Of lineage, blood, and business

Cutting right through the bone of the matter, ‘lineage and blood’ is parlance that in legal text would be defined as ‘relatives by affinity (marriage) or by consanguinity’. I could have just said ‘family’. ‘Business’ is what it is – Business.

So here we go again. Another opinion piece on the much discussed ‘Family Businesses’. Well, yes, but follow my thought for a moment. My attempt here is to analyse and simplify the compounded complexity inherently shrouding doing business, whether with, or for family.

So, let’s break the title down. Lineage gives identity and draws lines of relationships typically illustrated by family trees. Blood is what passes through those interconnecting lines. Blood is what feeds emotions, be they compassion, love or greed. Emotions, blended with reason, give our race, Homo Sapiens, a distinguishing identity from other creatures, which also have lineage and blood. But such other creatures survive because of instincts, not because of emotions and reason.

It follows that blood carries both instincts and emotions. Indeed, humans have reasoning power and intellect. However, blood is always thicker than reason. The thickness of blood, and hence emotions, get diluted the further away the lines in the lineage of a family tree travel. The emotions one feels for a son or for siblings are stronger than those for a distant second cousin or an in-law.

In the title I also blend in ‘business’. By ‘business’, I simply mean ‘business’, an economic activity that is intended to create and preserve wealth.

All family units need an economic activity that creates and preserves family livelihood and wealth. Gone are the days when ‘livelihoods’ depended on literally providing the food and necessities by parents. Families in today’s developed economies would more often find employment with business concerns to earn a living and hopefully create and preserve their family wealth. Some family members might venture themselves into the business world and even perhaps become employers as their business grows.

Growth comes through hard work and being smart. But it can also happen through joining with partners, whether working partners or investing partners, family, or non-family related partners. The type of partner to join with is a choice. Choices always have consequences, sometimes positive and value-adding, and sometimes, sadly, festering into conflicts. Conflicts can often be resolved by reason. Alas, when reason is however overpowered by blood and lineage, conflicts become more complex to resolve. Sometimes they become impossible and very painful, leading to paralysis and destruction of value.

Partnerships are as old as time. Humans joined in hunting parties and tilled fields for the greater good of their participating partners. There were surely disputes because that comes instinctively driven by hunger and then greed. Back then the rule of ‘might is right’ prevailed. The fittest survived.

Fast forward to today. Intellect has brought about efficiency and equity in society. Societies were the natural evolution of herds since when Homo Sapiens were still a pack creature. Today, in civilised societies, most of the experience of conflicts between people, or groups of people, whether in business, or in any other type of relationship or proximity, has been captured and, with fairest remedies found over the centuries, have been transposed into legislation and jurisprudence. Humans created laws and religions to protect societal responsibilities, especially because the benefits of societies outweighed individualism. Business law has reached a high level of excellence to regulate relationships and rules of going into and doing business. Jurisprudence attempts to find equitable economic resolution between conflicting parties. The law also protects stakeholders such as employees, transacting suppliers and customers, Government, investors, and society at large, and now with added emphasis on the environment and common good. The law defines the rights and obligations of each party and prohibits among others discrimination, or favouritism, which bring ‘nepotism’. The word nepotism comes from the Italian word for nephew, ‘nipote’ or from Latin, ‘nepōte’. Apparently, back in the 17th century, a lot of people tended to promote their nephews to powerful positions at the expense of other candidates.

So, why is this relevant?

As postulated above, lineage and blood bring emotions and instincts. Success stories told in business literature and experience, point at meritocracy, fairness, equal opportunity, good governance, respect to all stakeholders and the environment and making all these part of the conditions to the ultimate purpose of existence of investment – giving returns to investors.

There is no exception to these principles neither at law nor in business literature and academia. Leaders of successful businesses act with neither fear nor favour, promoting meritocracy against nepotism, equal opportunity against discrimination, and ethical behaviour as a religiously followed corporate culture. There is no space for anyone, related or unrelated, owner or not, who endangers the value of the business through misbehaviour, non-compliance with laws and regulations, or abuse of perceived power of authority and lineage. No law protects such behaviour.

So, while global economic activity is driven mostly by the individual family households in employment or in business, with non-related third parties or with family partners or employers, the golden rule is to always strive to keep emotions out of the business. Family businesses would be easier to manage in today’s world if the word ‘family’ is only kept as an adjective to the noun ‘business’, rather than a qualification or entitlement that does not abide by the law and societal expectations. Business is business. If meritocracy and equal opportunity, for example, actually trouble you or your family members emotionally, then there is really no place for you in the business. Rules and regulations apply in the street as much as at home. Indeed, every household will have ‘house rules’. But house rules cannot conflict the law.

Perhaps this may feel pointed and sharp. It might not sound sweet. But business is regulated by law, and is a function of societal expectations and the economic environment. Its success depends on good practice that scores well with employees and all other stakeholders. The eco-system of the business playbook is complex but at the same time simple. There is no thread in the fabric that gives any hint of the colour of favouritism inherently understood to be a right carried by the blood in family lineage.