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Richard: Yeah. I've experienced a lot of the components of a family business and because my father passed away really at a relatively young age, and there were five children in the business - as we tried to grow again - we experienced a lot of the sibling issues that there are with family businesses, which led me to buy out my family at their request. Then family business succession became a whole different thing, 'cause it was just my three children versus 10 grandchildren of my father. So I wanted to build our business and work with our children in a manner that we didn't have the same kind of experience that I had with my brothers and sisters, and my mother for that matter. Um, just to recap a little bit - my dad started our business with two sewing machines in a basement, uh, sewing lace around baby doll diapers in 1949.
He and my mother worked very closely together, to build the business.
I grew up in the business as did my four brothers and sisters. I was the oldest. When I graduated from college in 1968, we were doing somewhere between two and $3 million a year in sales for the next 10 years. My dad and I worked closely together and we grew it to about 10 million in sales. He died of lung cancer at the age of 55. So it was definitely a premature death at that point. My family actually lived in Florida, which is where my father had started a division. I lived in Ohio, which was the headquarters of the company. And certainly the distance between us challenged our ability to communicate really effectively and, and, and the kind of communications you have to have if you want to have effective ownership of family ownership.
We worked together pretty well for 10 years. And at that point, we started experiencing a lot of the problems that family businesses have, which resulted in their request that I buy them out. And subsequently I did that in 1994 and had been running the business since that time period. I'm very proud of the business we've been able to create over the years. We now do over $200 million a year in sales. We have about 400 associates that work for us. My three children don't have their careers in the business, but they're active shareholders of the busines, and see ownership of the family business as a responsibility of stewardship, not one of entitlement. So we're, we've been very fortunate in that regard.
Martin: So you actually bought the whole company from your family?
Richard: I did, yes. Because my family lived in Sarasota, they lived in Florida; and they worked in the division down there. And because my brothers and sisters did not complete their college education, which isn't as significant as the fact that when they didn't complete it, my dad let them come into the business. Therefore they had no other perspective on what business looked like other than what they recall as my father growing, you know, as they were growing up. And so as the business grew, it took on many different dimensions, that was hard for them to understand. So we started polarize. They didn't, they never questioned my role as being the president of the company and, you know, driving the strategy of the company. They just didn't see what their role was, and they wanted a role that was sort of similar to my father's - a level of independence and all.
And as I say, they didn't have other outside work experience to give them a valid perspective of what was going on in our business. In addition, they connected with a person who purported to be a family business consultant, in Florida, and worked with him for nine months before he even contacted me, and supported some of their emotional feelings that they had about the business. Um, and they started to built their own personal coalition between my mother and my four brothers and sisters down there. And the train really left the station before I was asked to get on board. Um, and we couldn't get a resolve. We worked together, for three years, tried to try to get it resolved. They couldn't fully articulate what they wanted - again, I think that was the result of not having a good, clear perspective from other business experience.
The resolution that they all came up with it, I should just buy them out. At one point they would have just wanted me to sell the business and whatever we got from it, we'd split amongst everybody. And I wasn't interested in doing that... So they said, well, then buy us out. Uh, so we'd negotiated for a well over a year to try to see what was important to them, and basically they wanted a stream of income that would support them for the next 20 years. And that's how we were able to resolve it.
Martin: Did it change your personal relationship in some way?
Richard: Oh, very much so. Yes. My mother didn't speak to me for three years. There were a lot of issues... now, since that time, most of those have gone away. There's, there's still a few issues... And it's, as you know, it's more than 25 years ago, but blood runs thick, and runs long so there's still some, some issues. And I knew, you know, I knew when I bought them out that it was not, it was going to be a lose - lose for me. I mean, either I would screw the business up and wouldn't be able to support the payout that I agreed to, or, you know, the business would be very successful and they would feel that I cheated them. And I guess, fortunately, it's the latter, not the former. But that's, and again, it's pretty typical of family businesses that don't make the kind of investment you have to make into the family business ownership component of a, of a multi-generational family business.
Martin: Then maybe some other conclusions now from 25 plus years of your experience, having different personal relationship with them, are there any conclusions, any, you know, tipping points you can stress out?
Richard: You know it was... aggravated to some degree in my situation because my brothers and sisters and my mother lived a thousand miles away. So we had a geographic separation, uh, which further complicated reconnecting with them on a personal basis. Audio conversations are one dimensional, zoom communications is two dimensional, in person is three-dimensional and you can't replace three dimensions with two dimensions or one dimensions. So I don't know that it would have helped that much if we had today's technology. Obviously you're focused on the business and you have to, to get it started and get it up and running. But you don't want to take too much time to not invest in the family relationship component of the business. If you want other family members to be owners of the business, or if you want future descendants to be owners of the business. I'll give you an example. And you know, much of what I did early on was more intuitive than, than really having any knowledge.
Um, but when my family lived in Florida and I lived in Ohio, I felt it was important that once a year, we all got together as family. And we would have a business meeting and also have social activity. So we would go to different resorts to do this such as Hilton head, some Florida resorts... But, you know, we would plan this once a year and my brothers and sisters and I, and my mother and our board of directors could interact over a two to three-day time period - both business wise and social wise, and even the young cousins, my nieces and nephews would get together at that point. Well, there was a point where my brothers and sisters and my mother said, well, we think this is costing too much money. It's not a warranted expense. So they said, don't, we don't want to do it anymore.
Well, it's ironic that shortly after we stopped doing these annual get togethers, that's when our business personal relationships started having problems at that point. So my point is that, you know, you invest in marketing, you invest in sales, you invest in your financial component of your business. You have to equally invest in the family ownership aspect of the business. Even if your family shareholders are not involved in the business, if you want them to continue to be owners. So that needs to be recognized I think pretty early on. I recognized, I mean, I was doing it intuitively, not really recognizing the significance of it until we lost it. And again, after I bought them out and I started working with my family, we've been vested a great deal more in the family ownership aspect of the business.
Martin: Can you define "family ownership aspect?"
Richard: Well, um, the family shareholder where you're on the generation of family members or your, you know, your children and grandchildren. So I don't, I think Sarah told you about the book that I wrote recently. Yeah. Vibrant vision. So I have a chapter in there on governance and on shareholder education. And, you know, those things don't happen naturally: it takes education, it takes time to build trust, it takes the education that allows your descendants to recognize it they're not being given something that they have entitlement to, to support their lifestyle. They're being candid to treasure, uh, that employs and supports hundreds of other families. And it's a treasure that they have a responsibility to be good stewards of. So, you know, there's the contrast between an entitlement sense of ownership and a stewardship sense of ownership. And far too many family businesses, particularly in the second and third generation, see it more as an entitlement than as a responsibility of stewardship.
Martin: Sure thing. Regarding the entitlement versus the stewardship dilemma. What did you find out about ego during your life journey and regarding the topic we are talking about?
Richard: I had a mentor of mine, very good friend, who was a generation older than me... On his desk, he had a saying, and he ran a large public business. And the saying was: "There is no limit to how far man could go, as long as he cares not who gets the credit." And to me, that's, that's where ego comes in. In my opinion, I think ego gets in the way very quickly and very easily and in ways that are not necessarily self recognized.
Martin: Did you have any ego issues in your family?
Richard: I had it. The subtlety of mine, I think is I mentioned that the model that my brothers and sisters had about a family business - was my father. And I think they unconsciously always wanted to, in a sense to be my father; or to be able to have a life that had the, the kind of role that they perceived him to play. Now, that was an out and out ego, you know, they weren't trying to be president of the company and they weren't really trying to show that because they were owners, they could order other people around. Um, but I do think that they, uh, didn't have a good appreciation for what other people in the company were contributing.
Martin: What about authenticity? How would you define authenticity? And is it important and what about different authenticities at the same time in the same room?
Richard: Yeah, I think authenticity, uh, comes from being willing to be vulnerable. And, um, I think an important component of running any organization is both teamwork and trust. And you don't build trust amongst your team if you're not authentic. They don't perceive you as being authentic. Uh, you won't, you won't get the trust you need to build your team. With my brothers and sisters, you know...
...I tried to be authentic, um, I'm not sure that I came across as feeling a willingness of being as vulnerable as they thought I should be. But I also think that they didn't want to feel vulnerable at all, I think that gave them a great sense of insecurity there. So that's probably how that played out. If you were our psychotherapist, that's what you might say. And I might add that in many of our family meetings, um, we had one of our board members that I put on the board specifically because he was a psychologist, and he tried his best to try to try to deal with these family emotion issues and found it very challenging.
Martin: What is the power of emotions from your point of view?
Richard: To be a good leader, you have to inspire and to inspire your team, they have to recognize your authenticity. I'm an eternal optimist. So in the face of any business challenge that we've had or challenges that we've had, it's important to communicate clearly what those challenges are. I mean, you can't sugar coat challenges, but in the process of doing that, the emotions you communicate that are positive, that give them confidence that we can overcome these challenges, uh, really gets them on board and keeps them on board and keeps their spirits positive. If you communicate the challenges in a doom and gloom kind of manner, and even if you say, we'll get through this together one way or the other, that's not the same thing as giving a very positive confidence that you as a team will be able to get this accomplished. But everybody has to work together as a team to make that happen.
I think, you know, there's a component of charisma that comes into that, and that's not necessarily natural for everybody, but I do think everybody that has risen to a position of leadership can recognize the importance. And if you're going to deliver a message, you want that message to be positive in the end. And if you have to practice the delivery so that you come across in a positive manner, then that's what you need to do. So I think that's, I think it's critical to, uh, leadership and, and moving your organization forward. There's ... particularly if you're going to be multi-generational, your, your business is going to face so many changes going forward because the world's always changing. And what you're providing in product and service today is probably not going to be successful, you know, 10 years from now or 20 years from now.
So part of the culture of the organization has to be a culture to accept change, and recognize and get people to recognize that change is an opportunity for them. They're not going to be victims of changes or big victims of the change. And we've done that. I think incorporating that as a cultural component to our company, because we continue to push ourselves to the next level. Um, that happens when you want to commit your organization to growth. You're always going to be pushing yourself to the next level. I recognized that fortunately early on, after my father passed away, because we'd worked together for 10 years, we grew our business from, you know, 2 million to 10 million, which, you know, that was pretty substantial back in the day. And when I reflected on my first 10 years in the business, what I recognized is that we would grow our business and then we would plateau.
And then we grow our business and we would plateau. And generally when we plateaued, it was because our people weren't growing. It couldn't take us to the next level. It was only when we made some leadership changes that got us moving to the next level. I also recognized that we were not investing in our human capital. We were taking it for granted. We didn't even have a personnel manager. Now we had over 200 employees that worked for us, but we didn't have a personnel manager. So one of the first decisions I made after my father passed away was to convince our organization that we needed somebody whose full time responsibility was to address the issues of human capital, the issues of our employees. And, when I found this person and hired him, I didn't call him a personnel manager, cause I didn't want him to do what I call just a custodial things of personnel. I wanted him to be more strategic. So he was our director of human resources and it was one of the most significant hires I made early in my career. I could say that over my time of 40 years, I only had three, uh, human resource managers or VP of human resources because it was an important position. It reported to the CEO. To me, it's the most important team member you can have is your HR leadership person at that point. That's really a key part - to growing your business in a sustainable manner. Because you bring the ideas in.
And, you know, I was tempted many times to continue to work in the business like my dad did, which was kind of his ideas and the things that he wanted... But you're only one person. You only have 24 hours a day. Your ability to grow a business is to, is to have your vision out there, stay involved enough with it, but you've got to leverage your vision and your capabilities through other people. Otherwise you're simply not going to grow. You said you started doing this you know when you were 18.
Because of my father's early death. Uh, and again, if you read my book, I have... The book is called a Vibrant vision, the entrepreneurship of multi-generational family businesses. And one of the last chapters, has to do with balance in your life. How do you take care of yourself. And, you know, you recognized the need to do that in your late teens, early twenties. I didn't recognize it so much until I was in my thirties. Part of it comes from interestingly enough, from challenges in our marriage and where we were using a psychologist to help us, uh, deal with our marriage issues, which forces you to look at yourself. The other part I mentioned earlier that one of our board members was a psychologist... And he was helping me work with my family issues with my brothers and sisters and my mother. When we were flying back from Florida to Ohio, I asked him, I said, "Jay you've now seen me operate as a, you know, as a leader for our company. Do you have any recommendations on what kind of development I should be doing?" Jay was very involved with the Gestalt Institute in Cleveland and his recommendation to me was to do a men's only workshop.
For a weekend. Um, but he said he was facilitating that workshop. And as we got closer to it, it turned out that my best friend also decided to take that workshop for the weekend. So you've had enough experience to know that you go into one of those workshops, if they're quality facilitators, you're going to have to be vulnerable. You're going to have to open yourself up. I was going into one with a member of my board of directors was there and one of my best friends was there, but we did not disclose that amongst the rest of the group until the end of the three day. So in that session, I just... I learned a lot. I gained a lot from that experience; and I remain connected to a lot of the Gestalt theory.
That was just a very... A good week. And obviously, as you know, from those kinds of experiences, forces you to do a lot of, um, soul searching and that force you into being vulnerable. Uh, so you, you know, you get personal growth from that. That kept me associated with the Gestalt Institute in the Cleveland area. And, as a matter of fact, purely by coincidence, not by design, many of the resources outside resources we use for leadership coaching, for our strategic planning process, have been trained in Gestalt psychology in one form or the other. So just recognizing the human component, both of yourself, as well as of your team - I think allows you to build a more effective team in your business operation. You can't ignore the psychological component of the human capital that you're trying to bring together to build your business.
Martin: How do have the same level of output with a different organizational structure, the ownership vibes, uh, personality traits, et cetera. Richard: That's a.... Martin: (smiling) Easy question.
Richard: Yeah, very broad. Again, I'll refer back to my book when I was writing the Vibrant vision, which... the background behind the book is when I retired as CEO, I basically was reflecting on the fact that I've always thought I might want to write a book, but I didn't really know what that would take. My motivation was to write a book about the business processes we had discovered and implemented it in our business it allowed us to grow to $200 million a year in sales... And remain growing as a sustainable business. But as I was working with a writing consultant who did some research, she said, uh, you know, the space there is where there's a void in the literature today is that there's a lot of books on how to grow a business. And there's a lot of books on family businesses, but there's nothing that talks about how do you grow a business, for multi-generational businesses.
I have a family business to be multi-generational. So, as I thought about that, and we took notes and all, um, and this gets back to your question Martin, to some degree that the first chapter of the book is a chapter on innovation. That's the way our company was built.
I think any business that is going to be multi-generation has to have a culture of innovation because every generation is going to face new challenges, and you've got to be able to adjust - that there's nothing static in life. And innovation is not just about innovation of service and product. It's innovation about processes that you're using to accomplish these types of things. It's also innovation about governance and shareholders and ownership.
So when you think about future generations, uh, as long as you're continuing the engagement of an education process, you're able to take the core values of the business and the founders of the business and present them to the next generations, but at the same time, you learn and understand what the world of the next generation is. And you find a way to, again, innovate that allows them to exercise their leadership for the opportunities and challenges that their generation's going to face. I think the worst thing is to tell the next generation that, "well, this is the way I did it, and so this is the way you should do it." You know, you just, you can't do that.
So it's, you know, at the end of the day, any organization is a human being. It's a human organism... That survives with human capital. So, you know, the kind of issues you have in a business are the kinds of issues you have in relationships, they may not be that recognizable, but they certainly go, (noise.) So you have to deal with all of them. And if you don't it will be hard to be successful over generations.
Martin: Yeah. Sure. Can you tell us something about you today? Did you find your own peace? Are you a happy person?
Richard: I'm a very happy person. I think one of my most challenging decisions to make was to step aside, retire as CEO and step aside. And I told my entire management team and our employees that, you know, I, if I had my druthers, I like to die in the saddle with my boots on... But, uh, I'd be doing a great disservice to them, a great disservice to our customers and a great disservice to my family, if I did that. You have to have an ability to transition (noise) and stuff like. So definitely I had many other things to do. And as an example, I hired my son-in-law to work for me, to look for new investment opportunities. Not where I would be a hands-on manager, hands-on leader, but to be able to make investments in businesses where we could apply the things we learned in growing our business and grow more businesses... To help continue to create value and create a career opportunities for human capital, if you will.
The one thing we did locally... because I decided to start playing tennis again after I retired... Our local indoor tennis facility - as I say, we're near Cleveland, so, you know what our weather can be like - had been there for 40 years and they decided to close down right after I started playing tennis. As I tell everybody, I thought my game was better than that, but they decided to close down anyway. So, a couple of years later, we decided to make an investment in a tennis facility. And my son-in-law's is an avid tennis player. We built a new indoor tennis facility... was rated as the best new tennis facility by the USTA in the country. So that, you know, that gives me something fun to do. It's good exercise, we're creating another business, it's great for the community.
So those are the kinds of things that I do. I probably 'am more frustrated today because of COVID and having to create this bubble and you can't get out and you can't travel, and I recognize that's a lot of the ways a lot of people retire, but that's not for me. My greatest frustration is right now dealing with the COVID.
I'm happy. And plus I continue to, you know, play a role in our family business. We have a family council - my daughter heads that up. We're providing education and interaction with our grandchildren. So I am fortunate, very fortunate to be able to retire, but still keep connected and be able to be involved in ways in which I can pace myself to do that.
Um, you have to be very deliberate about not interfering and that's, you know, that's sometimes hard to do and you have to be proactive about that. It's not natural, it's not natural to be able to not interfere. And it's not natural for, you know, for the CEO, that's leaving, the founder CEO so to speak. Uh, but it's not natural for the organization either. Because all they've got to do is see you're around and they think you're really pulling the strings. So you have to be very proactive, um, to be sure you're not undercutting your new leadership team. And, uh, you also have to position yourself, so you're seen as a resource and not somebody that's second guessing the new leadership team.
We say, shirtsleeves to shirtsleeves in three generations, always sort of rice patties, different rice patties in three generations. There's a number of different metaphors for that. And I think that's because as the third generation is growing up, you're farther removed from the challenges of building a business, and understanding what really has to go into it. And you begin to see it more as an entitlement and, and a lifestyle type of a business. And I think that's where very proactive shareholder education, family shareholder education has to, has to be done. You know, it doesn't happen in the first generation very often because I don't think your first generation people really have the time to think about it.
I mean, they're trying to build the business, put the foundation on. It definitely should happen in the second generation. You've got to get it started there at that point. Um, and you got to preserve the history of the company and the culture and the values of that, of that foundation and pass that on effectively. And so it was a third generation kid understand that they have inherited a treasure that they are stewards of and their primary responsibility is to turn it over to the fourth generation in better condition that they received it. What's it going to take to do that? You know, you've got to have a good outside board of directors that will select the best leadership, whether they're family or non-family, it's there, and you have to have good shareholder education. And I think, you know, this is what my book tries to do.
You know, I talk about how to grow the business. Uh, and this is where I've been truly fortunate in my journey because I've been able to recognize, be a part of, learn to be a part of, of these different things. But you have to have innovation. You have to have human capital because it's going to be other people that are going to help you make it done or help you leverage yourself. You have to have good strategic planning so that you're constantly thinking of the challenges that are in front of you. And how do you have to adjust to do that? You have to have constant reinvestment. You've gotta, you know, you can't take all your capital out of the business that you generated. You've got to reinvest for change, whether that's technology equipment, plant and property, or your human capital, you've got to invest in those.
Then you have to have good governance. You've got to have governance that will force the CEO of the company who may be the founder or a second generation to question themselves, to be vulnerable to themselves. So you have to have independent board members that aren't afraid to challenge you. If they're just going to rubber stamp you, you don't need that. And then you have to have shareholder education. And then with all of that, and this is that chapter I was talking about, how do you get balance in your life and how do you end your journey, feeling happy, feeling at peace, feeling sad, feeling that you've done all you can do and have confidence that your future generations are going to take this treasure and manage it effectively and continue to pass it on.
Entrepreneurship models that we talk about in the United States, in North America, are the models where as soon as you have an idea and you put a business plan together, you have to have an exit strategy. This is so you can go on shark tank and, you know, get money.
The decisions you make about building a business that has an exit strategy, um, are significantly different than the decisions you'll make if you think you want to be multi-generational. And I believe that the strategic decisions you make within the context of being multi-generational will have you be more successful in the long run, because they're going to be long-term related decisions and not short-term related decisions.
There'll be decisions that will by their very nature, have you make long-term investments and maybe even more investments in your business. And if you're thinking about either an exit strategy or a lifestyle business, or trying to extract the highest level of profitability that you can out of the business right now. So I would encourage, I'm not saying don't have an exit strategy kind of model or go on shark tank because that drives a lot of innovation, there's no question about that. But let's look, let's look at the other model also, because once you get your business started in a few foundation blocks and you start making other decisions, those foundation blocks that are laid to be multi-generational will be better long-term decisions for your business. And if you just try to make it to have an exit strategy.
Richard Seaman is the author of A Vibrant Vision: The Entrepreneurship of Multigenerational Family Business, and the current Chairman of Seaman Corporation, where he served as CEO from 1976 to 2015. He assumed the leadership role of this family business in 1978 after his father passed away at the young age of 55. Under his leadership, Seaman Corporation, a manufacturer of industrial coated fabrics, grew from $10 million in annual sales to nearly $200 million in sales today.
Richard serves as a Trustee of the Burton D. Morgan Foundation, whose mission is to support entrepreneurship and the free enterprise system. In 2012, he was asked by the Governor of the State of Ohio to serve as a Commissioner of the Ohio Third Frontier, a billion-dollar initiative focused on creating an innovation and entrepreneurial ecosystem in the state. He is a member of the Young Presidents Organization, the Family Business Network-USA, and a Trustee on the board of the College of Wooster.
Richard was recognized as an Honored Life Member of his industry trade organization, the Industrial Fabrics Association International, and was selected as a Wall of Fame Honoree by the Wooster Area Chamber of Commerce. In 2015, Richard was chosen by Ernst & Young as Entrepreneur of the Year in the Family Business category.
Richard is an avid skier, sailor, photographer, and tennis player. Richard and his wife, Judy, live in Wooster, Ohio. They and the families of their three children are committed to being active owners and stewards of their family business enterprise.