96: Addressing the Emotional Side of Succession and Legacy Building, Deena Chochinov

by | Jun 21, 2022

Succession
Stories
Podcast

96: Addressing the Emotional Side of Succession and Legacy Building, Deena Chochinov

by | Jun 21, 2022

Succession isn’t something you wish to happen, it’s something you plan for. Deena Chochinov joins Laurie Barkman to share her 30+ years as a family enterprise advisor and discuss her new book, HomeWork: How to Be a Leader in the Boardroom and the Living Room. Deena works to strengthen family businesses by addressing succession derailers that get in the way of finding key pieces of the succession puzzle. 

Listen in to learn more about:

  • Successfully navigating the emotional side of business transition
  • Creating formal processes for succession
  • Avoiding flawed leadership models
  • Equipping next gen leaders through professional development
  • Preparing your business for the future
  • Increasing business value through proactive succession planning

Show Links:

https://www.deenachochinov.com/

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Transcript

Laurie Barkman:

Welcome to Succession Stories! I’m Laurie Barkman. As an exit value planning and M&A advisor, I call myself The Business Transition Sherpa. This podcast guides entrepreneurs from transition to transaction- from building value in your business to letting go. 

What do I do when I’m not hosting a podcast? I work with owners to maximize business value with my firm, SmallDotBig. And as a Certified Mergers and Acquisitions Advisor with Stony Hill, I guide you through the complex process of selling your company.

Tune-in to Succession Stories for weekly insights to reward your hard work and avoid succession regrets. Hit subscribe wherever you listen to podcasts, and sign-up for our newsletter at successionstories.com. Here’s to your success!

Is this the year to sell your company? Don’t leave your exit to chance. Stony Hill Advisors works with entrepreneurs like you to get ready for what may be the biggest transaction of your life. Learn what your business is worth by visiting stonyhilladvisors.com/podcast.

Intro:

In family businesses there is almost always a desire to build a legacy from one generation of ownership to the next. But desire is not enough! Many succession derailers can get in our way to prepare the different pieces of the succession puzzle. This week, Deena Chochinov joins me to share her 30+ years as therapist, management consultant and family enterprise advisor, and discuss her new book, HomeWork: How to Be a Leader in the Boardroom and the Living Room. I appreciated hearing the case study about retirement reluctant brothers, and how they managed through the challenges of letting go of one identity and moving forward in their lives. Enjoy my conversation about addressing the emotional side of succession and legacy building with Deena Chochinov.

Laurie Barkman:

Deena Chochinov, welcome to Succession Stories. I’m so excited to talk to you today. We got connected because of your new book and I look forward to speaking with you about that. Thematically, it’s about family, enterprise leadership, and legacy, and it fits really well with this show, which at its core, is about transitions, legacy, change, and all of these things are part of leadership, and it’s a wonderful theme of your book so, welcome.

Deena Chochinov:

Laurie, I’m so pleased to be here, thank you so much for having me as a guest.

Laurie Barkman:

Tell us about your new book, Homework. What inspired you to write it?

Deena Chochinov:

Well, I listen for a living, that’s my job. It’s really the same as all the clients that come to see me, which is that we both pay 100% attention to them and for the past three decades, I’ve been listening and practicing in three professional fields, one as a family therapist, the second as a management consultant with the focus on organizational development, and the third as a family enterprise advisor. All of those areas of practice require a systems lens of thinking so I think about a family, of course, as a system of interrelated parts, where all the relationships change and shift depending on what’s going on in the family dynamic, and I think of organizations as also a living system of people that are there to contribute to the success or failure of the business. Then when I started working as a family business advisor, it was just amazing to me to look through this world through the lens of a system, where family businesses are the literal marriage of family and business coming together that are separate, but connected systems where the peaks and valleys of the emotional, the operational, the aspirational, and the strategic elements of this very complex system of relationships come together and that’s why I decided, well, there’s so many crossovers and overlapping pieces in these three areas of work, based on my systems practice, maybe I have some stories to share with potential readers on how we can be whole and integrated in our leadership, regardless of the domain we live in, and show up as whole. No matter where we work and how we live.

Laurie Barkman:

Yeah, your 30 years of experience. For anyone watching on YouTube, I am holding up the book called Homework and it’s a great book and I do encourage folks to take a look at it. Of course, if you’ve heard me say this, in some other episodes, when authors have gone, I’ve always had the strange tendency in my life to flip to the end. Sometimes I read the chapters, and then I go to the end. With your book, fantastically, one of the last chapters is about legacy and I think for today’s discussion, there’s quite a bit of golden nuggets in that chapter and also some really helpful homework that you give people to the considerations of what to work on. If we begin with the end in mind, which I think is really, again, the story here is you’re walking people through a dynamic of leadership, where they might be the founder, and they may have family working with them in the business, or they might be a multi-generational company but either way, we’re talking about entrepreneurs, we’re talking about business owners, we’re talking about leaders, and lots of people listening can relate to any one of those scenarios. 

The other inspiration, I think you mentioned to me in writing your book, is this question of legacy. A lot of people want to feel like they matter and many founders are so intertwined with their business because their identity becomes so tied in and certainly in a family business. This concept of legacy is so important, because they have an obligation to pass the business from one generation to the next, but they can’t just wish for it to happen. They have to make it happen. Part of your book is about leadership transition and implementing some formal processes around that and again, you can’t just wish it to happen. You have to make it happen when you’ve worked with business leaders and they’re thinking whether they’re in an emergency situation – hopefully that doesn’t happen – but maybe they’re starting to think about it and prepare. People are resistant, but why? Why don’t people focus on this and be proactive with it?

Deena Chochinov:

Well, as every family enterprise adviser has said, including myself, family businesses have only three problems, succession, succession, and succession and so here are what I’ve learned to be the five most common succession derailers, why it’s so hard to do this. The first is that no one is both interested and qualified or qualified so this is when I hear owners say things like, “The kids are saying, ‘I don’t know how I’m ever going to get along with my sister in this business. If she stays, then I’m out,” or, “My parents are never going to retire. What kind of a future does this lead for me? Or why should I participate in this business if I’m never going to own any stock in it?” So even if kids, next generation kids are qualified, for these family dynamic reasons, they might not be interested, so that’s one derailer. The second is the poor choice of leader or if the leadership model is flawed. Here’s an example of a flawed leadership model – all the owners, all the CEOs must be firstborn. What if there’s a fabulous second born daughter who’s really interested and qualified and motivated, it’s not part of the leadership model. Another thing that I hear a lot is, “I gave him the title because if I didn’t, he would quit,” so that’s like hostage succession planning.

Laurie Barkman:

I haven’t heard that term before. [Laughs]

Deena Chochinov:

I made it up. The third derailer that we think about, and notice is poor selection and grooming of new owners so this is when the owner says, “Okay, It’s sink or swim time so prove yourself,” or when I suggest that owners need to develop their successors, and they say, “Listen, she doesn’t need any fancy training, she grew up in the business, she knows it all,” so a successor is named but left high and dry without the tools, the skills, the competencies and the critical information to do the job effectively. Another derailer is leaders who don’t let go of power in a timely way. This is an epidemic in terms of succession planning, and family enterprises. When the guy says, or the woman owner says to me, “It’s impossible for me to just let go of the company I’ve spent my entire life building and besides, my kids aren’t ready to take over anyway.” 

Another final derailer is, the business is not prepared for the future because the owner says, “I don’t want to invest in the technology that everybody says I need to,” or, “Our recruitment process or logistics process or manufacturing process – that’s worked for us perfectly well, for the last 40-50 years. Why do we have to change it now?” So there’s these resistors and these defensive behaviors around like, I don’t want to change, and I think the bottom line is that, well, most family business leaders don’t prepare anyone to properly succeed them. Usually, it’s because they don’t think anyone can so there’s this air of indispensability that somehow nobody can step into their shoes and what I found is when leadership teams do implement a succession plan, they often disagree on what leadership potential actually is, like, what is it, and who has it? There’s not a deliberate, focused, objective way of defining the competencies, the skills, the values and the behaviors of the future leaders. The last thing I’ll say to this piece is why don’t people do it. Finally, for family businesses who are deeply invested in their businesses and their families, the whole succession process is very complex and precarious. I call it tender, like simply put, it’s close to impossible to remain objective when considering a child’s future capacity to assume their own role as taking over their job. A child, it could be a son, or daughter and niece or nephew or a grandchild. A lot of family business owners are quite reluctant to bring in objective advisors, objective tools, performance metrics, coaches and mentors for the rising generation members so that they can help to develop them and it’s not done with only a subjective family perspective.

Laurie Barkman:

It’s really hard, yeah, it’s so complex, and so many of us can probably relate because either we’ve worked in a family business as an outside hire, or maybe we are part of that family dynamic and you’re never away from it, you come home and your dinner table, it’s always around you. The rationalizations, the resistance rationalizations that you mentioned are real and they are impacting people in their ability to see the future, which will then impact the business value. Tying it back to the big ‘why’ we want to make our businesses sustainable, either for the next generation, or getting it ready for its transition or whatever the company transition is going to be if it’s sale to a third party. If we’re not innovating, we’re not looking forward to the future generation as leaders, we’re actually going to be degrading the value of the business, which will then in turn, create a problem for future generations so the good work of thinking about this proactively is about creating business value and so that’s I think, part of the the big, other reason, the big why, besides the personal legacy. There’s the business legacy and the future wealth for future generations, so if a founder or an entrepreneur next gen is willing to do this work. We talked about some of the rewards here. What are some of the benefits that you’ve seen from a more personal emotional standpoint also?

Deena Chochinov:

Well, when owners invest the discipline, the money and the time to develop a form of succession process, there are benefits that I’ve seen. They include, well, it identifies a strong bench of possible successors who are more engaged, more driven to learn, and to improve their leadership skills so it prunes the tree already, by starting to identify those folks that are really into it. As you said, it enhances the value of the company by retaining the most talented leaders, you get better business. It offers a fresh outlook on safe and even staid strategies and it can add a transformative angle and doing things differently when you bring in fresh perspectives and new blood. The younger people, they have more available information, they’re more tech savvy, it really does help transform the organization and it can create clarity for everyone. We are not all that comfortable with ambiguity and uncertainty. I think we’ve learned that in the last couple years, how hard it is to not know things and when a owner decides who’s going to assume leadership, and makes that public and gets really clear on a plan, it really does lessen the anxiety for the family members who are sitting on tenterhooks not knowing who’s going to be taking over for dad, or who’s going to be taking over for granddad or who’s going to take over from them. That clarity is really important for the psychological health of the family. It can unite family members and strengthen their bonds. Parents can become devoted mentors and next generation devoted, dedicated successors and I have seen lovely bonding experiences between the generations when there is this plan in place. Most importantly, as you say, Laurie, it foster’s legacy for the business, and a secure financial future for the family so I think there are many benefits.

Laurie Barkman:

There’s probably a lot of stories you can tell and you would never reveal who this specific client is, so perhaps there’s an amalgamation of stories that are in the book. I’d love to hear some of that now, because we’ve talked a lot about some of the processes and some of the things that companies should be thinking about. How do we literally get over some of these challenges, and is there a particular case study that you can share with us?

Deena Chochinov:

Yeah, well, where it gets real, and the effectiveness of any succession plan gets tested is in preparing the current leader to transition out of the business. If this isn’t done well with extraordinary amounts of respect, patience, discipline and compassion, then the whole succession adventure can easily descend into absolute chaos. In my book, I tell the story of three brothers who were second gen owners of a very large and successful agricultural business and they were in their 70s, mid 70s, and they had started initially as a family farm when they were kids, working for their mom and dad. They grew it and grew it and they knew that it was time to leave. The third year generation kids who were, by the way, all in their 50s, were very ready and able to take on full operations and ownership of the business, but the brothers were having a very difficult time moving forward with the plan so there was a lot of stutter stepping of rationalizations and resistance and they were struggling tremendously with the big question, which is, “Who will I be if I leave,” so they said things like, “Retirement will be the death of me,” or, “The business will fall apart without us,” or, “The kids won’t need us around anymore.” My favorite is, “Our wives won’t want us around all the time,” and so I think it’s critical for any business owner to understand that they’re going to be dealing with change and transition, and that they are not the same thing at all. For these brothers, I called them the retirement reluctant brothers, and they were so lovely, and connected and close. They were, they were best friends and they were also brothers and business partners, so for them, I needed to help them understand that change is an event. It’s external, it’s a situation that occurs, they stop being in charge, they move out of their office, there’s a party, that kind of thing, the kids take over and it’s outcome focused, that’s change, but transition is not. That it is an internal process, like an experience, a gradual, psychological, emotional, and even spiritual reorientation inside each brother as they tried to adapt to the change. With change, the shift starts in the head and it is usually quite quick but with transition, it starts in the heart and it can take a while before people adjust and accept fully to their new identity and so with the brothers, I took them through a process of moving through three phases that I want to give a shout out to William Bridges, who is for me, the guru of transition management, and I learned from him many years ago. His theories and practices have been really helpful to me when I’ve been working with family business owners who are transitioning, so the first phase is endings and that’s the period of loss, letting go, getting closure, saying goodbye. The second phase is the neutral zone, and that’s sort of like that, in-between time of the desert or the wilderness. It can be chaotic, it can be exciting. It’s like an opportunity and it’s a time of creativity. The third phase is called the new beginning, which is really about renewal, and what I did in my work with the brothers individually and as a group, is help them understand that it’s a process that everyone goes through gradually, and at different speeds and comfort level and so we put into practice, they put into practice, you might support different tools to help them get through the three phases. Can I give you some examples of players?

Laurie Barkman:

Yeah.

Deena Chochinov:

In the endings phase, it’s really important to acknowledge and honor what you’re leaving. That’s why people have retirement parties or divorces or funerals and you need to find ways to compensate for the loss and for the loss of leadership. For example, we set up a process whereby each of the brothers became a coach, like a mentor, to one of the leaders that were taking over, based on their areas of expertise and so they had, each of the next gen leaders, had a coach in one of the brothers. That was very helpful, because it gave them a sense of purpose. It helped them understand that just because they were leaving being in charge, their intelligence and their history and their perspective, we’re really honored. You have to grieve for your losses, right, and one of the ways to do healthy grieving, and to regulate one’s emotions, especially in a time where people were quite agitated is to use rituals or symbols to mark the ending. What they did was they created a memory book and they took photos, articles, they were quite big in their community, photos, articles, any awards they won, and they brought in a photographer took pictures of all of these mementos of time over the last 40-50 years and then they had the photographs that they put into a box that they themselves carved. They were into woodworking, so I said, “Great, why don’t you create a box together and they put it into a place of pride in the office forever?”

They were getting clearer and clearer about how the kids were getting ready and they were ready and they didn’t have to worry about their financial security and so that was part of the endings phase. Then as they were moving in and out between endings in the neutral zone, it’s really important to use the time creatively because they didn’t know. One of the brothers wanted to become a great golfer and you can’t be a great golfer unless you take a lot of time to practice so he had more time gradually, more and more time learning how to be a great golfer. One of the other brothers joined a cycling club and started taking little cycling trips with his group, and one of the brothers decided he wanted to spend more time being a very present grandfather, because he had spent most of the time not being present because he was at work all the time and so he started doing childcare with his grandkids three days a week. That was them learning new skills to manage this in-between, “Who am I what is my identity,” but it was gradual, so it didn’t feel like a cut off. Then in the new beginning phase, which was renewal, I love the story about these guys. They were so engaged, they were so optimistic, it was really lovely. They decided that they needed to become more involved in their community. They were quite respected in the community as business owners and leaders, but they wanted to take that and move it into a more active place so they became volunteers and then they joined boards and then they had leadership on the boards. After about a year and a half, two years, they thought, “We have a lot of wealth. What can we do to support our community with our wealth?” They decided to create a family foundation and they didn’t know about family foundations, they knew about agriculture, and property development and so they decided to become students of philanthropy so they embraced that they went right into it. They started their other – like the next career. It was like a renewal of their skills, that they harnessed from running this business for so many years, and then putting it into leading this foundation and they they’re still involved, they were still involved as their third gen leadership team’s, mentors and coaches and they did an amazing job, they needed to understand the psychological and emotional nature of transitions, and they need it.

I believe that every business owner, CEO, needs to feel secure in four areas, in order for them to be able to do this work and transition their business from one generation to the next. They need personal financial security for them and their spouse, they need family security, organizational business security, and psychological security and so when they achieve comfort in these four areas, I think that implementing a succession planning process will work.

Laurie Barkman:

Takes a lot of time. How much time end to end, from when you started working with that client to when you said or that you all agreed that it was time to end that relationship? Was that five years? Was it less than that?

Deena Chochinov:

Well, it started with the conversations with the children, saying, “You’ve got to help us get our dads out of here,” and then me identifying what it was that was getting in their way so I’d say often, I would be called in for different engagements on this journey over about four years.

Laurie Barkman:

Okay, that’s what I would have guessed, and so many times it’s age-based, as opposed to stages of life when people are making these changes in transition decisions. There’s another episode of Succession Stories with Jerry Cahn, I encourage the audience to take a listen to it where this concept of it’s not just how old you are, but it’s at what stage in life you are and how do you really think about what your interests are and you really help them do that Deena, which is which really key to that, knocking down those resistors that so many people may have as to why they don’t want to leave. Do you know – just from a flash forward – how’s that business doing today?

Deena Chochinov:

The business is great because the 50 year old next gen’s hands were ready. They had grown up in the business themselves. They were very entrepreneurial. They went for their own training and education and some of them left the business, worked at other places. This is a best practice where you leave the family business, you work for other organizations, even another family business, and you come back with skills, training and expertise that you can harness from one situation and you can transfer into the other and they were a healthy family, they had faith as a value, family as a value, and hard work. 

One of the most important elements of this process working, I believe, is an understanding that we’re all working for the same thing and the parents were so loving and accepting of their kids and very, very supportive and they realized that this really wasn’t about their children’s ability to take over. It was their resistance to letting go of their identity that had been getting them out of bed every morning. It was really my job to help them understand that we can have more than one identity at a time and in my book, I talk about how when we show up as whole and integrated leaders, not feeling like we have to separate our work selves from our home selves, our personal from our professional, and that we are very connected in all elements of our lives, so we don’t just have a door where we open and it’s our work, and another door, which is our family, and another drawer, which is our volunteer work, that we have qualities that move us throughout all the aspects of ourselves so that we can be congruent and psychologically stable. That really was at the back of my mind as I was working with them. It’s like they’re more than just a CEO, even though they think that was the only thing that they could ever be.

Laurie Barkman:

Right? There’s a lot of great quotes in the book, and I’m sure you have many to pick from, but if you’re going to choose one favorite quote to share which one would it be?

Deena Chochinov:

The one that has guided me in my entire professional life, which is, attention is the rarest and truest form of generosity, which is a quote from Simone Vale.

Laurie Barkman:

Why is that important to you?

Deena Chochinov:

I really believe that most people don’t get enough attention paid to them and so for me, as somebody who enters into every relationship with what I like to call, it’s a concept called therapeutic love, where you really appreciate and care for someone and accept them as who they are. I feel it’s a real honor and a gift that I’m able to offer my full attention to my clients who are all leaders in their domain, so there’s executives and there’s team leaders, there’s parents, there’s presidents, there’s partners in relationships, I feel that it’s just such an honor to be able to be of service to them and pay attention in ways that maybe nobody else does, and offer them a safe container in which they can grow and maintain their leadership in healthy ways.

Laurie Barkman:

That’s beautiful. If people want to learn more about you, Deena, or learn about your book called Homework, how can they do that?

Deena Chochinov:

Thanks, Laurie. All they have to do is go to my website, www.deenachochinov.com.

Laurie Barkman:

We’ll put that in the show links as well. Deena, thank you so much for coming on Succession Stories and sharing your insights and wisdom with us. I really appreciate you.

Deena Chochinov:

Laurie, the pleasure was all mine.

Laurie Barkman:

Listeners, thank you so much for tuning in. You can always catch Succession Stories on any of your favorite podcast players or YouTube. Don’t forget to like and subscribe to the show! If you want to maximize the value of your business and plan for future transition, reach out to me for a complimentary assessment at meetlauriebarkman.com. Tune in next week for more insights from transition to transaction. Until then…here’s to your success.

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