EntreLeadership - #135: The Beer That Changed the World

Episode Date: February 22, 2016

This month’s focus is family-owned business, and no one tells it better than Stephen Mansfield, the best-selling biographer of one of the world’s most famous brands. Stephen shares the story of the Guinness family and the beer that changed the world. You’ll walk away with some practical tips on how to run a family-owned business and the principles they used to win. To continue the theme, we’re talking with family-business expert Edgell Pyles, whose company helps families understand and work through the psychological dynamics of being in business together. Family Business Tool InfusionSoft Leads Workbook Learn more about your ad choices. Visit megaphone.fm/adchoices

helping business leaders grow themselves, their team, and their profits. This is the Entree Leadership Podcast. Now here is your host, Ken Coleman. We're broadcasting from the Music City, and we're so grateful that you've joined the conversation. We're going to stay on this theme of family business. Of course, we're coming off our last episode where you've got to really get to know and learn about this whole idea and how it works and how you can do it in a healthy matter. This idea of transitioning from generation to generation you heard the Ramsey kids. And so we're going to stay on this theme.

Two great voices today. Stephen Mansfield, best-selling author. And we're going to talk about his book, The Search for God and Guinness, a biography of the beer that changed the world. Now, this is not about God or necessarily beer. It's a great story of the Guinness family. And Stephen, a wonderful historian, really gives you the inside scoop, the historical context, and some real practical things that you can learn about family businesses over generations, certainly with the Guinness Branch.

You're going to love that. And then Edgel Pyle, who is an absolute, brilliant consultant with many family businesses. He's a PhD, has an organization called Aspen Consulting Team, and they have dedicated their entire business to helping family businesses grow, sustain. And these are two really unique conversations. I don't know that you can get this much goodness on this specific topic. in very many places. So we're going to get right to it because we've got a lot to give you.

Don't forget the giveaways. We always have good stuff. I'll tell you more about those after the conversations, of course, from InfusionSoft and from our own entree leadership team. But first, Stephen Mansfield in studio talking to me about the search for God in Guinness, a biography of the beer that changed the world. Here it is. Steven's great to have you in studio, and you're a long-time friend of days,

and I've been following your works. This is a big treat from me because we are, we'll get this out of the way in case this just turns into spontaneous combustion or in history. But both of us are just history geeks. Is that a fair? That's so fair. And there are so few of us, let's just go for it sometime. I'd have a blast with it. There's no shame in my game. None at all. But today, because we're focusing on family businesses this month, obviously Ramsey Solutions, a family business. And you've got one of many books. And this is the title we're going to kind of send us. enter our conversation around. It's called The Search for God and Gennis. This is great. We got to get this out of the way because we were talking before we started recording. Neither one of us technically really likes Guinness at all. Like we're not going to drink it. So you're just going to out me right here at the beginning. Yeah. Okay. All right. That's cool. Because it leads to a very interesting question, which is if you weren't a fan of it, how did you get to this story? And then at what point do you go, this is a book?

Yeah, yeah. I mean, I really do confess I don't like the taste of beer and I'm, you know, don't like to taste of coffee either, but that's for another show. The way I came to the Guinness story is very unusual. All my background academically is history. Right. And I've spent a lot of time studying Wesley. Well, so eventually we'll get to the story of Arthur Guinness and how Wesley and basically produced the sort of revamped Guinness Company. And that's how I came to it. I didn't come to it through beer. I didn't come to it through Irish history. I didn't come to it through any of that. It was Wesley. So once I got there, I said, oh, man. man, nobody knows this. And by the way, a lot of Christians are going to be mad that, you know, we got beer and God on the same book. But I just, it's a story that goes together. It really is great. Okay, so let's take our listeners back. The 1700s in Ireland, Arthur Guinness learns this trade from his father. Give us the context of all this.

Well, a couple things we need to know. First of all, at that time, brewers were like, you know, social activists. Because there had been maybe 50 to 100 years before an act by parliament that banned the importation of alcohol. So people began to make their own gin, and drunkenness just ravaged the country. And a lot of evangelicals and priests, nuns, convents, they began to brew beer as an answer because it had vitamin B and because it had lower alcohol, it was refreshing, and that really rescued the country from the extreme. So move forward 50 to 100 years, Arthur Guinness's era, brewers are esteemed.

Well, Arthur Guinness grows up on the estate of an archbishop, his father is sort of a caretaker, and one of the things they're responsible for is brewing beer, and they became very, very good at it. And the real key to the story that non-beard drinkers don't really care that much about is that they became very good at brewing the black stuff, the dark beer, the porter stout, as it's called, because the porters of London and the train stations used to drink it. So he became sort of a champion brewer,

and then he went off on his own, and that's the beginning of the getting story. So that's how Arthur kind of gets in the family business. On an archbishop's estate in rural Ireland. Okay, so you mentioned Wesley, John Wesley. Now, for you non-Methitologists, some people may not know who John Wesley is. I mean, if you're an evangelical, you probably know who John Wesley is, but it's possible that you don't. Sure. We're talking about a legend of the faith.

That's right. John Wesley is the founder of the Methodist Church, but was more important at the time, was he's a guy who pretty much rescued England from a French-style revolution with a, you know, what we can call a revival. I mean, it was a renewal of real good, solid Christianity. And one of the things that was really important about him is that he was one of the first guys in history to say, you know, business is not a secular thing. Business is not a thing outside the church. You don't go to church to be holy and they go out to business to, you know, do secular, worldly, sinful things. So when he met Arthur Guinness, we're jumping a little head in the store, but when he met Arthur Guinness, he had, he sold, taught Arthur Guinness a vision, a sense of purpose for business to be used for social good. And that changed everything.

So it was Wesley who did that. out of his preaching of the Christian gospel, but it also had the sort of ethical, social benefit edge that really impacted Arthur Guinness. At what point in Guinness's career? So this is Arthur. He's learned the trade from his father. How old is he at what point in the business career? So it's a two-part question that he runs into Wesley and then this aha moment happens.

It's later in his life. He leaves his father on the estate. He moves to a nearby town, opens his own brewery with a little bit of money. The Archbishop had sort of given him in his will. Then he decides, no, I'm pretty good at this. Frankly, it's what he was thinking. And he moved to Dublin and signed a thousand-year lease for where the Guinness storehouse is now. Wow.

I know. I don't know. People, historians, I don't even know why. None of us know why. Thousand years. You can see the lease on the wall. But he began to brew, and it was a brilliant location because the ships could come up on the river that was right there and so on.

He was very good at it. He made a lot of money. But the key to the story is that he was very successful. He was upper class. He had 10 children, this noted family. But he was kind of stuck because remember he'd been raised on the state of an archbishop, and he had some sense of a higher purpose. And I think he just didn't want to brew beer only the rest of his life.

And that's when Wesley entered his story. Okay. So you said it really changed things. He did. So clearly we're talking about future generations. We're going to get into the family business. But he walks away from this encounter, this vision that's been cast and he gets it. What are some of the changes that begin to take place?

Well, first of all, Wesley had said, make all you can, save all you can, give all you can for the glory of God. So Arthur started doing that. But then it got real specific. He got into some specific plans. He started a hospital for the poor and sat on its board. He began to work for social reforms like banning dueling. Remember dueling was a big thing, even American history back in that era. He began, first of all, the thing that I love the most and the thing I focus on in the book is that he began to treat his employees differently.

And this is a real key. A lot of guys who own businesses might get excited about doing something, you know, in India or Africa or in the Appalachians. But they forget, hey, I got 100 employees over here. And so what Guinness says is, look, let's take care of our employees first. He raises salaries 20%. He begins to add benefits. He begins to provide education for the kids, et cetera, et cetera, he provides medical care. So he ups the life standards of his employees and he begins to do social good, even rebuking his own social class for the lack of regard for the poor.

And all of this becomes absolutely transforming. In fact, he's the guy who actually started Sunday schools in Ireland, for example. So he did a lot of things. But the real story, as you're already focusing on, is not so much what happened in his life. He kind of got the ball rolling and then he died in 1803. It was his kids who then took it off. And that's what I was going to ask quickly, how many years between this Wesley kind of intersection and when he dies in 1803? Just a few years, just maybe four or five years.

Oh, really? Yeah. So a substantial change is given birth there in that four or five years. Yeah. Picture that you're going to what's basically an Anglican Church, Church of Ireland. Nobody's talking to you about your business. Nobody's connecting the gospel you hear of every Sunday morning. But Wesley shows up, befriends you, by the way.

They didn't just have one meeting. They had a lot of meetings. And begins to say, hey, you don't have to become a priest or become a monk or leave your business or regard your business as secular. Just do it for the glory of God. And that's what does it. That's what changes everything. Okay, so four or five years later, he passes away, 1803. He's got 10 children, you said.

Yes, 10 children. What was the involvement of those 10 kids up to this moment? And was there an overt plan by Guinness to kind of say, all right, this is the succession plan? He did have a plan, but it wasn't as exact as we might think about today. It wasn't a purpose statement or something that was written out generationally. But he definitely intended for it to be a family business. He pulled the main thing I think that's so important is he pulled the males. And females, of course, wouldn't have been in the lead at that time.

He pulled his male children into the relationship with Wesley. and then through that began to pull them into the leadership of the company. So first was letting those who had impacted him impact them, and then he mentored them in the company. And that's really what launched it into the generations. And I just want to jump way ahead and say, think about the fact he starts this brewing company about 1759. Wesley comes along later than that.

He dies in 1803. 200 years this company exists and with very strong social principles. So what happened in a short period of time? Yes. lasted over 200 years. We're still talking about Guinness. We still brag about their commercials, and they're still doing social good, even though they're not owned by Guinness. Yeah, and that's why I want to stay here for a moment. So you kind of gave us a summary. I want you to take us a little deeper on, you use the phrase joining the generation. Yes. But who was driving that? Here's the

patriarch, and he dies. Yet 200 years later, you know what I mean? This is phenomenal. Somebody had to take that baton. Yeah, it's unbelievable. Who was you? driving that? Dad, Arthur Guinness, drove it first and said, I want to be intentional about this thing. I want to be generational. I want to be family owned. He then pulls his sons into the relationship with Wesley and then begins to talk to them about what they want to do long term. And what is exciting to me, even though we don't have any transcripts of it, is the sons later describe, you know, the vision that Arthur Guinness would give them. You just can't believe how it expands over the next hundred years. It's unbelievable. The way they're thinking, technologically

the way they're thinking, the way they're invading markets, the way they're brewing beer in unusual ways, just every kind of thing. And all of that comes from Arthur Ginnis saying, thank big. Listen, if we're going to use this business for the glory of God, you've got to think beyond any model you've seen. Don't even think in terms of models. Go in your own head and find it and find something that's unique and incredible and focus on technology and all the principles that they later built on. And there are five principles they built on. We can talk about here towards the end. But the bottom line is it was Arthur Guinness who began to plant those things. But the sons had to be willing soil, so to speak.

Absolutely. They had to see, because you can look at your dad and go, okay, dad, great. You sell tires, I don't want to. And they were just brewing beer, which was wonderful, but, you know, not every kid's going to be engaged by that, but they said, look, we got it. They had been impacted by Wesley. They had the same values, the same spiritual vision, and they saw the power of business to transform society, and they bought it in completely. Okay, you just said a mouthful right there. Yeah. Folks, if you want to just rewind the last 20 seconds of what Steven said, And that's what I want to ask you about because you do so much study of history.

And to me, you just encapsulated the fact that they caught the vision. Yes. That's my short version of what you just said. They intentionally caught the vision. And I could stop now, you and I being history geeks, and go for two hours on the number of great men and women whose children did not get the vision, who rejected it or screwed up their lives or tried it but didn't have the same gifts, that this got embedded in that next interview. and then continued to be embedded is just an astonishing story. It is. Is it a matter of chance?

I don't believe so. I believe it could have died with Arthur easily. You know, the reality is that most wealthy families, you know, they can produce some pretty spoiled brats. And the good news was Arthur put these kids on the floor of the factory. Arthur made them do all the jobs. Arthur had done them himself. He had once driven off thieves with an axe, you know, himself.

I mean, he was a hands-on guy and he taught them to be hands-on. And I think they got it viscerally in their bloodstream. And they weren't just spoiled upper class, even though when Arthur died, they were already one of the richest families in Europe. I want to talk about values and impact, again, all stemming from some changes that you outlined the first part of our conversation for review. Folks, you remember Stephen said that once he kind of met with Wesley and all this kind of guidance took place, he made some changes with the team members.

Yes. Right? The employees is what the word everybody else used around here. We say team members. and they begin to treat them differently. You assert in the book, and I want you to kind of outline some of this, that when those changes begin to take place, and of course then the children came in,

and they kept those changes and then implemented their own kind of policies that in how they treated their people, it also altered the course of Irish history. That's an astounding statement. How did that happen? There's no question about it. Arthur said, look, if I'm really going to be a guy who's running a business that's going to make a difference, it should be shown in my employees

or my team members first. So he began to up their lives. He began to change their situation. You go forward. You just cannot believe how that continues to deepen. In fact, the best way I can do it is if you'll let me jump forward just from 1928. Okay. In 1928, many people listing, and I'm sure you know, that's one year before the Great Depression.

So this is not exactly an enlightened time for company leadership, right? If you had worked for Guinness, you would have gotten on-site medical care, on-site massage services, library services. They would have put you in the country for a day a year. If you didn't have a date, they had an office that provided one. They would have given you burial services. They had a savings and loan. They had sports facilities. You got two pints of the black stuff every day, the beer they produced.

I could list 20 other benefits that you got in 1928. Now, this challenge is, this is almost like what we've seen recently, you know, with Microsoft and Google and Apple and so on, these really innovative companies. How did they get there? It's because they said, look, we're going to model, we can do more good by modeling for the rest of our industry. how to take care of people, then just preaching it and doing it a few places, you know, out in some neighborhoods or some other nation. So what they did was they turned their company into a model.

And then they would teach other people how to make it a replica model. It's amazing how their competitors would come and learn from them. And they did astonishing things. For example, one of the guys named Rupert who got married, just as the new century dawned, about 1902, he got five million Irish pounds at that time. It's hundreds of thousands, hundreds of millions of dollars now. he put it in a bank, took his wife, and lived in a tenement to draw attention to the poverty-ridden housing that was in Ireland.

They rescued Ireland from the potato famine that happened in the middle 1800s. Potato famine caused horrible problems, horrible crowding. There was a guy on their board whose name was Dr. Lumsden, and he said, look, if you really want to change poverty in Ireland and help your employees build new housing. So he got permission to go and build a whole network of new houses around the family. They were so well built that now the yuppies in Ireland went to buy them and move into them. He also started the Irish version of the Red Cross that's called the St. John's Ambulance there. And he did it where on the on the Guinness floor?

Because he said, you really want to take care of these people? People are dying of injuries from time to time. Let's teach some Red Cross principles. I got in a taxi when I was in London. I mentioned that I was researching Guinness. The taxi driver burst into tears and said, I'm only alive because the Guinness people were taught how to do Red Cross. My grandfather severed an artery working there. people knew how to compress it and do all the things that now we know how to do. And that's why my

family continued. And he just hugged me and said, please tell the story. So I'm, I can tell you a thousand stories like this. But the point is they made actual material differences in the lives of their employees. Of course, eventually they ended up with thousands of employees. And you could just measure the differences. I went and did some research at Trinity College, Dublin, which is basically their Harvard professor said, I'm only here because my grandfather was paid a tuition to come here, Guinness paid for it. My great-grandfather was an Irish factory worker at Guinness. I mean, they literally transformed poverty and gave huge amounts of money. And one final thing, they started a thing called the Ivy Trust. The Guinnesses are the Lord's Ivy. That's kind of their aristocratic

name. And they put a huge amount of money into a trust for housing for the poor. There have been years in Irish history when that trust gave more to the poor than the Irish government. Because they just wisely managed that and gave massive amounts of money. The Irish government would be maybe they'd be having a depression that year. So long term, over 200 years, massive amount of difference. Why? Because they said, let's make our care of our employees a model for our industry. And it upped everybody's game. You know, that old statement, rising ties lifts all ships. That's exactly what happened. It's absolutely true. Okay. So we're going to move forward here because I've been waiting for this. I'm so excited,

get out something to write with. You know, this is the point of the podcast. We may have to rewind a little bit because this is great stuff. You write about, in this book, The Search for God and Ginnis, you write about the five pillars of Guinness Success. You teased it a little bit earlier. And I want you to just walk us through this, the five pillars of Guinness Success. And by the way, I would point out that here at Ramsey Solutions, we have seven pillars. And everybody knows about them. I tell you this, folks, all the time on the podcast, Dave is constantly putting those up in front of the entire team. And everybody knows what they are, why they are, how they affect everything that we do. And so I love this. The five pillars of Guinness success.

There are these five awesome pillars. I put them at the back of the book because they really summarize everything that Guinness did. And the first one, it sounds real preachy, but it is something they had on the wall. They talked about all the time. And it's discern the ways of God for life and business. Now, this was the first Guinness pillar. And it actually didn't come from church or from a preaching situation. It came from Prince Albert, the husband of Queen Victoria. He said in a speech, gentlemen, find out the will of God for your day and generation, and then as quickly as possible, get into line. So that's what Guinness perceived himself to be doing. What's God doing right now, he says? Well, he's obviously

caring about the poor of Ireland who are proliferating after the potato famine. And so his thinking was, how can I discern the ways of God for life and business? I even tell people who aren't religious, you know, don't have a faith in God or who are even businessmen who are atheists. I say, look, still though, you can say, what are the pressing needs out there around me? Meet those needs, discern what the needs are, answer them. That's one of the keys of great business. There's another one, and it really explains what you and are talking about. Now, one of their principles, now this came from Arthur's from the very beginning,

is think in terms of generations yet to come. You rarely find Guinness ever thinking in terms of just the generation that's alive at the time. They're thinking, what's this going to be 50 years down the road, 100 years down the road? And it's pretty stunning. Some years ago it was a big thing in business circles in America to talk about how some Japanese companies would have a hundred-year plan. Well, back at that time, it wasn't uncommon for a company to have 500-year plans because they just thought they would be around.

So they always think in terms of generations, and that's why four or five, six, ten generations later, you still find the Guinnesses living it strong. That's why he signed a thousand-year lease. A thousand-year lease. I mean, it just makes me laugh, but it's still going on. Some family somewhere is making money off of a thousand-year lease on Guinness, one of the most prosperous companies in the world. but it's because they thought in terms of generations.

They didn't worry about Jesus coming back. They didn't worry about dying. They didn't worry about the end of the world from plague. We're going to do what we're called to do. Number three was this. Whatever else you do, do at least one thing very well. I love that, Princess. Guinness admits that they made mistakes.

Sometimes they got into transportation. Sometimes they veered over here into housing. And sometimes they went and did other things. And they finally said, look, we can maybe do a little bit of that as part of our company, but we need to do one thing very well. We're going to brew beer. We're going to do it better than anybody else on the planet. And I know it sounds like that movie, you know, years ago,

what's the one thing? But in our age where everybody's a jack of all trades and a master of none, you know, the question is, what's the one thing you really do well, that you hone that craft, you work at it, whatever else you've got, whatever else you do with computers, whatever other sports, whatever other skills, is there one thing you do exceptionally well? And when Guinness came back to the one thing they did well,

that's how they prospered. and they would always ask companies, what are you doing? And companies would ask for help. There's a fourth principle, and that is, master the facts before you act. Guinness was known for studying and preparing a long time and then acting quickly. Studying and preparing a long time and acting quickly. So master the facts. They would research and study for years.

And how many companies have we seen really messed themselves up by just kind of acting on rumors or bad information or conflicting consultants? But Guinness would take years to prepare, study, get research, make sure of its facts, and then suddenly they would act. And it produced huge things. The fifth one is the one I like the most. I've already quoted it in one form. It's invest in those you would have invest in you.

They had a principle, and I even have it on my wall where my team works together. You cannot make money from people unless you are willing for people to make money from you. There's sort of a thinking, as you will know, in some business circles, if I can rape the other guy, If I can leave him standing there naked, you know, looking for a ride home, then I've won. But no, winning is that he does well in the same transaction where you do well. And that makes them want to work with you. That raises your reputation. That causes you to do good in the lives of people.

And so invest in those. You would have investing. I'm going to say that principle one more time because some of you're probably writing it down. You cannot make money from people unless you are willing for people to make money from you. And Guinness practiced that. and they raised literally the value of their entire industry worldwide by doing it. So in 2016, we've talked about all this historical context. How would you assess the company now?

Are these values and things that we've been talking about? Are they still very much alive? Here's what's interesting. Guinness is no longer owned by Guinness. It's now part of a company called Diageo. Many people will know it as an Italian alcoholic drink company. But here's what's great. The Diageo executives, whom I interviewed said,

listen, the Irish guys in our factory in Dublin are so proud of that heritage that they keep the old values alive on the floor and in the company when we don't require it. So here are these Italian guys who, you know, own various breweries and what have you, distilleries around the world. But it's the folks in Dublin who are keeping the old ways going and the Italians saying, well, you don't have to. No, no, we want to. So they do the things on the floor they used to do and they have the meetings they used to have and they provide the benefits they used to have, you know, with permission from the parent company. It's still extremely impressive, but it's all volunteer because Diageo wouldn't have known what the Guinness values were when they bought the company if they had to. Any family involved? Very few, mainly as consultants, but what's interesting is how Guinnesses are involved in everything else.

There are Beatles songs written about Guinness. Oz Guinness was quoted here just recently. Sure. Oh, sure. He's an evangelical quoted just recently in one of the presidential debates. There are actresses and models and parliamentarians. And so what happened was they left brewing. as their family business, but you see the values in the quality of the lives that the family members are living.

So our theme is family business this month, and so we've gotten a wonderful history lesson with a lot of practical takeaways, but I'd leave it for you to challenge those who are in family business. They read this book. They do their research, and they really figure out, okay, all right, I'm taking what Stephen shared with us, and how do we build on that in their business? I think the genius of the Arthur Guinness approach to building a family business was that he did not attempt to get his children committed just to the family wealth and just to brewing. I don't know that that would have engaged them. He helped them gain an understanding of the business as a means to a higher good. We definitely want to prosper.

We want to run a successful business. We want to make the best beer in the world. We want to take care of our employees. Great. Would that alone have engaged, what was it, eight, nine, ten generations? Maybe not. But when he said, if we do this right and God is with us, we can build a company that can change nations, that can transform poverty, that can live for generations and be a model to the world. And I think that no matter where one of his kids originated or his grandchildren originated, you know, maybe they said, I'd like to go be a missionary.

I'd like to go, you know, work in some other field or printing or publishing, whatever. They said, no, no, I can do the good I had intended to do in this other field through the vehicle of brewing. And I think the people that I consult with and teach often say, you know, I've messed up. What I've tried to do is engage my, you know, recent college graduate on just how wonderful a carpet company can be. Well, okay, it can be. I mean, we can love all kinds of business, but many times the next generation is not that engaged in just the, you know, the duties and the details. What they're engaged by is look what a successful company can do, whether it's hamburgers, carpet, or beer. And I think that's what engaged them.

And that's how we see it lasting in the family, almost 180 years. And then still the values continuing to this day, people who aren't even related and aren't even owned by Guinness. Folks, this is a masterclass in history and family-owned business. The book is The Search for God and Guinness. He is Stephen Mansfield, a longtime friend of Dave Ramsey, a friend to all of us here at Ramsey Solutions. And at least a part-time neighbor here, Nashville, right? Absolutely. I split my time between Nashville and D.C.

Come back to Nashville to get unskentepernic. I was going to say, you come back to Nashville. Nashville to breathe some clean air. Exactly. Exactly. My goodness. Go to D.C. to lose my mind for a while. Well, thanks for being with us, brother. We're better for it. Great to be with you. Thank you. Well, I hope you enjoyed that fascinating conversation as much as I did. I got to tell you, this guy knows so much about the Guinness family. This is a tremendous book. I think it will really help you, specifically those of you who are thinking about how do we leave a legacy and continue the family business and keep those values. just some great stuff there.

And then, of course, all you personal growth junkies, this is a terrific book. Again, The Search for God in Guinness, a biography of the beer that changed the world. Now, I want to make sure that you're taking advantage of the free resources that we give you each podcast. Again, this month in February, as we really focus in on family businesses.

We've got a great resource for you. I told you about it last podcast. You've heard about it. It's entitled The Six Major Mistakes That Will Destroy Your Family Business. This is a PDF. It's absolutely full. free. Now, give you an example of some of the stuff you're going to learn in these six major mistakes. One of the mistakes is failing to plan. This pops out at me right now because you heard

Stephen Mansfield talk about the Guinness family. Arthur Guinness was planning very intentionally. A thousand-year least, this guy was thinking about how long this thing would last. That's just one of the things that we heard in the conversation. So failing to plan, you've heard this phrase before, is an almost certain plan to fail. So again, that's just one. of the areas that we dive in on, on six major mistakes that will destroy your family business. Absolutely free. Two ways to get it. You can text the word family biz.

Family biz, B-I-Z, family biz. You can text that to 33-444. 33-44 is the number to text the word family biz. Or, if you don't want to text, you can just go to entreleadership.com slash podcast and click on the link that is in the show notes. and you can download the PDF there. This is fantastic. It's absolutely free, so take advantage of that.

Well, I told you at the top of the podcast, we were really going to dive deep with two conversations. The next conversation, Edgel Pyle. I introduced you to him at the top of the podcast, but suffice it to say, I don't know that there's a more qualified expert in America when it comes to sitting with advising and leading family-owned businesses

to Heights Unknown, helping them come out of crisis, helping them think through the issues that they need to be thinking through so they can make the changes they need to make as they move forward over time. This guy and his team, they really get it. So we ask him to open up his notebook and share it with you. This is our conversation with Edgel Pyle. Well, this is a thrill to be with you, Edgill.

Got to know about you from Dave Ramsey. Of course, this is a family business at the end of the day. If people have been paying attention to what we're doing here at Ramsey Solutions, they know that Dave is very, very intentional. about the next generation of Ramsey's, passing the baton, and you see very few leaders do that well. And so the unique topic of family business, this is huge, because we don't spend a lot of time here. And so I want to dive into this. Before we do, I want you to tell folks what you do with Aspen Consulting, because it's really unique in what you do in working with families,

and specifically families that are involved in a family business. So tell us a little bit about what the day-to-day looks like and how you guys operate with these groups. Well, thank you for inviting me to be here, Ken. We are a family business. I'm in this business with my oldest son, Tom, who's a psychologist and a executive coach, and we have a lady, psychologist lady on our team. I grew up in a family business. We raised cattle, which means you get a payday once a year. And our other product, we had timber, which means you get a payday every 20 years. So I said, I'm not going to stay in that family business. I'm going to go someplace where I can get a payday once a year. And our other product, we had timber, which means you get a payday once a month, like normal people. I went off the college, got a degree in business, and I also was literally tapped on the shoulder and called to ministry. So I went to seminary, then I got a PhD in psychology. When we started Aspen Consulting Team, our goal was to work with family businesses, which obviously is family members that get together to start and operate a business. But we also work with affluent families where maybe at the third or fourth generation, G.E.

G3, G4, they are still have an ownership piece in the family business and they still have to work through the dynamics of the wealth, if you will, of how to distribute that money and how to handle and manage that money. Sometimes it's often a foundation. So our specialty is to go in and work with family businesses on the psychological dynamics of the family. There are other people who work on the financial structure, the legal structure. that's not our expertise. There are a lot of very good people and some of them are my colleagues. And the closest that I got to law school was dropping my wife off. I love that.

I'm a licensed attorney. So our specialty is to go in and help the family understand first, then work through the psychological dynamics of being in business together. If you take the typical entrepreneur, what are they? They're passionate, they're driven. they get up every morning and saddle up and go to work, right? They know what they want. They're confident.

They're smart. So you put all that on one side of the table. That's the entrepreneur that starts the business. And then across the table is the brother that's the same way, or the sister, or the son, or the daughter, or the nephew. And then you've got the family dynamics going on of how do you keep three. It's literally keeping three balls in the air. at one time. It's the family ball, the relationships. These brothers that work together still go to

lunch together and play golf together. Secondly, it's the management ball that somebody runs the company. And then it's the ownership ball. So those three balls, it's a balancing act to keep all those up in the air at the same time. So that's our job. I love that you have the psychological approach. I mean, that's huge. So I want to dive in a little deeper here. and follow that up with set a scene for us because you've got folks who are sitting there going, okay, this is us. We're a family-owned business. And so I want to get them quickly where they need to be mentally here to kind of accept the rest of this conversation.

So when you go sit down here and you've got a unique situation, which is a family-owned business, you've got those three different balls in here. Which one do you tackle first? Well, usually there's a fire at one place or the other. Right. Okay, so we have to figure out how to put that fire out. If there's a fire on the business side, they're not making money, or if there's a fire on the family side, they're in a feud of some sort. Or if there's a fire on the ownership side, they just don't have the governance.

We have to go where the fire is. But once we can get the fire out, then we start a process of collecting information from the family. I've already had a family meeting this morning before coming here. where we talk about what are the dynamics that are gone here. We analyze that and put that together in a pretty one or two pages and saying, these are the issues you have to pay attention to. And then the third step is we help manage through that process. Family business is the most effective, successful, rewarding business there is.

Why? When it works. Why is because you have two brothers. that already have good trust. They grew up together. They know each other. So they can make decisions more quickly. And they have that kind of trust level to move fast. You don't have to build that like you do another. It's already there. It's already there. Okay. When it works. But the reality is, the first generation is the entrepreneurial excitement level. The second generation may not come in with that same entrepreneurial attitude or even having the same desire.

You know, I worked with a business that made cowboy boots. And the second, third generation had no desire to make cowboy boots. They wanted to start a computer company. Right. Right. They wanted to do something entirely different. But they still had the assets and the ownership piece in the cowboy boot company. That makes sense.

So the why it works is because the high level of trust is already there. But when it breaks down, it breaks down every place. Which is why your team comes in and you focus on the psychological. We try to keep what we call the alignment around the psychological dynamics going in the right direction. It's like getting your car aligned. If you got good alignment, it's going to go further. Right. Would you come at it from a psychological standpoint?

I guess I'm asking, it's all personal, right? This is how each of the family members are viewing each other, their roles. I mean, let's break down some of the big issues because we've already established that it's psychological. But let's get specific. What are the things that are developing that are unique to a family business? Well, okay. What is unique to the family business is the entrepreneurial attitude of the founder. Right.

Usually, you know, maybe the mother or the father. That may or may not be in the DNA of the children. That's exactly right. Right. The assumption of almost every founder of a family business, 90% of family businesses, owners, say, I want to transfer this ownership down to my son or daughter. Very small percentage of that actually works. That's what makes it unique.

So there's a gap in a family business development. The entrepreneur starts the business, gets it going if they're successful. Usually there's a gap, what we call the gap management stage, where they bring in an outside manager. They bring in a professional that they may. have known or that's in the industry, they basically hire the president of the company. This is the company grows. And then the second generation, G2, have a learning period under this other professional manager.

That helps with the dynamics. But most small businesses, there are 28 million businesses in the United States. 28 million of them, essentially, are small businesses, which means they have under 500 employees. Only 20, about 20,000 have over 500 employees. We work with both small and big businesses, but the family dynamics is the same. Right. The ownership piece. Oh, yeah.

All right. So I want to focus on what's needed for a family business to be successful. You really outline this. I'm looking at your thoughts on this, and I think this is fantastic. This is, I got to tell you, this right here is this is the meat and potatoes. So tell us, when you get in and you start working with all these folks, you have identified these three areas. This is what it takes for family business to be singing. Yeah, this is what it takes.

We believe. And if a family can do this at the beginning, obviously, it's like having a roadmap where you're going to go. You're going to probably get there in a more effective fashion. And the first stage is you have a clear strategic plan of an alignment around that in terms of the values, the vision, the goals. and then there has to be the alignment of the family, the management, and the owners. So that's the first stage. It sounds complicated, but a strategic plan should be one page. Yeah.

This is the mountain top. This is where we're headed. Yeah. I call it plan to win. This is our game plan to win. Then the second stage, I call it the structural stage or getting a clear understanding of the boundaries, the roles, within the business, who's going to do what, when, and that is how we're going to play. Now we're on the field.

Plays are we going to run to be successful? And that means a high level of two things. Two things break down family businesses. 70% of the time if we go in, and this is documented in another research, not just our experience, 70% of the time when we go in and we see a breakdown in a family business, it's in two areas. The first area is trust. Trust has been broken. Trust has been lost.

The second area is communication. People just miss each other in terms of how they talk to each other. And the next step out is conflict. 90% of conflicts are really poor communication. So our job is settle the fires down, get people to work on whatever broke the trust, whatever the breakage is, and establish more effective communication tools. And then the third stage, and that's down the road away, businesses is the secession stage or the transfer of ownership stage, which again, it's very

complicated. There's only three stages in a family businesses that are difficult. It's the beginning stage, the middle stage, and the end stage. Well, that's it. So that's encouraging. Yeah. We work a lot on the, you know, the sort of the psychological understandings that we're all human. Any one of us can drop the ball any day. So what? Don't go into victim role. Right. You know, don't go into persecutor role like my job around here is to point out all the things that are wrong um or don't go into rescue a role sometimes we see that in a family business someone goes into the rescuer role oh so and so yeah you know we'll just fix we'll just patch it up for right meaning one family member's gone off the reservation and instead of sticking within the clarity and what's best

for the business you try to rescue it which is normal i mean that's a normal impulse and that's bad Well, it's bad in the sense that, one, you have the resources usually to do that. Right. You have the resources to chase the victim. Okay. Right. So you go, oh, well, what are we going to do now? How are we going to fix that?

And what we come in and try to do is put some caring and compassionate discipline around that process. Otherwise, the family gets exhausted. Right. Oftentimes, family business leaders who have really worked hard and have been smart and they're tough negotiators, they're, when for the time we get there, they're like, I don't know what to do now. I'm devastated. I get up every morning and I'm not thinking about sales. I'm worried about so-and-so, and they're whatever.

So that's our job. What happens when caring discipline doesn't work? Then you have to have tougher caring discipline. Okay. There's another level. There's another level. And sometimes we have to do that. We meaning as the consultants, we have to step in and do the caring discipline.

That the parents or the owners or, you know, usually parents, aren't able to do it. But what happens when that doesn't work? Well, you keep sometimes you have to have permission to exclude. That's where I was going. I'm not trying to be negative, but I think this is a realistic conversation people need to have. We often talk about, and we create a family, what we call a family constitution. There's a lot of names you could give it. I like that. But you create a family. This is how we operate as a family. Yeah. And these are the guidelines. These are the rules. This is how you show up.

Right. I lived in a family where you showed up at the dinner table dressed. Right. Okay. You know, you didn't show up. You showed up responsible. You look, and so we talk about the, we have the permission to include and we have the permission to exclude. Now, that's a hard, when we get there, that's hard work. Yeah. But it's still, you got to do it.

Right, because if you don't, it could kill it. It'll drain the bucket. It only takes a small hole to drain the bucket if the holes there long enough. Boy, now, that's a great truth. Yeah. And this is so unique to family business. It's unique to family business. Because there is a tendency to give too long of a leash when it's a family business where it would not even be feasible in another business.

The other piece that we often get connected with and involved with is the professional management piece. Because you bring in somebody who's got an MBA from wherever and they're smart and they've already got their stripes. They're a colonel, if you will. And then they come in and they have to deal with the family dynamics and the family drama. Wow. All right. So I want you to now take us through. So I think we've got some great background here on how you go from this founder, entrepreneur type to the next generation. But I assume we have a lot of people listen to this who are that second generation. Yeah. And so they've got to be thinking now, okay, what's it look like to go to the next generation? What is unique from that level, if you will? So I'm going to make it up here and say from second tier to third tier. Second tier to third tier. Well, and I've worked with family businesses that are down to the five tier. Wow. Now, often they're not involved in the original family business, of course. Right. Things are diversified. Yeah. But that was the seed that grew everything else. Yeah. While the business is different, the structure is essentially there. It's a family-run business.

Exactly. But I'd say this. If you're at the second G2 or G3, and if you've taken over this from your father or grandfather or grandmother, it's primarily. primarily men, but that's changing rapidly in today's world. But if you've taken over and your mother or father expects you to run the business the same way they've run it, call me. Right. Because it won't happen that way. I don't care how good the business was in 1960. That's right. Or 1970 when they started it, maybe cowboy booters stay the same. That's right. But most things have changed so quickly. And so you have to have. have the competency in the character to make those adjustments as well. So the G2 and the G3, and this is a maturity level issue, have to be able to stand up to, if you will, stand toe to toe, if you

will, with the person who put the bread on the table when they were kids and dropped them off at school. That's right. And now they're sitting across the board, the board table. And they have to have that maturity and that confidence to do that. And as we wrap, I'll ask you a question on that point. That strength, that maturity is boistered by tremendous clarity on what we talked about earlier. If you get clarity on these others, you know what kind of game you're playing in. And if you don't have that, someone may think they're playing on a football arena. Somebody else thinks they're playing in a basketball arena and it's not going to work. And not everybody has the same skill set, of course. You know, everybody born with a different skill set.

And it's tempting. Now, I have a son who, if you meet my son, Tom, you say, God, that looks like Edgel, 35 years ago. We look alike, we act alike, we talk alike. But we're not alike. And so we live what we talk. So Tom and I have to sit down and say, okay, you know, how's this case going? What's this doing? So we work out our own dynamics so we don't go in as if we have never, quote, done it for ourselves. We've walked the talk. And I grew up in a family business that had been around for a few generations. We've been there.

And we bring that expertise as well. Absolutely. We know what it's like to sit down across the table from someone that you literally, you know, change their diaper. Right. And now you've got to talk about a customer contract or shareholder agreement. Right. Well, we think this is such an important topic.

it's ground zero for our organization, as Dave has been very, very open with our entire team, is on a regular basis, overcommunicates, clarity, clarity, clarity, and it's huge. And I know his kids, and they're phenomenal people. And I have nothing but the utmost confidence that he's doing it well. But he trusts you, we trust you. So this is a great resource. This is just the tip of the iceberg. We couldn't cover it all in a conversation.

So I want people to know that they can connect with you that there's help there and this very vital. vital exercise to get clear, to really get healthy to make sure the family business sustains. Now, I know they can go to Aspen Consultingteam.com. That's Aspen is in Aspen, Colorado. Aspen Consulting Team.com. Real quick, tell us about any other resources, the book that you wrote that they can help people. Yeah, we have a website. Everybody can go to, you know, do you put in Aspen Consulting Team?

The acronyms are Act, ACT. or you put in Dr. Edgel at Aspen Team.com. You get my email. I get 100 emails every morning when I wake up. Then we have a book out. It's called Maps for Men, a Guide for Fathers and Sons in the Family Business. That would be on the shelf in a few weeks, we hope.

It's a good piece of work. It's a lot of research, a lot of work. We took four years to write it. Wow. We have another book that's coming out. We're knee-deep in it. It's called Family Incorporated. And that's going to be,

a different version of what we do, but specifically for family businesses on the three steps of strategy, structure, succession. Got it. Then I have another book that I wrote around my horse experience, and it's basically a book on how to follow your dreams and set your goals and that sort of thing called Ride Up, Live Your Dreams, Live Your Adventure, and it's out, it's on Amazon.com, and it's a workbook. You go through it, and fill out the questionnaire. I wrote that book with a world champion cowboy named Aaron Ralston.

Yeah. Fun stuff. I'm holding that book, by the way. This is just if you just want to live the adventure and learn more about Edgel. He is an inspiring guy. That's a fun book. So again, great resources there, Aspen Consulting Team.com. Edgill, it's always fun when we have guests in studio because, you know, we talk to people

that are all over the place all the time. So this is always a treat. So thanks for being here. Well, I'm honored to be here, and I listen to your brother. You're an outstanding interviewer. Well, you're very kind. From a true cowboy, I'm going to take that. So now I've got to get a buckle.

That's my next step. It'll be in the mail. There we go. All right. Thank you, sir. Edge will mentioned it at the end of our conversation, but one more time, the website to learn more and connect with them. Aspen Consulting Team.com.com.com.com.comptingteam. Well, InfusionSoft is giving and giving and giving and giving to you all.

We've actually met about this. Eric, the producer and I recently went out to their home office in Phoenix, Arizona, and we literally plotted. What are some of the things we can give to our audience from Infusionsoft over the next year? And getting started off right is infusionsoft.com slash leads. That's the location for you to go online and download the tool that's absolutely free. It will help you convert leads. Leads are everything for you.

You need to make sure that you're dealing with them in a way that is efficient and effective. Infusionsoft.com slash leads. Check it out. It's absolutely a game changer. Well, folks, we're excited about part two of the Entree Leadership Summit. What an event. Had our first event last fall.

And now here we are again with another incredible lineup. May 22 through 25 are the dates. Dallas, Texas, the location. The speaker lineup, unbelievable. Jim Collins, Seth Godin, Pat Lynch, our team of Chris Hogan and Christy Wright. It's unbelievable. All joining Dave Ramsey.

And we have that special mysterious guest, which as I meet people out on the road, Eric, that come to the Entree Leadership One Day events, they've gone online. They're like, okay, you weren't being sensational. Now, we're not allowed to talk about it. If you're new to the podcast, we can't tell you who the special guest is

because of the contract. So we honor our contracts around here at Ramsey Solutions. But if you go to Entreeleadership.com slash summit, it. You can see the entire lineup. It is going to be amazing. May 22 through 25, 2016, on our way to a sellout. So you need to move quickly. There's no event like it anywhere in the leadership space. So we'd love to see you there. Well, folks, really excited about this whole family business series. If you'd like to dive deeper with our team, remember John Falcons and his team of coaches at Entree Leadership, they can take you to the next level. We've stirred up some conversations. We've stirred up some questions. Remember, If you'd like to get connected with the team, well, Eric the Proust and I will certainly do that.

An easy way to just say, hey, I'm raising my hand. I need some help. Well, you just email us, podcast at entreleadership.com. Podcast at entreleadership.com will get you connected. And I highly recommend all access. You really want to take everything in the next level. All access. This is our exclusive membership, helping leaders go to the next level, creating great community through the content.

And it is, I'm telling you, risk-free. contract necessary. I don't talk about it very often, but I think it makes so much sense when we think about deep issues like this. So check it out, all access at entreleadership.com. Well, that's going to do it for this edition of the Entree Leadership podcast. Our thanks go out to Stephen Mansfield and Edgel Pyle on behalf of our producer, Eric Anthony. And the entire Entree leadership team, thank you for listening and being a part of this amazing community. We'll talk with you again very soon.