Business schools ‘teach what you can’t learn from your parents’
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When engineer Henk Willem van Dorp enrolled at Nyenrode on his part-time executive MBA in 1993, his technical service company in the Netherlands was eight years old and employed 65 people. When he completed the degree two years later, the company had 200 staff.
“It was a busy time and I learnt a lot,” he says. “When I was young I was looking for the best technical solutions. At Nyenrode I learnt how to take people more seriously. If I have the right man in the right place, the problem is solved.”
Mr van Dorp’s enthusiasm has prompted two of his sons to study on a full-time MBA programme and a third is considering an executive MBA as part of the company succession plan.
Yet the family is unusual. In contrast to the van Dorps, many first-generation entrepreneurs eschew business school and believe their children do not need to go, either.
“This is a hard thing for the parents,” says Morten Bennedsen, professor of family enterprise at Insead, where 100 of the 1,000 MBA students a year are from family businesses. “Business schools can teach you things you can’t learn from your parents. They can teach you how to run a professional firm.”
There are solid benefits to an MBA, says Denise Kenyon-Rouvinez, director of the Global Family Business Centre at IMD, Switzerland. These include credibility in the business world, the trust of company employees and an independent business network.
More schools now offer family business courses, which is a recognition of the need for a rounded business education combined with the specific expertise that family-owned companies require. One example of how family concerns are different is the fact that they were particularly resilient in the 2008-09 financial crisis.
Columbia Business School in New York, launched a family business programme in 2016. “Business schools have come to realise that they have to educate more than just professional managers,” says programme co-director Patricia Angus.
She argues that all MBAs should learn about family businesses. “We have a lot of students who are going into private equity and consulting who need to understand their clients and the deals they make,” says Prof Angus.
There are 200 members of the family business club at Columbia, drawn from its annual intake of about 750 on its MBA programme and EMBA students.
At Babson College, Boston, the business school famed for its entrepreneurship teaching, half the undergraduates and half the MBA students are from family businesses, says Mathew Allen, faculty director for the Institute for Family Entrepreneurship. “It’s driven a good part by non-US students who are coming from family businesses to study in the US,” he says.
In China, an overseas education can lead to a different type of succession problem.
Children who have studied in the US or Europe often have contrasting views to their parents, says Kevin Au, director of the Center for Family Business at CUHK Business School in Hong Kong. “The communication is usually very different to begin with.”
This is significant because many first-generation Chinese entrepreneurs are ready to retire, he says. “In Asia much of the wealth and resources are controlled by family businesses.”
For Prof Allen the MBA is not necessarily the answer for all family businesses, as their structures are complex: a management system, an ownership system and a family system, all of which interact. “Ninety per cent of an MBA concentrates on the first of these,” he says. “Family businesses need to look at all three.”
Many schools meet this need with executive short courses for family business clients and customised programmes for individual families. These help address some of the limitations of an MBA.
One concern is that second and third-generation family business executives are often under extreme pressure, says Prof Kenyon-Rouvinez. “You have on your shoulders the expectations of all the other family members. You don’t want to be the generation that is not successful.”
Prof Angus agrees. “The burden of taking on the management of a company that someone else has created is enormous. At what point do you talk to your mum as your mum, as opposed to talking to her as your controlling shareholder?”
For those who do take the MBA route, one question is whether to return directly to the family business on graduation.
Allan Cohen, professor of global leadership at Babson, recommends that students work for an outside company for a few years. He says this boosts confidence, gives an outside network and brings more credibility for the family member when they return to the fold.
“We urge everyone to get outside experience if possible, even though some of those people won’t come back [to the family business],” he says.
It is a conundrum that Prof Bennedsen recognises, but he is pragmatic. “Nobody should go back to a family business because they have no other options.”
As for Mr van Dorp, he ponders whether his fourth son, an entrepreneur, will join the family firm. In the meantime, as he puts his succession plans in place, the Van Dorp founder has added a new management programme in his diary for 2018: how to be a successful non-executive director.
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