From the Knowledge@Wharton today blog.

For any family business facing a transition from its founders to the next generation, several fundamental questions must be addressed: What are the assumptions behind the company’s culture and values? Are these assumptions helpful or harmful to succession? Do the culture and values lead to artifacts that serve as physical evidence of the company’s mission? 

To uncover some helpful assumptions, consider two companies that have enjoyed multiple successful generational transitions: SC Johnson and Son and the J.M. Smucker Company. SC Johnson was founded in 1886 when Samuel Curtis Johnson, at the request of his customers, created a preservative for hardwood flooring sold by his company. To create the product, he studied how Europeans preserved the wood floors in manor houses, and then he developed a formula that he perfected in his bathtub. The company’s culture, in part, is based on an underlying assumption of “doing.” The resulting value is, “We will not stop doing until the customer is satisfied.” The artifact is the founder’s bathtub, which played a central role in the company lore. 

Johnson also assumed that people and communities were essential to his success. The resulting value around employee practices is, “We care about you.” The value around community involvement is, “We are part of [the] communities in which we work and, therefore, believe in paying our civic rent.” Artifacts include a pamphlet titled, “This We Believe,” given to all employees. The pamphlet starts with the following powerful statement: “The goodwill of people is the only enduring thing in any business. It is the sole substance…. The rest is shadow.” 

J.M. Smucker dates to 1897, when Jerome Monroe Smucker began producing apple cider and apple butter from trees growing near his Orrville, Ohio, home. He was so obsessed with quality and fairness in his pricing that he added a bit more product in his jars to ensure that the customer was not being cheated. He also personally signed every lid of every jar he produced. Smucker assumed that in a business that bore his name, people had to be treated fairly and with respect. From this assumption, the values of quality products, fair treatment of employees, responsibility for the well-being of the communities where the company operates and customer satisfaction had their roots. An artifact that flowed from this basic assumption is the J.M. Smucker signature, which still appears on all jars of Smucker’s products. 

Both SC Johnson and J.M. Smucker perpetuate the memory of their founders with artifacts that remind all employees, both family and non-family, of what values the businesses holds dear. Both companies have created a participative culture in which customers, suppliers, family, employees and community all take part in decision making. 

Since a participative culture is essential to multigenerational success, how do you keep that type of culture in place through generational change? Knowing that future generations of children will be raised in different economic and social environments than their parents — and marrying spouses whose upbringing may be foreign to the culture of the business family — what is today’s business leader to do? 

The answer to this question can be summed up in one simple word: stories. Telling and codifying stories can distinguish a family business and promote its longevity. These stories can share the folklore of the company’s founding. They can explore the rationale for critical decisions that shaped the company’s development. They can recount the achievements, and failures, of past business cycles. They can recount meaningful or silly events that led to employee bonding. As a company’s leadership is being handed from one generation to the next, the stakes are raised for the company to articulate its culture — the assumptions, values and artifacts that have served as the “glue” over the years. 

In Made to Stick: Why Some Ideas Survive and Others Die, brothers Chip and Dan Heath write that one key to success is the use of stories, especially those that are emotional or inspirational. Hearing and internalizing stories from a company’s past can fundamentally change the way next-generation members will act when confronted with difficult situations. 

Storytelling can also benefit the company’s employees. Stories add color to the principles espoused by the company’s leaders and the assumptions underlying these principles. They help employees identify with the values and culture. A recent Reel Tributes client, a CEO of a family business turning 120 years old, cited his employees as a motivation for storytelling. As he explained early in the film project, “I want my staff to know how special the history of our company is, and how special they are to the history of the company. It’s this link that I want to establish with these stories.” A chapter of the film titled, “Finding and Keeping Passionate People,” is dedicated to the company’s staff. 

A company’s customer base is another key audience for its stories. Consumers prefer to buy from companies that share their values. But if the company doesn’t express what its values are, how are customers to know whether they are shared? For this reason, companies are increasingly presenting “Our History and Values” as a central part of their websites and marketing materials. Showing that a certain store has been in the same location for four generations, or that a company has raised millions of dollars for local charities, is a powerful sales tool. However, it is not enough to just list this information. Tying the history and values to stories, such as a personal anecdote from the CEO explaining why his daughter’s struggle with cancer led him to support the local cancer hospital, makes the connection with customers that much deeper. 

The key to encourage storytelling is to find the right people and ask the right questions. Chances are, the older generation holds a wealth of knowledge. Ask about the company’s founding, its background and its challenges. Find out what values were established early on, and how those values have changed over the years. 

Avoid limiting the storytelling to management and family. Invite employees to participate in the conversations. Multiple perspectives on the same story will emerge, and new information will be revealed about the company culture. This information may be glowing, or it may be difficult to swallow, but it will certainly be enlightening. 

Once the stories are told, the question then becomes, “What do we do with this information?” Technology has provided many options for recording and preserving stories. Companies can post their stories on their website. They can publish a book detailing the history and values of the company, and present copies to employees and customers. Digital tape recorders can collect oral histories for the company archives. Social media presents an engaging outlet for telling a company’s stories to its network of followers and receiving valuable feedback. And video documentaries allow for the compilation of interviews, photographs and other memorabilia in an engaging format. 

No matter what method is chosen, the process of sharing stories should start today. The reality is that while companies and their cultures can live on, founders and family members will not. Recording stories will ensure that the business — and the culture it has created – will not be forgotten.

This post was previously posted in Knowledge@Wharton today blog: The Power of Storytelling