They preserve their own ego at the expense of others.
• They have difficulty hearing and empathizing with other opinions and ideas.
• They take credit to feed their own egos.
• They develop a sense of entitlement.

Differentiation can be manifested in small but important ways. When Joe first stepped into a leadership role at the restaurant, he found himself in the kitchen, wearing an apron and hat, tossing pizzas. During the early years, Joe dreamed of expanding the business to include mass production of frozen pizzas. But no one took Joe's ideas seriously. He suffered the successor's curse: “I was the son of the owner … always living in the shadows. People would say, ‘You’d be nothing without your dad. You're riding on your dad's coattails.'” In order to step out of the shadow, Joe realized he had to earn credibility. It began with a small, seemingly insignificant, choice of attire.

One day Joe showed up to work in a shirt and tie. All the old-time managers, as Joe puts it, thought it was a joke. Day after day, Joe donned the shirt and tie, regardless of the sneering. Joe's thought was, “I have to change my image if I'm going to change the whole business.” After about five years, everyone started wearing a uniform—even his dad's old guys started wearing a shirt and tie. This one small step outside his father's shadow changed Joe's image as well as the image of the business. By the time his father passed away, all the old timers had fallen in line with Joe's leadership. And a few years later, the frozen pizza business was starting to scale.

To escape the founder's or predecessor's shadow, a young leader must understand the current reality of the existing business; determine what needs to change; and figure out if he or she is fit for the job. In my experience, those who make a successful transition tend to be reflective. They ask:

• What are my personal values?
• What am I good at?
• What am I passionate about?
• What do I want for my life and my career?
• What does the family enterprise need from me? Am I prepared to provide that?
• Do my personal values align with the family business?

There must be alignment between who a successor is and what the business needs. A successor may be good at something, but if he or she is not passionate about it, or if the family business doesn't need it, then succession is difficult for both successor and the family business.

To lead with credibility, successors take the risk to lead as only they can lead. They must develop core convictions and form their own values and vision for their life, all while honestly assessing if they possess what the business needs going forward.

A turning point is when a young leader grasps fully that what allowed the organization to succeed in the past might not help the organization meet the challenges of the future. This is confidence earned through the differentiation process. By doing things the way a parent did or approves of, a successor fails to develop her own sense of what is right.

From Hero to Human: Deconstructing the Myth of the Founder

For successors to become generative leaders, they must downsize their ego—from hero to human. It is hard to do this without meeting the challenges of life cycle development. As they humanize themselves—taking ownership of both the good and bad parts of themselves—they are then equipped to humanize their predecessor. They can integrate their good with the bad and develop empathy for their predecessors' failures and vulnerabilities as well as their own. This doesn't mean they ignore their predecessors' successes, but they contextualize those successes.

Although parents don't set out to be their child's hero, they can fall into the trap of accepting the role of hero. What parent doesn't want to be known as a person of conviction, perseverance, courage, sacrifice, and compassion? It is instinctive to want to be recognized by the family as the one who made it happen, who made the sacrifice. The problem comes when a parent allows a child to idealize these qualities, sheltering him or her from failure, conflict, and the hard-knocks of life. Allowing hero-making may inhibit the more mundane but critical responsibilities of parenting, such as instilling values into the child. By focusing on values as opposed to passively and tacitly reinforcing the myth, the parent communicates stability to the child. Doing so also provides continuity with the family values that drive the business.

The stories parents use to instruct are particularly compelling because while they are lessons in legend, they are also lessons in life. A story is compelling and instructive when it conveys a value. Bob Vermeer, chairman emeritus, and his sister Mary Andringa, CEO and Chair of the Vermeer Corporation, recall their father openly talking about his failures, like the gravedigger machine that didn't work, or the time they developed a mowing machine before John Deere, but weren't able to get it to market because of distribution rights. A measure of a parent's self-confidence is his or her ability to be honest about the failures and not react to failures with harshness and blame. And every successful family business has many of them. In the process of becoming a differentiated adult, successors must see their parents as more than just the hero. They need to see the parent as human.

A myth of a legendary figure without the raw stories of that person's humanity, flaws, and weaknesses only enlarges the legend while shortening the legacy. If the essence of idealizing is the making of a hero, the task of stepping out of the shadow is the unmaking of a hero. This does not mean diminishing the hero and what he or she has accomplished. Nor does it mean demonizing the hero—making the hero a villain. Rebellion is a fake version of differentiation. It makes the parent all bad, rather than integrating both good and bad. Deconstructing the myth of a hero humanizes the person. It strips back the veneer, revealing his or her mistakes while accepting, learning from, and even forgiving the failures. Coming to grips with the mortality of a parent gives successors a realistic sense of who they are, freeing up emotional energy to be more forgiving of themselves. It also gives them a shot at taking their own path, and the freedom to not emulate the parent.

Heroes can't be followed if there is no humanity to learn from and build on. The task of the successor in a family business is to acknowledge the legend while continuing to build the legacy in a way that the legendary figure might have never envisioned—but in a way that bears the imprint of the successor.

But to do this, the successor must “leave home,” the very place where the shadow is greatest. In leaving, a child gains the necessary distance from the idealized hero. After a stint in the “real world,” such as Massimo Ferragamo's travels to America, a child can return to see his or her parent-hero in a different light. Rather than following an appointed path, a script for life with predictable steps, a child who goes off-script creates experiences that will help to define an identity apart from the myth. This is the task of recognizing who you aspire to be in light of who your parents are or were: their successes, what they did for you, what they passed on to you, and what they challenged you to reach for. But it also means realizing who you are in light of your own gifts, skills, and passion. A child who finds his or her own sense of calling is better able to resist the pull into the predecessor's shadow.

I liken it to body building. The best way to tone your body is by pushing against something, allowing resistance to develop strength and definition. So, too, the best way to develop a productive and healthy relationship is to allow for resistance between generations. Resistance is the middle ground between compliance and rebellion. It is the common ground between parent and child, predecessor and successor, on which the business can continue to grow. Part of growing up, and growing into a strong leader, is learning to outgrow the hero complex, moving beyond the mythic ideal of the parent–savior. Both parents (the heroes) and successors (the ones rescued) must learn this.

Succession can be messy because differentiation inevitably causes conflict. As the successor leans into a way of leading that is authentic to him or her, he or she pushes against the predecessor's proven way of leading. Differentiated leaders understand that conflict kicks up emotion that needs to be reconciled with the facts. They are empathetic to others' perspectives and points of view, but they avoid sympathy. Empathy seeks understanding; sympathy wants solidarity. Differentiated leaders don't get sucked in even when they receive negative feedback. They pursue what they feel is in the best interest of the whole, and don't allow negative emotion to sway them. Strong successors are able to step out from the shadows cast by parents and grandparents that are often laden with emotion, entitlement, and expectation: the Silver Spoon Club. Released from the burden, they are free to develop their own identity. They become the hub of family legacy that champions the best of the family values and leverages the strengths of its members. Together, the family generates meaning, purpose, and an emotional return of investment—all the things that money can't buy.

The Bowen Center for the Study of the Family describes this differentiated leader as one who:

This can feel threatening, even disorienting, to a successor. He can act selflessly, but it must be a thoughtful choice, not a response to relationship pressures. Breaking away from the old patterns is a sign that the successor has done the hard work of figuring out what he or she believes—determining what to hold onto to preserve the identity of the business, and what fresh perspective is necessary to lead the business into the next era.

When Successors Chart Their Own Course

Creating one's own definition of success as distinct from that of one's parents, family, and business community is a primary task of differentiation. What distinguishes successful successors in family businesses is their ability to chart their own course. On a journey to identity formation, signposts mark the way, indicating, “Stop! You're headed in the wrong direction!” or, “Keep going in this direction.” Trials faced through experimentation; overcoming failures; feedback from others; mentors; education: These all provide the successors with feedback that they are headed in the right (or wrong) direction.

The strength to define a unique course of action comes from a clear understanding that we are more than who our parents want us to be. And sometimes, from their point of view, less than they want us to be. While many young leaders focus their actions on making their parents happy, the most successful successors do things differently, despite disapproval from their parents. Identity is formed through differentiation, enabling a successor to achieve internal as well as external credibility. The more he or she aligns her beliefs with her actions, the more credibility he or she experiences. To quote Dave Juday, retired chairman of Ideal Industries, this can help the successor “start with what needs to be done, rather than what has always been done.”

The family mythology often works against this, trapping individuals into roles along with familial versions of success. It's hard to break free from the roles, because underlying the roles is a child's primal wish for parental acceptance and love. The child will tend to give primary consideration to the way parents see him or her, not the way the child sees him- or herself. The task of self-awareness is asking, “How do I see myself?” and, “What does success look like for me?” One can only imagine where Home Run Inn would be today had Joe Perrino bought into his father's assessment that all Joe's ideas were stupid.

Defining self apart from one's parents doesn't happen overnight, but gradually as one differentiates. Determining what's right for the future is largely dependent on the cultivation of self-confidence, wisdom, and knowledge, which I will discuss in chapters to come. These are all necessary to make this break from the parent. Cultivating a gut instinct, identifying his or her passion, knowing his or her strengths and weaknesses, and working toward continual improvement—all lay the foundation for a successor to choose to do things in a way that is authentic to him- or herself.

Unintentionally, successors fail to lead authentically because they fail to differentiate. It is all too easy to assume the larger identity of legendary parents and to allow that to prop up the leader's sense of self. But it's only a crutch. Successors can't build a foundation of credibility on someone else's accomplishments. The foundation of authenticity can only be built from the hard work of establishing a true sense of one's self and one's own accomplishments.

When Idealization Interferes

The first draft of the story of a person's life is written by the genes during fetal development. That's nature. Parents help to shape the rough draft, filling in the narrative during childhood. That's nurture. But nature and nurture can only take the story so far. Sooner or later, the individual has to take authorship to develop fully the story's main character—him- or herself.

For all the ways a myth provides meaning and purpose, it rarely helps the successor establish a strong sense of self. The myth a successor grows up with is likely to confuse the issue of identity. One dead end that I have identified (see Chapter 1) is idealization, the process of exaggerating positive qualities in a person. Children naturally idealize their parents, and parents tend to also idealize their children, especially when they confuse loving their children with loving the best of themselves in their children. What parents often want is their own image reflected by their children, not someone who is uniquely different from them. The irony is that it is the child's uniqueness and sense of self that will allow him or her to lead the business with credibility, and consequently further the family legacy.

The natural progression of succession in a family business is that parents foist their expectations on their children. The expectations become the obligations of the child, who works from a sense of duty rather than desire. One successor once said to me regarding his choice to enter the business: “I felt that if I didn't come into the business, I would be letting my father down.”

The process of idealization can also go the way of indulgence, of setting no expectations at all, except for that of happiness, and providing for their children a canvass of unlimited potential and opportunity: “You can do anything. I just want you to be happy.” Both specific expectation and suspended expectation present dilemmas to a successor trying to figure out who he is and what he wants. The one defines the successor by his duty: “I will be the loyal child, the good soldier, and do what's expected.” The other leaves all identity open: “You can do and be anything.” Neither guides children into a growing sense of their own personhood.

The statements, “I am doing what my parents want me to do,” or, “I can do anything I want to do,” leave the successor asking the same question: “What is it that I want to do?” While the temptation might be to see differentiation as solely the challenge of the successor, the parent also plays a powerful role in the process. If the parents work to give the next-generation leaders a true understanding of their strengths and weaknesses, as well as their successes and their failures, this can let light through the shade of the tree.

Shining the Light Inward

The inner work of self-awareness can be prompted by intuition, but it must become an intentional process of getting to know what is underneath the surface. It demands figuring out one's own personhood. A successor must compare the story of who he thinks he is with the reality of who he is—and be honest about the gap. Building internal credibility starts with this self-awareness, the inner work that only the leader can see that validates the outer work that everybody else sees.

It's not just turning on the light, but intentionally shining it inward and asking, “What am I not seeing?” as well as, “What am I pretending not to know?” Successors must find the courage to face the most realistic version of who they are. Self-awareness is something that builds and grows across the life cycle. Unfortunately, it can be distorted by the messages of our parents and the shadow. A temptation for Joe Perrino might have been to believe his father's opinion that his ideas were stupid, but he worked hard to differentiate in spite of this. Self-awareness is also a learned characteristic. It develops over time. The process of development ranges from obliviousness (having little or no understanding of one's own emotions), to consciousness (individuals become aware not only of who they are, but who they are in the mind of others). Self-awareness is innate; it is learned; and it must also be applied.

Differentiating oneself from one's parents starts with self-awareness. Self-awareness is the process of building consciousness of “who I really am in the world.” Rather than just implementing a parent's or the family's vision for the successor's future, as a successor becomes self-aware she becomes clear about who she wants to be, what she is passionate about, and what she is good at—who she really is. It's about creating a clear vision of who one wants to be in the world, and reconciling that with who one really is. To be self-aware is to increase one's understanding of what one values, personality, style, the impressions that one leaves on others, what one is good at and, where one needs to improve. Through building self-awareness, a successor can begin to own his own definition of success—one that builds on the best of the family legacy, while charting a course that is true to his or her unique talents and beliefs. This work can be both practical and reflective.

The following describes four practical ways a successor can increase self-awareness:

1. Personality inventories. These provide feedback about personality traits and styles and offer information that can help the individual understand the implications for their personality in leadership and family interactions. Some of the most common include DISC, Myers Briggs, The Hogan, Big Five, and Strength Finders.
2. 360 reviews. 360-degree review processes are designed to give leaders feedback from those with whom they interact. Through a structured survey and/or interview process, a 360 gathers real feedback about others' perceptions of one's strengths, weaknesses, and leadership style. Commonly, bosses, peers, and direct reports provide feedback. The 360 can be either transparent or anonymous, but the data collected from others is then compared to the successors' own ratings of themselves.
3. Coaching. Trained coaches work with leaders to help clarify professional as well as personal goals. Using personality inventories and 360 reviews, coaches develop a practical game plan to achieve those goals and maneuver around roadblocks.
4. Taking action. By taking action and interacting in the world, we get feedback about who we are and what we are good at. The more we act and interact, the more we learn.

Reflection is much more introspective, psychological, and nonlinear. These methods require successors to reflect on the knowledge that they have about themselves, as well as the feedback they get from others, and then determine what needs to change in their life because of the information. These reflective methods are often needed to fully integrate the feedback provided by the more practical methods of building self-awareness. Reflective methods include these three:

1. Journaling. The simple process of writing down thoughts and periodically reviewing them offers an initial degree of self-reflection that can provide perspective.
2. Meditation/mindfulness. These methods focus on building one's self-awareness by focusing on the here and now, paying attention to what is happening in the moment.
3. Therapy. Although often stigmatized, therapy can be an invaluable tool for leaders to understand how the patterns and traumas in their lives impact their relationships and leadership in the here and now.

Building one's sense of identity through self-awareness allows the successor to build both internal and external credibility, which I will explore in subsequent chapters. Along with the discovery of oneself as a unique entity comes the understanding of independence to exert one's will and either adopt, adapt, or discard that which surrounds the leader. For the emerging leader, this is about testing his or her capabilities against reality. For lack of hard data about oneself, an individual will make up a version of self that doesn't necessarily match reality. The more self-aware a successor becomes, the better able the individual is to make an informed assessment of what he or she is capable of.

Bella Hoare is a banker—a career she admits rarely makes any child's “What I Want to Be When I Grow Up” list. Bella is an eleventh-generation managing partner of the family-owned C. Hoare & Co.: “Private bankers since 1672.”⁵ C. Hoare & Co. is the oldest bank in the United Kingdom, the world's fifth oldest bank, and the most profitable in the country.

According to Bella, she wasn't born to be a banker; she certainly wasn't interested in a banking career. Instead, she grew into it as she worked to become the person she wanted to be. Now, banking is an expression of her personality. “I don't make the distinction between business and my personal values, some of which are different, particularly in the banking world.… I'm a firm believer in having fun. It's one of my core values. There's not a lot of fun in banking.”

Bella developed a sense of fun, in part, from the way her parents raised her. “They never boxed me in,” she says. “If you box people in…then things explode.”

On the one hand, Bella says she was not “really taught anything growing up,” but when she talks about her parents, she reveals their profound influence on her. “I was difficult, awkward, and generally grungy and revolting,” she says, “but my parents never excluded me. My father never made me do anything, but when he said, ‘I suggest,’ I knew it came with the full weight of his parental authority.” He also brought to bear the weight of a father's love. When Bella went away to boarding school, he wrote her every week, “and every letter he told me stories about people in his life, but never about work.” He shared himself as a human more than a hero.

Her father's presence, strong but not dominating, gave Bella freedom to explore what she valued. She was burdened by neither expectations nor idealization. “I didn't grow up,” she says, “being told I was clever or beautiful or anything like that on any sort of regular basis. But I always knew my own mind.” And her own values. As her teacher reported, “We hope that next term Arabella will see homework as more than an intrusion into her valued private life.”

Bella idled through school and then hit the throttle into her career. She followed her half-Russian husband to his half-motherland, learned Russian so she could work for a stock brokerage firm where she was hired as number 2 of 2, and stayed until she was number 2 of 75. All the while, Bella was preparing herself for the job that she didn't want.

Her cousin, Alex Hoare, was managing partner of the bank, and Bella had been a luminary on his radar. For one year he pursued her, and she rebuffed him. “Why should I come to a dozy family firm on Fleet Street?” she says. As it turned out, Alex got his way, and so did Bella.

Bella ascribes to the theory that mistakes are strategic, not chronic. You don't keep making the same ones. “I learned a lot of lessons from the mistakes I made at my two jobs, and none here knows about those mistakes. They can see that I've learned.” Bella has proved herself to the one man who matters the most: her father. “He has seen me make useful comments, understanding the issues, taking the business forward. It's been a process of adjustment, from viewing me as Little Bella, to the person he trusts to hold his company in her hands.”

“Taking it forward” is Bella's life approach. “Your job expands at the rate of your capabilities.” For Bella, that includes opportunities that she has seized and created for herself. These have included taking a course at Harvard, seeing a therapist (“very un-English” she laughs), finding mentors at work, and drawing strength from a community of friends. “You end up reasonably confident,” she says, “that you understand your strengths and weaknesses.” She had a strong sense of self, and continued to build it so that at the peak of her career, her “self” and her work coalesced. “I don't make a distinction between a business life and a personal set of values,” she says. “And some of those values are different.”

Different indeed. Bella Hoare has made banking fun, and that perhaps, is her greatest achievement.