This commentary discusses the importance of street smarts (or street-smarts), common sense and entitlement in the context of family business.
Based on internet searches, literature dealing with these three things in the context of family business seems non-existent – and long overdue.
This commentary begins with the best piece of generational business transition advice I have ever received.
The best generational business transition advice I have ever received
I do know unequivocally what was the best business transition advice I ever received. It was said to me by the best hands-on in-house generational transition advisor I have had the opportunity to work with. That advice was:
“When planning for family business generational transition identify every conceivable problem that might arise. Do that early and ongoing. Don’t wait until one or more of those problems bites you in the wrong place, leaving you to conclude that you and others have spent ten or more years in what turns out to be frustrating generational transition failure.”
What is meant by the terms ‘street smarts’ and ‘common sense’
A typical dictionary definition of street smarts is along the lines of ‘the experience and knowledge necessary to deal with the potential difficulties or dangers of life in an urban environment’. I think a better and more germane definition of street smarts is ‘a shrewd awareness of how to survive or succeed in any given situation’.
To say a person has street smarts is saying he/she possesses situational awareness based on experiences where they have been at risk, have survived, have learned from that experience, and thereafter make judgments, decisions, and take actions based on that prior experience. As I see things, street smarts:
- can be thought of as being the polar opposite of naivety.
- are best learned from an early age.
- must be learned from personal experiences that arise initially in a supervised, but thereafter in a largely unprotected environment.
- those experiences result in a person continually assessing people, things and making decisions through a prism that includes a healthy measure of cynicism and skepticism.
- provide a distinct advantage to those that have such experiences over those that don’t.
I was recently with a family business owner who built his large business from nothing over 40 years. During our discussion I said to him:
“If you hadn’t grown up in the tough neighborhood you did, and hadn’t stood up to the playground bully in 5th grade, you would not be the successful person you are today”.
He simply smiled and winked, indirectly chiding me for what he saw as stating the obvious while wasting his time doing that. The conversation moved on to another topic.
A typical dictionary definition of ‘common sense’ is along the lines of ‘sound and prudent judgment based on a simple perception of a given circumstance, situation or set of facts’.
Some equate street smarts with common sense, but I see them as quite different things. Stated simply, I believe street smarts compliment and enhance a person’s common sense.
Here is an old – presumably untrue – story. Read it and decide whether the Soviets exercised street smarts or common sense.
Legend has it that in the 1960s NASA scientists realized that pens could not function in space. They spent years and millions of taxpayer dollars to develop a pen that could put ink to paper without gravity. The Soviets gave their cosmonauts pencils.
My answer: I would attribute use of pencils to common sense. There was time to think through the problem, and no reason to be anxious or experience feelings of being at risk prior to its resolution.
Here is a second story. Again decide whether the skydiver in the story exercised street smarts or common sense.
Sam, a retired army sergeant, had survived a number of firefights in Iraq unscathed. Sam had seen many of his comrades-in-arms panic with bad consequences. He had concluded at the time that thinking logically with as little emotion as possible improved one’s chances of survival.
Sam, now a retired veteran, decided to learn to skydive. His initial jumps had been done in tandem with an instructor. He was sole skydiving for the first time. When he pulled his parachute release cord his parachute malfunctioned and did not deploy. Initially he panicked, but within seconds gained control of his emotions based on his prior experience. Thinking logically, Sam remembered he had a reserve parachute. He also remembered the instructions that had been drilled into him. He cut away his main parachute and successfully deployed his reserve parachute. He hit the ground hard, sustaining minor injuries and a broken leg.
My answer: I would attribute Sam’s ability to gain control of his emotions, and his subsequent survival, to street smarts developed in Iraq and likely earlier.
What is meant by “entitlement”?
Broadly a sense of entitlement can be described as an unrealistic, inappropriate or unmerited belief that causes an individual to believe respect, opportunities and/or privileges (financial and otherwise) are for them a “matter of right”, as contrasted to being things they must continually earn to receive them.
The word entitled, in the context of an entitled person in a business family, can be defined as someone claiming title, rights or anything else he or she has had little or no part in creating – in particular a second or subsequent generation inheritor who owns a share of a family business and/or is employed by it simply by dint of birth. The claims of such business owner inheritors can lead to a narcissistic personality disorder characterized by ungracious, rude, combative or full-of-themselves attitude and demeanor – and importantly an exaggerated belief in their value to the family business.
Street smarts, common sense, entitlement, and family business
Those who build a successful family business often are driven by ambition that results from their own youthful under-privilege. Those people in turn want their children and grandchildren to have what they didn’t have – superior accommodation, sports related opportunities, private school related opportunities, cars when the come of age, and so on.
It is hardly a surprise that a young adult ‘of privilege’, with or without good book learning, may have interpersonal problems with family business management, employees, suppliers, customers, professional advisors – you name it. This where within their peer group at school, summer camps, holidays, etc. they were part of an elite group who experienced a protected environment – and never had to think much about school yard bullies, let alone put one down during 5th grade recess.
In a nutshell here is the problem as I see it. Such a child of privilege may:
- and frequently does, not have to work for what they receive.
- have comparatively good common sense, unenhanced by street smarts.
- be more naïve than is good for them – and for their business owner parents both in the context of the family business and otherwise than the latter would like.
- in interpersonal relationships be:
- expectant of respect, not realizing that respect has to be earned where others may resent them for who they are – making earning respect more difficult.
- more demanding of others where they expect others to do what they think ought to be done because of who they are, rather than what they know.
- more subject to manipulation by others than if they were more street smart than they are.
- exhibit what other take to be an entitled attitude when, simply put, they may not know any better.
- not have any meaningful idea of “where and how the other half lives”. In many cases it is that “where and how” that results in street smart people – where having street smarts results in real advantage for the possessor of it.
Is there a solution for a family business whose family members – otherwise talented – fall short in the context of street smarts, common sense, and entitled attitudes?
First, having or promoting a family member with lack of street smarts, lack of common sense, and/or an entitled attitude to a management position in a family business is almost certain to be a recipe, if not for disaster, then for serious problems. This where those problems are likely to spill over beyond just the family business to the business family at large if the family member who is so promoted subsequently suffers demotion or worse, employment termination.
I am unaware of, and in fact am highly skeptical that there is, any real solution to successfully introducing family members into the family business who do not have adequate street smarts, common sense, and suffer from conveying entitled attitudes within and outside the business family.
Reverting to my earlier rendition of the best piece of generational business transition advice I have ever received, I have the following suggestions for family business owners.
1. Do not consider hiring a family member to a management position in the family company without having them independently tested for:
• business drive.
• long-term interest in growing the family business and contributing – largely unselfishly – to developing a family business legacy.
• emotional intellect.
• an entitled attitude.
• street smarts, common sense and naivety.
2. Adopt a policy that ensures any family member thought to be management material first works for a customer, supplier or competitor of the family business for at least three and preferably five years – with promotions and superior job ratings – before hiring them into the family business. This where the family member:
• directly and indirectly learns something about business management in general, and perhaps specifically in the context of the family business, from successful arm’s length parties.
• may learn things that prove valuable to the family business whether or not they are eventually employed by the family business.
• can develop meaningful industry relationships from an independent venue that in due course might help the family business.
• may pick up some street smarts and hone their common sense while so employed.
• may learn the importance of an unentitled attitude in business and all other aspects of life.
• if eventually employed by the family business have a better chance of being accepted as having earned their employee positions in the family business and should therefore face less resentment from non-family executives and employees than they otherwise might.
- Book smarts vs. Street smarts. Scott Berkun Blog, February 2010. https://goo.gl/c8C5kN
- Why Street Smarts Always Win Over Book Smarts When It Comes To Success. Elite Daily, June 2014.
- Street Smart Disciplines Every Entrepreneur Needs. Forbes.
- 50 Things You Can Do to Make Your Kids Street Smart. A Fine Parent.
- Do MBAs Need More Street Smarts?
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Ian R. Campbell FCPA FCBV
Ian R. Campbell is a Canadian business valuation and transition expert. He is the author of several Business Valuation texts and of 50 Hurdles: Business Transition Simplified. The Canadian Institute of Chartered Business Valuators recognizes his contribution to the Canadian Business Valuation Profession through the annual The Ian R. Campbell Research Initiative.
He writes The Business Transition and Valuation Review newsletter for business owners and their advisors.
You can reach him by email at email@example.com, or by telephone at 905 274 0610.