From Tractors to Trustees

"From Tractor to Trustee: Preparing the Family and Business for Sunny Days and Stormy Nights" NY Farmnet July 23, 2025

For today: Working with family is often wrought with conflict, complexity and consternation. This workshop will examine strategies that can have a beneficial impact on your business and relationships. We will spend a quick 15 minutes on each of the following: governance, communication, innovation, conflict, succession, offering several actionable steps to walk away with.

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Johnson | Cornell SC Johnson College of Business

Smith Family Business Initiative The Smith Family Business Initiative is dedicated to supporting and strengthening the network of owners, leaders, and alumni that work in, with or for a family business.

Founded in 2014 from a generous gift from John and Dyan Smith, the Smith Family Business Initiative provides education, networking, and new knowledge for family business owners, successors, and students from across the globe.

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Cornell SC Johnson College of Business

Cornell Peer Leadership Forums

Long term cohort of trusted, capable and mission-aligned family business leaders

Facilitated discussions on topics that create most value to the members

Customized education based on your needs as they evolve

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Johnson | Cornell SC Johnson College of Business

My marching orders…

• How big business deals with succession planning • How major organizations handle changes at the top among family members • Why governing bodies are so critical when it comes to managing family business • Strategies to repair rifts and mend working relationships • What owners should consider when handing over the business to their children • How family businesses have successfully expanded into different ventures • How interfamily communication can influence business outcomes

Pathway We will spend a quick 10 - 15 minutes on each of the following: • Conflict • Innovation • Succession • Governance • Communication If we do this right, we will be offering and/or collecting 2 -3 actionable steps and resources to leave today with.

Using one word only, how would you describe a family farm?

What makes family business unique?

• Presence of family • Owners dream to keep in family • Overlap of – Family – Ownership – Employment

• Unique sources of competitive advantage

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Cornell SC Johnson College of Business

What makes farm family businesses unique?

• Business ownership is combined with managerial control in the hands of business principals.

• Principals are related by kinship or marriage.

• Family members provide capital of the business.

• Family members include business principals, who also do the farm work.

• Business ownership and managerial control are transferred between the generations with passage of time.

• Family lives on the farm.

Gasson and Errington (1993)

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Cornell SC Johnson College of Business

The Family Business 3-circle model

Family

Owner

Manager

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Cornell SC Johnson College of Business

Source: Tagiuri & Davis (1982)

The Family Business 3-circle model

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Cornell SC Johnson College of Business

Source: Tagiuri & Davis (1982)

The “Blurry Circle” model – aka Family Farms

Business Family

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Cornell SC Johnson College of Business

Ownership

Family Business Mortality Many reasons why businesses don’t continue from one generation to the next

• • • • • • • • •

100 75 50 25 0 14 14

1st Gen

Cornell SC Johnson College of Business

2nd Gen

3rd Gen

4th Gen

Sale of the business Loss of family interest Unpredictable challenges Industry changes Missed opportunities Mismanagement Succession problems Family conflict Family norms challenge business norms (more on next slide)

Ownership, Business, Family

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Cornell SC Johnson College of Business

“The 4 C’s”

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Source: Miller & Le Breton-Miller 2005 Cornell SC Johnson College of Business

The other side

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Cornell SC Johnson College of Business

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Iowa Farm and Rural Life Poll • 50% had no estate plan • 71% had no named successor • Only 20% HAD spoken to a banker • Only 30% HAD spoken to an accountant • Only 28% HAD spoken to an attorney • 30% had not discussed their plan with their family Source: Duffy, Baker, & Lamberti, (2000)

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Cornell SC Johnson College of Business

Source: Iowa Farm and Rural Life Poll — 2024 Report

Most important farm & ag transfer issues • Clear goals and communication • Transfer strategies • Assessing financial strength • Understanding tax issues • Wills, trusts & estate planning issues • Life insurance, power of attorney & health care issues Source: Family Farms: Tips for Working Together

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Cornell SC Johnson College of Business

Let's go!

Conflict Innovation Succession Governance Communication

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Cornell SC Johnson College of Business

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Conflict

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Cornell SC Johnson College of Business

3 Types of Conflict Values conflict

Task conflict

Identity / relationship conflict

• Politics

• Work assignments

• Personality

• Religion

• Roles

• Style

• Ethics

• Resources

• Birth order

• Norms

• Policies

• Race

• Other deeply held beliefs • Procedures

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Cornell SC Johnson College of Business

• Gender

Structure or relationship?  Over-emphasis on structure among consultants and the law  Joe’s Axiom: Solve structural problems with structural solutions and solve relational problems with relational solutions. Doing the opposite inevitably makes problems worse.

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Cornell SC Johnson College of Business

Genogram, or Family Diagram

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Cornell SC Johnson College of Business

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My genogram, aka family diagram

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Cornell SC Johnson College of Business

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Cornell SC Johnson College of Business

Fault Lines - for reconciliation to work, the following key elements are important: • Give up rehashing past arguments or trying to insist other people see things your way.

Instead, try to focus on moving forward with the relationship.

• Spend some time thinking about the least you can accept in the relationship. Are you willing to see each other during limited times or in controlled circumstances?

• If you are interested in repairing the rift, reach out periodically to attempt to build a bridge. Situations change over time and anger often dissipates. It’s worth checking in with your family member to see if he or she is ready to engage.

• Think about setting boundaries. If you are going to reengage with an estranged family member, it is helpful to spell out specific terms that will allow some sort of relationship.

For example, an adult daughter might tell her mother, “You are welcome to visit, but you cannot criticize my parenting choices.”

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Johnson | Cornell SC Johnson College of Business

Conflict take-aways Action steps

Resources

1.

Complete a Family Diagram

2.

READ: Fault Lines (Karl Pillemer)

3.

Take eCornell course: Managing Family Relationships

• eCornell Keynote: A Family Divided (https://ecornell.cornell.edu/keynotes/overview/ K111924/) • Bowen Center for the Study of the Family (https://www.thebowencenter.org/) • Continuity FBC (https://continuityfbc.com/) • Leadership Coaching Inc. (https://www.leadershipcoachinginc.com/johnengels)

Innovation

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Cornell SC Johnson College of Business

Family Innovation

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Cornell SC Johnson College of Business

Entrepreneurial Resources Provided by the Family Debt Capital Access to distribution channels Equity Capital Favorable and negotiable conditions (debt and equity capital) Physical resources (infrastructure, facilities) Industry-specific knoweldge

No Family Business Family Business

Coaching/mentoring related to entrepreneurial activities Introduction to networks Provision of contracts Knowledge about how to lead a business

Ernst & Young Coming Home or Breaking Free 2011

Two Types of Innovation Exploitation: Incremental innovation • Rolling suitcase • Power windows

Exploration: Revolutionary /disruptive innovation • Autonomous Vehicles • AI Robots: Chat Bots and visual assistants

• Pour spouts/caps

• Immersive Experience: from virtual reality (VR) to Augmented Reality (AR)

• Cherry Coke, etc.

• Blockchain

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Cornell SC Johnson College of Business

• 3-D Printing

How Do Organizations Evolve?

Often not by incremental change... but by revolutionary change involving simultaneous shifts in strategy, structure, and culture.

This process is characterized by periods of stability with continuous incremental change punctuated by major reorientations, usually led by new senior management teams – aka the rising generation.

Most managers are accomplished at supporting incremental innovation, but not radical innovation.

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Cornell SC Johnson College of Business

Willow Bend Farm – The Mueller Family

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Cornell SC Johnson College of Business

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Cornell Hackathons

A hackathon celebrates “hacking” in its most positive context: using minimal resources and maximum brain power to create outside-the-box solutions (“hacks”).

2025 / 2026 Hackathons: • Food • Digital AG • AI • Talent 2.0 • Health Tech • Animal Health 35

Cornell SC Johnson College of Business

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Cornell SC Johnson College of Business

Innovation take-aways Action steps

Resources

1.

Attend Grow NY

• Entrepreneurship @ Cornell

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• SCORE - https://www.score.org/findmentor

2.

Nov. 12-13, 2025 Canandaigua, NYhttps://www.grow-ny.com/

Participate or volunteer at a Hack-aThon –

Ami Stewart (ams345@cornell.edu)

3.

Create your own Next Gen Business Pitch Competition

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Johnson | Cornell SC Johnson College of Business

– Connect with a retired executive

• Upstate Venture Connect - https://uvc.org/ – Mentors Network

Succession

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Cornell SC Johnson College of Business

Is succession?

• An outcome • A process • Inevitable • An opportunity • An event • Not my problem • Complicated

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Cornell SC Johnson College of Business

THIS IS A BLANK PAGE

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Johnson | Cornell SC Johnson College of Business

If you learn only two things today…

1. START NOW! 

Succession planning is important at every stage of the business

2. INVOLVE OTHERS… Family  Stakeholders  Professionals 

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Cornell SC Johnson College of Business

Succession Checklist

Succession take-aways Action steps

Resources

1.

Find / create a Peer Group

2.

Define objectives

• Ag Transitions (https://agtransitions.umn.edu/)

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Personal

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Family

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Farm

• Family business centers: – Cornell University (http://business.cornell.edu/familybusiness) – St. John Fischer University (https://www.sjf.edu/schools/school-ofbusiness/family-business/) –

•

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Johnson | Cornell SC Johnson College of Business

Stride (https://stridefba.com/)

Farmnet!

Governance

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Cornell SC Johnson College of Business

O M F G

Distinguishing family businesses from non-family businesses CONTROL & INFLUENCE How? Through OMFG combination of Ownership, Management, Family & Governance

Why is having good governance important?

Why would you need it?

• The family (and business) is growing • An upcoming transition • To determine the business of the business VERSUS the business of the

family

• Keep everyone on the same page • Stave off entitlement

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Cornell SC Johnson College of Business

Big “G” governance • Board of directors • Family council • Family office • Constitution • Shareholder agreements Little “g” governance • Board of advisors • Coffee talks • Family stories and traditions • Lunchtime conversations • “Hey, mom or dad, what would you think if I…?”

• “I am taking this class and my professor required me to do this assignment…”

Source: 2014 EY Family Business Survey

Q: Does your family have the following…?

THIS IS A BLANK PAGE

Source: 2025 Cornell Rising Gen Survey

As complexity increases, structure is your friend The Four Room Model

Board Room

Management Room

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Cornell SC Johnson College of Business

Family Room

Owner Room

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Different decision rights, members and “currency”

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Decisions are made in the right places with the right inputs

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‘A place to land’ for transitions

Roles and responsibilities are different in each “room” Shareholders’ role is to:

Owner Room

The Board’s job is to:

• Represent the interests of the owners • Advise management on strategic and operating issues • Assist in continuity planning

Board Room

Management’s job is to:

• Operate the business day to day • Achieve strategic goals and business plan • Be accountable to CEO

The family room is for:

• The family to discuss and decide on matters of importance to the family • The family to build relationships and have fun 51 51

Cornell SC Johnson College of Business

Management Room

Family Room

• Define owner mission/vision/values • Set highest-level business goals • Define key shareholder policies

Governance take-aways Action steps

Resources

1.

• The Family Business Handbook (HBR)

2.

Governance inventory –

Which rooms exist?

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Which rooms are needed?

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Who is in each room?

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Who is making the decisions?

Take the eCornell course - Implementing Family Governance Systems

– Josh Barn and Rob Lachenauer

• The Farm Whisperer – Dave Specht

Communication

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Cornell SC Johnson College of Business

"Everyone is very happy.

Or maybe just no one has the courage to say anything."

One Word

“If there is one piece of advice we would give to all family firms dealing with succession, it is: COMMUNICATE.” Chrisman, Chua & Sharma

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Cornell SC Johnson College of Business

Communication is Still Key Among Rising Gens…

• Conducted in partnership with the Smith Family Business Initiative at Cornell University, Family Enterprise USA, and The Roberts Group, 164 current students shared their perspectives on their family’s business.

• For the second consecutive year, legacy was the word most associated with family business.

• Agriculture (12%), construction and real estate (24%), and manufacturing (15%) remain the primary industries for family business, followed by retail (10%), healthcare (5%), and hospitality (5%). Nearly half (46%) of these family businesses do most of their business locally, yet 33% do business on a national or international scale.

Q: What are your top 3 biggest concerns?

"Everyone is very happy.

Or maybe just no one has the courage to say anything."

Source: 2025 Cornell Rising Gen Survey

Q: If you had the courage to ask your parents/grandparents any question about the family business, what would it be?

"Everyone is very happy.

Or maybe just no one has the courage to say anything."

Source: 2025 Cornell Rising Gen Survey

Jack Welch on Candor In fact, I would call lack of candor the biggest dirty little secret in business.

What a huge problem it is. Lack of candor basically blocks smart ideas, fast action, and good people contributing all the stuff they’ve got. It’s a killer.

When you’ve got candor—and you’ll never completely get it, mind you—everything just operates faster and better.

Now, when I say “lack of candor” here, I’m not talking about malevolent dishonesty. I am talking about how too many people—too often—instinctively don’t express themselves with frankness.

Communication take-aways Action steps

Resources

1.

If you had the courage to ask your parents (or grandparents) any question, what would it be?

• Purdue Institute for Family Business (https://ag.purdue.edu/department/agecon/ fambiz/index.html)

2.

Picture Your Legacy activity

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Take eCornell Course: Stewarding Family Wealth and Values

• Inspired Questions for Farmers (http://www.inspired-questions.com/) • 21/64 (https://2164.net/)

Thank you.

Dann Van Der Vliet Smith Family Business Initiative