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Capital, Culture and Change - Perspectives on Succession · Succession and Transition

• 0:01
  SPEAKER_00: Hi there, my name is Chris Underhill.
• 0:04
  SPEAKER_02: I'm Andre Coleman.
• 0:05
  SPEAKER_00: I'm Mel Young.
• 0:06
  SPEAKER_00: We've created the Elders Council for Social Entrepreneurs to explore succession, leadership, well-being, and money.
• 0:14
  SPEAKER_00: Navigating the good times and the bad.
• 0:20
  SPEAKER_00: A very warm welcome to another webinar from the Elders Council for Social Entrepreneurs.
• 0:26
  SPEAKER_00: Today we have a fantastic conversation going between Andrea Coleman and our guest, Rachel Harrington.
• 0:34
  SPEAKER_00: Over to you, Andrea, for the introduction.
• 0:37
  SPEAKER_02: Hello, everyone.
• 0:38
  SPEAKER_02: Welcome to our conversation with Rachel Harrington.
• 0:42
  SPEAKER_02: I'm delighted to be in this conversation with her today.
• 0:45
  SPEAKER_02: Rachel has worked with our organization, the organization I co-founded, Writers for Health, from 2004.
• 0:54
  SPEAKER_02: And what was fascinating about Rachel throughout her career is that she started as a board member when you were 18 or 19?
• 1:04
  SPEAKER_02: Yeah, 18, 19.
• 1:06
  SPEAKER_02: So Rachel has had many perspectives on social enterprise, both from being a board member for a startup in their very early days, joining a young social enterprise, my own organization, and then moving on to be a board member and working at Coots.
• 1:25
  SPEAKER_02: So her perspective on particularly developing social enterprises and seeing that succession, which you will have seen over certainly over 20 years in your young life, will be very informative, I think.
• 1:42
  SPEAKER_02: One of the things that we found at the Elders Council for Social Entrepreneurship is the challenges that boards of social enterprises have and how social enterprises often don't benefit from their boards.
• 1:56
  SPEAKER_02: It's a tricky relationship.
• 1:57
  SPEAKER_02: So we're very pleased to have your perspective on many aspects of this.
• 2:03
  SPEAKER_02: So, Rachel, just to give us an idea of what it was like to be a board member of a startup social enterprise when you were so young.
• 2:14
  SPEAKER_04: Oh, so there's two trustee roles I think that are interesting here.
• 2:17
  SPEAKER_04: One, the board I joined when I was 18, 19, wasn't quite a startup, but it was a very small and fledgling organization.
• 2:25
  SPEAKER_04: So it was the British Youth Council, which sadly actually has shut down recently.
• 2:29
  SPEAKER_04: And the role of the organisation was all about giving young people in the UK a voice.
• 2:34
  SPEAKER_04: And I got into it through being a member of Girl Guiding.
• 2:37
  SPEAKER_04: All of the big organizations would send delegations to this council, and it was rather like herding cats, as you can imagine, having a room full of 200 young people.
• 2:45
  SPEAKER_04: And anyone who's worked with young people will know that people say, What do young people think?
• 2:50
  SPEAKER_04: Which is a ridiculous question because you know what the young conservatives thought compared to the young Green Party, compared to the scouts, was no.
• 2:58
  SPEAKER_04: But it was a key principle of the organization that all of the board were under 26, which, in hindsight, the pity I feel for our poor chief executives along the way, who were proper grown-ups trying to do a proper job, it really took a special kind of person to be chief executive there because they had to really walk the walk in terms of listening to and trusting young people, and had a very different dynamic because they were also having to mentor the board members as well as take direction from them.
• 3:30
  SPEAKER_04: So it was an incredibly interesting experience.
• 3:33
  SPEAKER_04: And I think the grounding it gives you is understanding where idealism has to meet reality and turn into pragmatism.
• 3:41
  SPEAKER_04: And all of the people that I was on that board with have gone on to hold prominent roles in public services, have set up their own social enterprises.
• 3:51
  SPEAKER_04: It clearly was a sort of grounding of how to make a difference in public life.
• 3:56
  SPEAKER_04: But it really brought home the realities of when you try to create change, you can only do it within the constructs that you're working within.
• 4:03
  SPEAKER_04: You can only do it with the funds that you can raise.
• 4:05
  SPEAKER_04: You're responsible for risk, you're responsible for strategy, you're responsible for stakeholder management.
• 4:12
  SPEAKER_04: And the relationship between the board and your chief executive is absolutely key.
• 4:17
  SPEAKER_04: So it was a very steep learning curve between the ages of sort of 19 and 26, but a fascinating insight into what makes the not-for-profit sector tick.
• 4:29
  SPEAKER_02: How interesting, Rachel.
• 4:30
  SPEAKER_02: And in what you've just said, there are some really key issues that I think social enterprises face.
• 4:38
  SPEAKER_02: One is that tension between, as you say, keeping the organization running, but also keeping the mission very clear and adhering to that mission.
• 4:48
  SPEAKER_02: And I think that issue that I've always described as the tension between mission and money is very key.
• 4:54
  SPEAKER_02: And then, of course, there's the other issue that you've raised there about sustainability, that what we've learned in the Elders Council for Social Entrepreneurs is that the succession and how you move on and the relationship, as you say, between the CEO and the board is all about sustainability, not just of one organization, but really of the whole sector.
• 5:18
  SPEAKER_02: Those are two really important, important points that you've raised.
• 5:22
  SPEAKER_02: And before we leave the young board member issue, most people construct their boards with people that are older and often men.
• 5:32
  SPEAKER_02: And I just wonder what your view is of young board members.
• 5:37
  SPEAKER_02: What do you think that they bring?
• 5:39
  SPEAKER_02: Obviously, you've shown the challenges of having a very young board altogether, but do you feel that it's a good idea for people to specifically look for the young board members in the mix on a board?
• 5:54
  SPEAKER_04: I do.
• 5:54
  SPEAKER_04: I've seen it done badly when it is just tokenistic.
• 5:58
  SPEAKER_04: And people say we just need more board diversity, we need to have some younger people on there.
• 6:02
  SPEAKER_04: And so you bring people in without properly supporting them, without really having a sense of what it is you want them to contribute to their board beyond just their age.
• 6:12
  SPEAKER_04: It's all part of that broader conversation about what is the mix of board members that this organization needs to give us the perspectives and the skills that we need to take it forward.
• 6:25
  SPEAKER_04: I think that the second trustee role that I mentioned, which is the startup, which I joined probably in my early to mid-30s, and the founder CEO was a young guy in his early 20s.
• 6:36
  SPEAKER_04: He'd started this organisation off the back of his master's degree, where he just got so frustrated with this challenge between people who came to the UK as refugees and then became settled, struggling to get into employment and integrate.
• 6:49
  SPEAKER_04: So a real kind of burning frustration and injustice.
• 6:52
  SPEAKER_04: And the board that coalesced around this in the early years was actually, on average, a fairly young board, 30s, 40s, early 50s.
• 7:00
  SPEAKER_04: And we actually felt like the most fuddy-duddy risk-averse board in the world because we were sitting there in contrast to this, you know, go-getting, wanted to run.
• 7:09
  SPEAKER_04: And I'm sure all the social entrepreneurs on this call are familiar with the cartoon of the guy hanging out of the train window, laying the track down in front of the train as it's going along.
• 7:19
  SPEAKER_04: And it really felt like that because we were having to build an organization very quickly from the ground up, and we were the ones saying, What about this risk?
• 7:28
  SPEAKER_04: Have you thought about this?
• 7:29
  SPEAKER_04: Maybe we won't do that quite so quickly.
• 7:31
  SPEAKER_04: So it was a very different kind of flipped perspective.
• 7:35
  SPEAKER_04: But when we were looking at growing that board, we were really conscious of trying to have a mix of people from professional services and the corporate world who could help us with our corporate partnerships and things that was core to our model.
• 7:46
  SPEAKER_04: But what was harder was bringing in people with much more recent experience of what it's like to be a refugee in the UK.
• 7:54
  SPEAKER_04: Interestingly, we did have people who came who were in very high-powered sort of corporate jobs whose family had that experience.
• 8:02
  SPEAKER_04: So they did have that, but not anyone who had been going through that more recently.
• 8:07
  SPEAKER_04: And so we worked very hard on that.
• 8:08
  SPEAKER_04: And I think that was for what was generally a white middle class board, was much more important than the age diversity, because they and the clients that we served were very good at sense checking us when we were saying this is something that's really important as a value to the organization.
• 8:26
  SPEAKER_04: When we started, we said we only wanted to try and place clients into jobs with real living wage employers.
• 8:32
  SPEAKER_04: And eventually our clients said that's not as important to us, actually.
• 8:36
  SPEAKER_04: That's your value.
• 8:38
  SPEAKER_04: What we want is choice and not to be restricted and to have agency in our decisions.
• 8:43
  SPEAKER_04: And that was a really good sense check for us.
• 8:45
  SPEAKER_04: So I think young board members are good.
• 8:47
  SPEAKER_04: I think there's a bell curve in your life of how willing you are to ask DAF questions.
• 8:52
  SPEAKER_04: You do it quite a lot when you're young, then you grow out of it or talk yourself out of a while, and as you get older, you stop caring and you start asking the DAF questions again.
• 8:59
  SPEAKER_04: Um, so having young people who will challenge and bring some of that kind of fresh perspective and keep you in touch with what the upcoming generations are thinking is really helpful.
• 9:09
  SPEAKER_04: But you have to support them properly and you have to think about who are the right people to have around your board table.
• 9:14
  SPEAKER_02: Yeah, and I think it is hard to get that balance between supporting the leadership of the management or the founder and supporting the board, sort of mutual support.
• 9:24
  SPEAKER_02: But what you're saying has brought up another area of tension within social enterprise.
• 9:30
  SPEAKER_02: I think that the founder being the risk taker and the board being risk averse.
• 9:35
  SPEAKER_02: And I think that is another issue that we all have to think about is where do you get that balance?
• 9:42
  SPEAKER_02: That there isn't then a great pulling apart of the board and the leadership because one is risk averse and one is a risk taker.
• 9:51
  SPEAKER_02: And I'm sure everybody on this webinar will recognise themselves as risk takers, those of us who are social entrepreneurs.
• 9:58
  SPEAKER_02: So moving on, Rachel, to when you joined, looking at another perspective of family high net worth members looking at how to support social entrepreneurs or charities.
• 10:12
  SPEAKER_02: What do you find when you first joined that?
• 10:14
  SPEAKER_02: Was that a surprise about looking at it from a different angle?
• 10:18
  SPEAKER_04: It was.
• 10:19
  SPEAKER_04: It was a big culture shock to go from Riders for Health where we'd felt that getting to 30 people was a big growth curve and it felt like a big organization to walking through the floors of a bank owned by Nat West.
• 10:31
  SPEAKER_04: So I just thought, what on earth do all these people do?
• 10:33
  SPEAKER_04: There's thousands of them.
• 10:35
  SPEAKER_04: And you'd think it would be very different, but starting to look at the kind of families and the family businesses that the bank was working with and looking at the issues facing family businesses, I sat there thinking, I've just been working for one of these.
• 10:47
  SPEAKER_04: This is where I've come from.
• 10:48
  SPEAKER_04: I recognized a lot of these issues.
• 10:50
  SPEAKER_04: So just to give people the context, the the team that I now run, we sit within the ultra-high net worth team at Coots, mostly working with families whose liquid wealth is 20 million plus, usually significantly more.
• 11:02
  SPEAKER_04: And we have been described as the Department of First World Problems, but they are important problems.
• 11:07
  SPEAKER_04: So one thing that we do is advise on philanthropy strategy and help families with their grant making.
• 11:12
  SPEAKER_04: The second thing we do is support the next generation who are coming up and helping them understand how to manage wealth and how to think about wealth and find their own identity.
• 11:22
  SPEAKER_04: And the third area is helping family businesses and families of wealth think about their governance and their succession planning.
• 11:29
  SPEAKER_04: And some of the similarities for family businesses in particular were quite striking of sort of social enterprises, founders, and how you think about those things.
• 11:37
  SPEAKER_04: Because in both cases, it's about much more than profit.
• 11:41
  SPEAKER_04: There's so much more at stake.
• 11:42
  SPEAKER_04: There are very different motivations and drivers in place.
• 11:45
  SPEAKER_04: For family businesses, it's a sense of identity and reputation, and often legacy.
• 11:52
  SPEAKER_04: If you're thinking about the legacy of the founder, often bootstrapped it and keeping that story alive.
• 11:59
  SPEAKER_04: There's a sense of not taking all the profit for yourself, but more of a shared sense of community, whether that's as often as an employer, being a really important employer and a really important part of a community, the sense of identity that comes with being part of that family.
• 12:15
  SPEAKER_04: Who am I if I'm not involved with this organization?
• 12:19
  SPEAKER_04: And also this experience of navigating these tensions and frictions of systems that have come together but don't naturally sit as bedfellows.
• 12:29
  SPEAKER_04: So in a family business, you've got the family aspects versus the business.
• 12:33
  SPEAKER_04: It's family versus money versus mission and benefit versus money.
• 12:38
  SPEAKER_04: But it's a lot of the same tensions when it comes to making a difficult decision in your organization where those two things might be at odds.
• 12:47
  SPEAKER_04: What factors you use to make your decision?
• 12:50
  SPEAKER_04: What's your rationale?
• 12:51
  SPEAKER_04: What are your values?
• 12:52
  SPEAKER_04: And how do you think about succession?
• 12:55
  SPEAKER_04: What does it mean to step into the shoes of someone who has to not just deliver profit from an organization but carry all of that baggage with them in a leadership role?
• 13:06
  SPEAKER_04: So it was interesting to see how many similarities there are between those two worlds.
• 13:12
  SPEAKER_02: Yeah, we've found in our discussions across the social enterprise sector, really, since we started the Elders' Council for Social Entrepreneurs, that many of those things are the same as you are mentioning, that succession at that time for social entrepreneurs, as you say, who am I if I'm not the leader of this?
• 13:32
  SPEAKER_02: It's very emotional.
• 13:33
  SPEAKER_02: It's about money, it's about planning, it's about so many of those same things.
• 13:39
  SPEAKER_02: I'd just like at this particular moment to make a little plug for our wisdom bank that we're building because of the great wisdom that comes from the social enterprise sector.
• 13:50
  SPEAKER_02: Just at this moment, some questions that anybody would like to ask, or if anything's come up on the chat, Chris, is there anything that we should open up to the floor?
• 14:00
  SPEAKER_00: Um yes, we had a nice comment from Jelena Haynes, Dr.
• 14:03
  SPEAKER_00: Jelina Haynes, a little earlier in the chat.
• 14:06
  SPEAKER_00: Jelena, do you want to comment?
• 14:08
  SPEAKER_01: Hi, how are you?
• 14:09
  SPEAKER_00: Hi there, welcome.
• 14:11
  SPEAKER_01: Thank you, thank you.
• 14:12
  SPEAKER_01: Talking about leadership.
• 14:14
  SPEAKER_01: I think for me, as I said in the chat, is that fresh minds always useful when it comes to trying to bring in the new ones.
• 14:21
  SPEAKER_01: And in my experience, young ones seem to have this energy to bring in and contribute to the organization.
• 14:28
  SPEAKER_01: And it's always energized, especially if we have the older organization that kind of is stagnant with their ideas, quite conservatives.
• 14:37
  SPEAKER_01: And the young ones always bring in the first idea and activate new ideas, and that really influences the organizations to have new ideas.
• 14:47
  SPEAKER_01: There have been a few organizations that I've been involved that I come in, that you have these conservative ideas, and first mind is always useful to bring in those ideas back to the table.
• 14:59
  SPEAKER_01: And main-term maintain is always good because you have free ones and you're trying to balance those ideas in the table, and it's always useful that way.
• 15:09
  SPEAKER_01: At the same time, it gives a new incentives for the older organizations as well to balance the level in the new society that we are now, especially we're driven by EI.
• 15:21
  SPEAKER_01: We have bringing that freeze ideas and just trying to catch up.
• 15:25
  SPEAKER_01: Thank you.
• 15:26
  SPEAKER_02: Yeah, thank you.
• 15:27
  SPEAKER_02: And I think that Rachel referred to one of the things I thought was important was that it's almost incumbent upon us all to help young people to become good board members.
• 15:39
  SPEAKER_02: So how you do that while you're developing social enterprise is a challenge.
• 15:43
  SPEAKER_02: But nevertheless, I think it's a very good point that we should all be considering.
• 15:48
  SPEAKER_04: It's interesting in the family business world, one route that we do see happening is what is sometimes termed reverse succession, which is where the younger generation will go off and start a business which is in the same field as the original business, but slightly tangential or a different way of doing things that modernises it and takes it into the next chapter.
• 16:09
  SPEAKER_04: One classic example, if anyone likes the southwest of England, the Watergate Bay Hotel, two brothers who were expected to take over the family's very traditional seaside BB business and thought this isn't us, this isn't what we want.
• 16:22
  SPEAKER_04: And their idea was could you take that race key culture and apply it to the surf world?
• 16:26
  SPEAKER_04: Would that give the business more longevity in a different way of doing things?
• 16:30
  SPEAKER_04: So they went off and started this new business to try and make it work and then bought the parents' original business and created a role for the parents within that.
• 16:40
  SPEAKER_04: So there are different ways of thinking about succession and how you diversify and how you iterate an organization to make it fit for the future.
• 16:48
  SPEAKER_02: Yes, it's something we definitely need to explore is the reverse succession.
• 16:52
  SPEAKER_02: No, that's something we'll be all thinking about.
• 16:55
  SPEAKER_02: So when it comes to looking at succession in a family business, one of the things I think we've found is that culture is really the main thing to be held on to.
• 17:09
  SPEAKER_02: Have you seen that being a difficult thing for the culture to remain the same?
• 17:14
  SPEAKER_02: I mean, the culture and the mission seem to me to be of the most ultimate importance.
• 17:18
  SPEAKER_02: Do you find that is the same in a family business?
• 17:22
  SPEAKER_04: It is.
• 17:22
  SPEAKER_04: I think the question assumes that the culture you have is a good one, which is always worth sense checking.
• 17:29
  SPEAKER_04: Yes.
• 17:29
  SPEAKER_04: And certainly with family businesses, we found that as well, is that you be watchful of this is the way we do things around here, becoming something that is negative and allows bad habits to perpetuate.
• 17:41
  SPEAKER_04: But you're right, the vision, the mission, why are we doing this and how do we do it are all challenges that we see in family-owned businesses as well.
• 17:50
  SPEAKER_04: And so when we're working with a family, one of the key questions that we ask is, why are you in business together?
• 17:57
  SPEAKER_04: And why do you want to continue to be in business together?
• 17:59
  SPEAKER_04: And it's that why question, the North Star that you come back to and for social enterprises, the same, why are we doing this?
• 18:06
  SPEAKER_04: What's the change that we're trying to achieve and how has the landscape changed?
• 18:10
  SPEAKER_04: Because for a family business, if the answer is we've just always done it and we can't imagine a world where we're not in business together, that's not the foundations for a thriving business that's going to last for a long time.
• 18:22
  SPEAKER_04: So we start with what's the vision, what's the North Star for the family, what's the mission, and what are those families' values and how do they manifest in the business?
• 18:33
  SPEAKER_04: And then from that should come what the culture of the organization should be, because values are just a word on a page if we don't have behaviors that go with them that everyone can hold each other accountable for.
• 18:47
  SPEAKER_04: So we spend a lot of time saying, okay, if you're saying these are your values, what does that mean?
• 18:52
  SPEAKER_04: If I were to film those values being lived in your family and in your business, what would I see?
• 18:59
  SPEAKER_04: And if those aren't being lived, how do you all call each other out for it?
• 19:04
  SPEAKER_04: How do you give that feedback?
• 19:05
  SPEAKER_04: How do you change things?
• 19:06
  SPEAKER_04: And how do you then diffuse that through the employees as well so that they feel that they're their values and they see it being lived in the organization?
• 19:15
  SPEAKER_04: And that can take a lot of thinking and a lot of work and a lot of honesty.
• 19:20
  SPEAKER_04: Quite often we'll have a conversation with family members where they come up with all these values and things, and then we start to talk about the behaviours, and then they sit there and say, This is more our aspiration, isn't it?
• 19:29
  SPEAKER_04: I'm not sure we're actually doing any of this right now.
• 19:32
  SPEAKER_04: So there is that reality check of taking a step back and saying, what do we really mean by mission and culture and values that we want to perpetuate in the organization and why are they important for being effective and delivering on our mission?
• 19:48
  SPEAKER_02: So these are all very relevant questions for all of us to ask ourselves in running our organization.
• 19:55
  SPEAKER_02: So I think those are really important to step back and ask: is this mission the right one?
• 20:02
  SPEAKER_02: Is the culture or the values?
• 20:03
  SPEAKER_02: So thank you for that, Rachel.
• 20:05
  SPEAKER_04: So just the other lens that we use, given that we've talked about capital in the title of the webinar, is that we tell wealthy families and family businesses that they have more than one kind of capital.
• 20:15
  SPEAKER_04: They've got the financial capital, which is the one everyone thinks about, the profits, the money, the investments.
• 20:20
  SPEAKER_04: They've got human capital, which is the strength of the relationships within the family, the knowledge, the skills, the experience, the capabilities, and then they've got social capital, their reputation, then the power of their networks, the goodwill towards that family and that organization.
• 20:39
  SPEAKER_04: And if you only focus on the finances and you fail to nurture those other two kinds of capital, you're going to be toast eventually.
• 20:46
  SPEAKER_04: But again, it's being honest and thinking about if we're going to nurture all of these kinds of capital, who is best placed to do that within our organization?
• 20:54
  SPEAKER_04: Can it be one person who really is the custodian of all of those things?
• 20:59
  SPEAKER_04: Or when you're thinking about succession, can you try and think about who can lead on those areas and play to their strengths in those roles?
• 21:06
  SPEAKER_04: And as if you can combine those three, you'll get more of a balanced culture that thinks about people and reputation and the finances.
• 21:15
  SPEAKER_02: That's going in the wisdom bank, Rachel.
• 21:18
  SPEAKER_02: Has anyone any other comments so far or any questions or experiences of their own to bring to the conversation?
• 21:27
  SPEAKER_00: What I thought, Andrea, was that chain of ideas that Rachel brought, where you either ended up with values or you started with them, whichever way.
• 21:35
  SPEAKER_00: But I thought that was a very interesting way of thinking, and of course, very important for the social entrepreneurial community who are quite prone to be talking about values, but don't necessarily have the wherewithal to back it up sometimes.
• 21:48
  SPEAKER_00: So I thought that was a very interesting way of thinking about that, and certainly something that's going to be useful for our wisdom bank.
• 21:54
  SPEAKER_04: What we do with families is try and capture all of this in a family charter or a family constitution.
• 22:00
  SPEAKER_04: Is very different from any strategy documents or business plans for the business, but really tries to set down on paper these things that are most fundamental to the family.
• 22:10
  SPEAKER_04: And don't try to preempt every decision that has to be made, but provide guide rails and a framework within which future decisions can be made.
• 22:19
  SPEAKER_04: So if I'm two generations down the line and I'm thinking, what would grandfather have done in this situation?
• 22:24
  SPEAKER_04: Or trying to preempt any areas of friction and conflict, and it becomes a live document that you refer back to.
• 22:31
  SPEAKER_04: And it starts with the vision and it talks about the values and the behaviours that go with them, and then it talks about what principles derive from those in terms of the way we run the business and how we run ourselves as a family and the strengths of different family members.
• 22:46
  SPEAKER_04: But what we found helpful lately, because those can be lengthy word documents, is a visual of it as a house on one page, the foundations of which are the values.
• 22:56
  SPEAKER_04: These are our most fundamental drivers and motivators and the things that are most important to us.
• 23:00
  SPEAKER_04: And if any of those are contravened, it's painful to us.
• 23:04
  SPEAKER_04: And at the top, the roof is the vision and the mission, which sort of is the umbrella under which everything sits.
• 23:12
  SPEAKER_04: And then we fill in the flaws underneath that of what are our business principles, how do we communicate as a family, what do our governance structures look like?
• 23:21
  SPEAKER_04: But they're held within these two really fundamental things of values and vision at the top.
• 23:28
  SPEAKER_04: And that's been quite useful, I think, just to focus the mind and try and articulate it in a simple way.
• 23:34
  SPEAKER_02: Really fascinating.
• 23:36
  SPEAKER_02: And one of the things I've noticed is that having a very clear mission in social enterprise can sometimes be quite dangerous because you're so totally focused on what you're doing that often people within the organization can get left behind.
• 23:52
  SPEAKER_02: The leadership, the founder, is so focused on those issues that nothing else will matter.
• 23:57
  SPEAKER_02: So I do think that building out that, as you're describing, that so that everybody is involved and can see where you're going, and that there are many layers to it and foundations and missions.
• 24:11
  SPEAKER_02: No, I think that's a really interesting picture that you've painted there.
• 24:15
  SPEAKER_02: So please come in, anyone who would like to.
• 24:19
  SPEAKER_02: We don't want to be dominating this conversation.
• 24:23
  SPEAKER_00: I was just going to ask Rachel, you made an analogy earlier on about having worked for riders initially and then come into the bank.
• 24:31
  SPEAKER_00: And you said something like, What do all these people do?
• 24:33
  SPEAKER_00: And so on and so forth.
• 24:35
  SPEAKER_00: I was wondering how far that analogy goes.
• 24:37
  SPEAKER_00: In other words, what are the comparisons between working particularly for wealthy families as you do within the bank and working with their family businesses, which is obviously a very important part of that, and your experience of having worked in social enterprise or in social impact, if you prefer.
• 24:54
  SPEAKER_00: What are the comparisons either way, either the distinctions between or the comparisons with when it comes to organization, boards, and indeed the adherence to and the commitment to behaviours, values, and so on and so forth?
• 25:07
  SPEAKER_04: There's probably a spectrum of social enterprises, family businesses, and then publicly owned for-profit companies, in terms of those points about being values-driven, people feeling engaged and part of one mission and one team, and shades of grey in between.
• 25:26
  SPEAKER_04: I think certainly having worked at Riders for Health, uh, it felt like a family business.
• 25:32
  SPEAKER_04: It felt like a family.
• 25:34
  SPEAKER_04: People felt that everyone was pulling in the same direction, that there's a problem to be solved here.
• 25:40
  SPEAKER_04: Yes, I'm turning up to work because I get paid.
• 25:42
  SPEAKER_04: I can't afford to do this as a volunteer.
• 25:44
  SPEAKER_04: But there were people who've done that for a long time in the organization.
• 25:48
  SPEAKER_04: But you're doing it because you can see a problem to be solved.
• 25:52
  SPEAKER_04: And for clients in their family businesses, there is often that same sense of pride and a sense of really thinking about what the business is there to do.
• 26:03
  SPEAKER_04: They're very proud of the products that they create or the services they provide and the employment that they create.
• 26:09
  SPEAKER_04: And so there's more of a sense of a social and moral contract rather than just one that's about profit.
• 26:15
  SPEAKER_04: Whereas once you get into working in a big bank, I'm quite lucky, and there's a reason I work for Coots and not another bank, that we're a B corporation, that we have very strong values, that philanthropy is a big part of the organization.
• 26:28
  SPEAKER_04: And Coots as a bank is small enough that it does feel like you know most people, and there is a very strong sense of service and duty and what we're there to do.
• 26:37
  SPEAKER_04: But I was talking to someone just earlier this week about the notion of the psychological contract between an employee and their employer, and I think that changes depending on where you are along that spectrum.
• 26:50
  SPEAKER_04: And of course, the bigger the organization, the harder it gets to really diffuse those values and get everyone to live and breathe them and feel connected to the top and what the organization's trying to do.
• 27:02
  SPEAKER_04: But it can be done and it can be done well, and it depends on whether you do have that psychological contract and people feel that what you're saying is authentic and they can see the evidence of it.
• 27:15
  SPEAKER_04: Nothing turns people off, including in big corporates, in my experience, than an organization that says one thing and then appears to behave another way towards its staff.
• 27:24
  SPEAKER_02: One of the questions I have, Rachel, is do family businesses ever bring in people from outside to lead the organization?
• 27:35
  SPEAKER_02: Because often you've mentioned that in Riders for Health, my own organization, it's very difficult when you grow it with people and it does become like a family to select the next kind of leadership.
• 27:48
  SPEAKER_02: And how do you bring everybody on board with bringing in someone who's not a family member?
• 27:58
  SPEAKER_02: Have you seen that done well or done badly?
• 28:02
  SPEAKER_02: Or what's your experience there?
• 28:04
  SPEAKER_04: Yeah, both.
• 28:05
  SPEAKER_04: It's one of the perennially thorny discussions for family businesses.
• 28:10
  SPEAKER_04: Because part of it is the question is what makes us a family business?
• 28:13
  SPEAKER_04: Does it have to be a family member running it?
• 28:15
  SPEAKER_04: Or is it enough to be family owned?
• 28:17
  SPEAKER_04: So a lot of our discussions around that, what does it mean to you to be a family in business together and what's best for this business?
• 28:26
  SPEAKER_04: So, yes, it's becoming more common either to bring in a non-family CEO or senior leader and potentially to think about non-family members on the board as well and bringing in non-executives who can bring a different perspective.
• 28:42
  SPEAKER_04: And it's challenging for the family members and it's challenging for the incoming CEO.
• 28:48
  SPEAKER_04: Again, it takes a special kind of person to come in and step into those shoes.
• 28:52
  SPEAKER_04: And I think this is where that clarity of expectations, the original founding family having had those conversations that we've just talked about and being very clear about what are the values, what kind of culture do we want in the organization and why is this important for what we're trying to achieve as an organization, not just our own peccadillos or ego, and communicate that to the incoming CEO and for them to really have a sense of what their role and autonomy is to support the stewardship of those values?
• 29:27
  SPEAKER_04: I talk a lot about being custodians and stewards in family businesses and who does those roles in different ways.
• 29:34
  SPEAKER_04: Again, another three-circle diagram is around ownership, leadership, and family.
• 29:40
  SPEAKER_04: And different people will sit in different buckets of that diagram and bring very different perspectives to the table as a result.
• 29:47
  SPEAKER_04: Does it always have to be a family member in that leadership bucket, or can we delegate it to someone else?
• 29:54
  SPEAKER_04: But the chemistry has to be right, the expectations have to be clear, the delegation of responsibilities has to be clear, and you have to give a really clear mandate to that CEO about what it is that you're being asked to deliver, and which elements of that custodianship are still going to be carried out by members of the family, members of the board who will continue to live and breathe those values and will be affected by the reputation of that business.
• 30:24
  SPEAKER_04: You're asking the CEO to take on your family's reputation, which you don't get if you're a CEO in sort of other businesses.
• 30:32
  SPEAKER_04: You've got your own reputation to consider, but you're not carrying someone else's lifetime's work on your shoulders.
• 30:38
  SPEAKER_02: And that's a very similar experience, I think, in social enterprise that you've spent all your life building this organization.
• 30:47
  SPEAKER_02: And if you haven't planned well, why often leadership founders can't leave because they don't have the money to be able to leave, not like in a business where you take away some equity.
• 30:57
  SPEAKER_02: And then there are the other issues around this is my baby, and can someone else take it on?
• 31:03
  SPEAKER_02: And I think our experience in social enterprise is that often the first person to take over from the founder probably has the toughest job of all, breaking that pattern, breaking that mould, but keeping the culture and the mission clear.
• 31:20
  SPEAKER_02: There are some bumpy rides.
• 31:21
  SPEAKER_02: So I'm sure you can't sum this up exactly.
• 31:25
  SPEAKER_02: But are there any best practices that you would sort of give us where people have done this well, or even lessons that you've learned from seeing people doing it badly, about preparation and some of the things that you could avoid in taking on new leadership from a founder or from a longtime family member?
• 31:45
  SPEAKER_04: I think the times when it's gone badly is where people aren't on the same page about why they want to bring in non-family leadership.
• 31:54
  SPEAKER_04: And I've had conversations with clients where they say things like, if I die, the children will take it over.
• 32:01
  SPEAKER_04: Death and taxes, I'm sorry, that's kind of two inevitables.
• 32:04
  SPEAKER_04: You are gonna have to think about this at some point.
• 32:07
  SPEAKER_04: When it feels as if there's a sort of a forced change that people haven't had time to adapt to, it doesn't go well.
• 32:15
  SPEAKER_04: And as I said, taking time to have that step back and really ask yourself the honest questions about what this organization need to be successful, and then to be able to look at the individuals and the personalities within that as a sort of parallel conversation is really helpful.
• 32:32
  SPEAKER_04: One of the one of the things that we do when we start working with a family is that we get them to work on a fictional case study, and it's based on things that we've seen happen in other families, but we get them to talk about this family and this business and the challenges that they can foresee.
• 32:49
  SPEAKER_04: What would they advise this family to do?
• 32:51
  SPEAKER_04: What do they think would happen if this situation came up?
• 32:55
  SPEAKER_04: And it takes the personal out of it, it gets them to start talking about some of these issues without it being about them, and it enables a more open conversation.
• 33:06
  SPEAKER_04: And then, of course, you get, oh, actually, that's a bit like us, isn't it?
• 33:10
  SPEAKER_04: Or we should be thinking about that.
• 33:11
  SPEAKER_04: So it sort of softens the ground up a bit.
• 33:14
  SPEAKER_04: And then I think if you can be very clear about what is it that we need this non-family person to do, you can think about what's the right kind of person to come into that organization because the personality fit is more important, I think, in many ways, than the experience and the skills.
• 33:35
  SPEAKER_04: It's the a friend of mine is the chief executive for a family foundation, family charitable foundation, which in effect is a family business.
• 33:43
  SPEAKER_04: And the most challenging part of that job is managing the relationship with the family trustees, not running effective grant-making programs.
• 33:52
  SPEAKER_04: So you need to recruit for someone who gets you and that you can work with, but then be very clear about what their role is versus what you will be continuing to do as that kind of crowding group.
• 34:05
  SPEAKER_04: And I think sometimes having a sort of transitional CEO, not quite like a rebound relationship, but you need something to break the duck.
• 34:12
  SPEAKER_04: You need something to get everyone used to this being a new state of play.
• 34:16
  SPEAKER_04: And maybe you have someone who knows that's what they're coming in to do, and they're comfortable with that remit.
• 34:21
  SPEAKER_04: They don't think this is something they're going to drive for the next 10 years and take in a whole new direction.
• 34:27
  SPEAKER_04: You want someone who is very consciously a transitional leader.
• 34:31
  SPEAKER_02: That's a really interesting comment, Rachel.
• 34:34
  SPEAKER_02: Thank you.
• 34:35
  SPEAKER_02: Mel.
• 34:36
  SPEAKER_03: Yeah, thank you.
• 34:37
  SPEAKER_03: This is obviously the fascinating conversation going on here.
• 34:41
  SPEAKER_03: Thanks for your insight, Rachel.
• 34:42
  SPEAKER_03: One question I have is there's clearly so much similarity between a family business and a sort of a social enterprise or charity, particularly from that psychological, emotional part in terms of change.
• 34:55
  SPEAKER_03: But I think one of the big differences, and you've mentioned it in the word a couple of times, wealth.
• 35:00
  SPEAKER_03: Social enterprise is struggling in terms of finance, and therefore, succession is you need to invest in it however you're doing it, and social enterprises can't do that.
• 35:09
  SPEAKER_03: I wonder if there's any learnings you could share, you know, about family businesses that the principles that they might apply to a social enterprise that doesn't have wealth.
• 35:18
  SPEAKER_03: Although the psychological emotional parts that I'm describing, I'm sure you understand, are the same between different entities, but the difference is the wealth, and therefore, what difference does that make in terms of the outcomes that we're talking about?
• 35:33
  SPEAKER_04: Yeah, and it's an interesting one because obviously the family business sector is huge, and the ones that we tend to work with are the very big family businesses that are then generating enough wealth for the individual family members that they would be Coots clients in their own right.
• 35:47
  SPEAKER_04: Or we do see families who have sold and now have liquid wealth and are thinking about these things.
• 35:52
  SPEAKER_04: But there are thousands and thousands of family businesses across the country who are struggling financially, who are trying to survive, who are in tough industries and where there isn't actually wealth.
• 36:04
  SPEAKER_04: You can look at the value of business on a piece of paper, and that doesn't mean that the individuals running it are wealthy, they're not actually taking money out of the business.
• 36:13
  SPEAKER_04: And it's actually interesting, one of the challenges for family businesses can be getting investment and attracting outside investment without giving up control.
• 36:22
  SPEAKER_04: It brings another influence into the family, and that's often one of the areas of conflict that you see within a family is the next generation might be saying, But we need to bring an outside investment, we need to do things differently, or we're not going to survive.
• 36:34
  SPEAKER_04: And the older generation being very resistant to that and saying, No, we'll just try and keep everything within the family.
• 36:40
  SPEAKER_04: That's where you do get into these conversations about why are we in business together?
• 36:45
  SPEAKER_04: Can we survive?
• 36:46
  SPEAKER_04: Really, can we continue making a living and employing all of these people with the funding that we've got?
• 36:51
  SPEAKER_04: And sometimes that does mean difficult decisions about having to open yourself up to outside influence in order to get the money.
• 36:59
  SPEAKER_04: Also, thinking about trying to get loan financing from banks and they start asking difficult questions about your governance and all of those things, it's very tricky.
• 37:08
  SPEAKER_04: I look at this as well for social enterprises with my grant maker hat on.
• 37:12
  SPEAKER_04: I'm a trustee of a of our corporate foundation.
• 37:15
  SPEAKER_04: We make grants, I'm advising families on supporting social enterprises and charities.
• 37:20
  SPEAKER_04: And this is an issue that comes up in all of these conversations as well about funding founder-led organisations and what are the right questions to ask.
• 37:29
  SPEAKER_04: I was with some clients this week who really like a charity that they have funded.
• 37:34
  SPEAKER_04: They said, we want to fund for three years, but only on the proviso, the chief executive stays in post for all three years because we really rate him, but not the people around him.
• 37:43
  SPEAKER_04: Wow, there is so much to unpick there.
• 37:46
  SPEAKER_04: You can't ask someone to accept three years funding that then ties them in without them being able to be honest about things.
• 37:53
  SPEAKER_04: There's the question about the strength of the team around him.
• 37:56
  SPEAKER_04: You know, you can't just rely on one superstar in an organization.
• 38:00
  SPEAKER_04: And then it was a conversation with the clients about one of the questions that we should be asking.
• 38:05
  SPEAKER_04: What does the board recognise they've got key person risk?
• 38:08
  SPEAKER_04: What is a succession plan?
• 38:09
  SPEAKER_04: What happens if he goes under a bus?
• 38:11
  SPEAKER_04: And at the Coots Foundation, we fund, particularly in the women and girls space, a lot of organizations that are the result of people's life work.
• 38:20
  SPEAKER_04: Strong women who stood up in their communities and made a difference and got things done and have been in their post for decades.
• 38:28
  SPEAKER_04: And as a funder, you have to balance being respectful of that and really understanding the value of that in the leadership team and asking the appropriately challenging questions about what happens if something happens to that charismatic leader.
• 38:46
  SPEAKER_04: Is the board there just to say yes to a strong CEO?
• 38:50
  SPEAKER_04: Does the board have a plan?
• 38:51
  SPEAKER_04: Does the board have a succession plan?
• 38:54
  SPEAKER_04: What's the strength of the senior leadership team?
• 38:56
  SPEAKER_04: If I'm going to commit multi-year core funding, which is what we give, we're going to really try and assess all of those things.
• 39:03
  SPEAKER_04: But you have to do it in a way that honours and respects the blood, sweat, tears, sleepless nights, putting your own money into the pot, not seeing your family that we know it takes to build and run an organization like that.
• 39:16
  SPEAKER_04: So it's a careful path to tread as a funder.
• 39:18
  SPEAKER_04: I think.
• 39:19
  SPEAKER_02: Do you think, Rachel, that funders of organizations are any thinking enough about succession of the organizations that they start to fund or continue to fund?
• 39:31
  SPEAKER_02: And do you think that it's likely now or in the future that people will think about funding succession being part of the succession journey?
• 39:42
  SPEAKER_02: Because one of the things we know is that social enterprise, it's a relatively new area of working with the social gaps in the world.
• 39:52
  SPEAKER_02: But a lot of social entrepreneurs who started early on are now reaching that point or have reached that point of succession.
• 39:59
  SPEAKER_02: But there doesn't seem to be very much either focus from funders on succession or even offering support for succession.
• 40:08
  SPEAKER_02: What's your thought on that?
• 40:10
  SPEAKER_04: I think that's right.
• 40:11
  SPEAKER_04: I think it's an area that is still overlooked.
• 40:14
  SPEAKER_04: I'm hopeful that it's an area that funders will start to support because we're part way along the line with funders talking about capacity building and organizational strengthening and sustainability.
• 40:24
  SPEAKER_04: But within that, I think this bit about succession planning is still a little bit of a taboo because it's such a sensitive topic to approach from both sides.
• 40:33
  SPEAKER_04: Certainly at the Coots Foundation, as I said, three years of core funding, the question we ask is how can this help your organization be stronger at the end of the three years than it is now?
• 40:44
  SPEAKER_04: And if we think that part of that answer needs to be around the succession planning, we will gently try and nudge the conversation in that direction.
• 40:52
  SPEAKER_04: Half the problem is not enough funders are doing that long-term commitment.
• 40:56
  SPEAKER_04: Not enough funders are looking at core funding anyway.
• 40:59
  SPEAKER_04: I think that's a big hurdle that we need to get over.
• 41:02
  SPEAKER_04: And there's so much focus, rightly, on how do we create a new generation of leaders for social good.
• 41:09
  SPEAKER_04: I look at some of the stuff that someone like Acumen is doing in the UK for that.
• 41:14
  SPEAKER_04: But does that have to be leaders who are going to start new organizations?
• 41:18
  SPEAKER_04: Do we need to have a conversation about how do we develop the next generation of leaders who can step in and take forward work that's already well established?
• 41:28
  SPEAKER_04: Because that takes a different kind of person, and both sets of skills are equally needed and equally important.
• 41:34
  SPEAKER_04: But I think we focus so much on the trailblazers, the change makers.
• 41:39
  SPEAKER_04: And if you're the kind of person who thinks I could probably be quite a good change continuer, where's my development program?
• 41:47
  SPEAKER_04: Where's my funding?
• 41:48
  SPEAKER_04: And so we lose those people, or we don't make the most of their potential.
• 41:53
  SPEAKER_04: So I would like to see funding for leadership and capacity building across the sector.
• 41:58
  SPEAKER_02: Absolutely.
• 41:58
  SPEAKER_04: I think that's great.
• 42:00
  SPEAKER_04: Thank you.
• 42:00
  SPEAKER_04: Maybe we'll go and start with if anyone on the call is interested in maybe we'll go and set this up.
• 42:05
  SPEAKER_02: I love that.
• 42:06
  SPEAKER_02: I think change continuous is a fabulous idea.
• 42:10
  SPEAKER_02: Mel, I know we haven't left you very much time for wrapping up.
• 42:13
  SPEAKER_02: Forgive us.
• 42:14
  SPEAKER_03: You're forgiven.
• 42:15
  SPEAKER_03: So I sum up at the end here, and there were so many insights that you were giving us there and real gems that I think a lot of us can learn from and certainly apply to our own situation.
• 42:25
  SPEAKER_03: So very grateful.
• 42:27
  SPEAKER_03: But just in your journey, which I think is fabulous, and you were describing how you become a trustee at 18.
• 42:32
  SPEAKER_03: And I don't think there's very many people who've done that.
• 42:35
  SPEAKER_03: And so your learning would probably be pretty steep at that age.
• 42:38
  SPEAKER_03: But I took away what one comment you made under that part where you said idealism meets reality and needs to turn into practical delivery when you were describing the trustees on that board and what was happening in how working with young people.
• 42:52
  SPEAKER_03: And then we talked a little bit about tokenism, about getting young people on boards and then not supporting you properly, and so on.
• 42:57
  SPEAKER_03: So that was very interesting as part of your journey.
• 43:00
  SPEAKER_03: And then then coming in as a trustee to really, I guess, an energetic founder who is passionate and working with that, and once again getting the right mix on the board versus the people that were working there to deliver.
• 43:12
  SPEAKER_03: And then, of course, your whole insights here since you've joined Coots and working with the high net worth and particularly around family businesses, and as we've just talked about the similarity of the issues facing family businesses in terms of succession, all of that part of what the mission is, future reputation, etc., all of these kind of relationships within the organization at board level or CEO level, how you move that forward.
• 43:42
  SPEAKER_03: And what you were saying is that there must be honesty between everybody in terms of going forward.
• 43:48
  SPEAKER_03: And then you talked about the three circles of wealth, of capital, wealth, obviously, human capital, social capital, and how does must work together.
• 43:56
  SPEAKER_03: And then other little interesting insights in the time we've got creating that family charter and creating that to be a live document, I thought was really interesting.
• 44:05
  SPEAKER_03: And I'm sure all of us caught the house with the foundation, which had the values and the division and mission, and it being an umbrella and everything in between.
• 44:15
  SPEAKER_03: And then we talked about how you bring in a non-family member and the family business into an organization to run the organization, which is very similar to social enterprises.
• 44:24
  SPEAKER_03: If you know how you bring somebody in from the outside around succession or exit strategies and so on, also mentioned about family business bringing in an investor on a poor business as you're going on.
• 44:37
  SPEAKER_03: I think everybody was nodding around creating the fictional case study.
• 44:41
  SPEAKER_03: And then we ended up in an interesting space, which is probably worth another whole webinar about the change continuum, which I think a lot of us are going, that's really interesting.
• 44:51
  SPEAKER_03: Because you're right, there are a lot of change makers around or initiatives around change makers, a lot of really good people around, of course.
• 44:56
  SPEAKER_03: I'm not doing you justice at all.
• 44:58
  SPEAKER_03: I'm not doing the session justice, but in the very short period of time, I hope I've captured some of that really valuable insights, lovely descriptions of some of the issues which are totally applicable to all of us.
• 45:11
  SPEAKER_03: And so thank you very much indeed, Rachel, and thank you to everybody who's joined, I'm sure, and really agree with me.
• 45:17
  SPEAKER_03: That was just fantastic.
• 45:18
  SPEAKER_03: I wanted to spend an hour.
• 45:20
  SPEAKER_03: Thank you.
• 45:21
  SPEAKER_02: Thank you so much.
• 45:22
  SPEAKER_02: That was fantastic.
• 45:23
  SPEAKER_02: It's been a real pleasure to spend an hour with you this morning.
• 45:25
  SPEAKER_04: Thank you very much for having me.