Family Firms and Sustainable Development

Dr. Pramodia Sharma

University of Vermont

Professor & Thought Leader

Pramodita is the Schlesinger-Grossman Chair of Family Business at the Grossman School of Business, University of Vermont. She is a visiting scholar at the Family Business Centers at Kellogg School of Management, USA and Indian School of Business, India, and is an advisory board member of the Jönköping International Business School (JIBS), Sweden. Dita served as the editor of Family Business Review from 2008-2017. Her research on succession, governance, innovation, next generation commitment, entrepreneurial leadership and sustainability in/by family enterprises is published in over fifty articles and ten books. Since 2015, she has published Entrepreneurs in Every Generation & Patient Capital: The Role of Family Firms in Sustainable Business, and ten articles in journals like ET&P, FBR, JBE, JBR & JFBS. Pioneering Business Families of Sustainable Development is her most recent book. She is the co-founder of the Schlesinger Global Family Enterprise Case Competition (SG-FECC). 

Kirby Rosplock 
Welcome to the Tamarind Learning Podcast. I'm your host Dr. Kirby Rosplcok and I'm thrilled today to have Dr. Pramodita Sharma with us. She is the Schlesinger- Grossman Chair of Family Business, at the School of Business at University of Vermont. She has many accolades behind her name. She's a visiting scholar at the Family Business Center at Kellogg and  India School of Business. Her research is voluminous She has done some of the pioneering research on succession, governance, innovation, next generation commitment, entrepreneurial leadership, and sustainability in and by family enterprises. She is a prolific writer and has written over 50 articles and 10 books. Some of our more recent works are Entrepreneurs in Every Generation: How Successful Family Businesses Develop Their Next Leaders, Patient Capital: The Role of Family Firms in Sustainable Business, as well as Pioneering  Family Firms’ Sustainable Development Stratgies, which is actually our focus of today. So, I'm thrilled to have Dita here and to dig more into the powerful role that family firms play in sustainable development. So, Dita, thank you so much for being here. 
 

Dita Sharma 
Thank you, Kirby. Appreciate the invitation. 
 
Kirby Rosplock 
Well, then maybe we can first jump and just talk about what you're doing today, the work you're doing, both in the education space and the writing space. Then also with family firms and and just help us take a toe in the water to sustainable development, based on the work that you're doing today. 
  
Dita Sharma 
I work at the University of Vermont, as you mentioned, and this is an old university founded in 1791. And it has a long long history of focusing on sustainability, though. We may or may not have used the term in the past. So for my day job that says a professor here, all our programs are focused on sustainable innovation. The business school undergraduate program, sustainable innovation, is woven into everything we do. And this is way before the term became fashionable. I would say the same thing for our graduate program. Our MBA program is called the Sustainable Innovation MBA Program. We also do online certificate programs. So, that's in terms of the education for undergraduate students, graduate students, and what I would call the executives. Most of them come to our programs through online certificate programs, as they are working. 

 
Dita Sharma 
In my role as a researcher, and, as you said, I do enjoy research a lot. For the last 10 years or so, I've been focused on the interface between family businesses and sustainability. Sustainability now is as we understand the people, profit, planet balance. So, for that, I've written a theory book, which is the Patient Capital but more exciting for this audience is the book called Pioneering Family Firms Sustainability Strategies and we'll talk a little bit about that.

Dita Sharma
I get to know the family businesses that are unsure of how to start. So just in the beginning stages of the journey.  Families are overwhelmed by what the journey might be and then I get to work closely with those families who are availing this opportunity of a century. They've gotten noticed, they're leading their industry, they're breaking the mold. So I'm pleased to be able to interact and work so closely with families  at different stages of the journey.

 
Dita Sharma 
Where are families today you might ask? Well, I would say, the first point, awareness. I don't think there's anyone in the world who's not aware of the issues caused by our heating planet, losing water, fire's, we see this all around us. We may deny it. They may argue with it? We may argue about whose fault it is, but it's hard to deny that today. Since 1987 we've had  our Common Future report. That's a long time ago. Ok, so even if I missed that report, in 2006 we had the Inconvenient Truth movie. That was 17 years ago. So we can pretend that I didn't read the scientific report . Maybe I didn't? I didn't watch a movie or hear about it on every single TV network (positive or negative comments). So as far as the awareness is concerned, I would contend it is there.

Dita Sharma 
Whether there is a desire to go on the sustainability journey, I would say it's mixed. There are those of us who say, I didn't cause it, and India is one of those. They say rich countries caused it. It's not our problem.They need to go fix it. If you want us to do anything where every sixth human being on the world today is an Indian, another sixth is a Chinese. If you want us to do something about it, give us some money because you caused the problems. It's your mess.So there is that.

Dita Sharma 
At the individual family business level there are people who say this is not my problem.It’s the government's problem. So, there is the desire. There are others and these are the people that we feature in our pioneering book. The others were skewed about the opportunity. They said this is not an opportunity of a generation,this is the opportunity of a century and my family business isn’t going to be left behind.On the contrary, I'm going to be that leading edge, company or family.  They are breaking the molds and it is that journey that we feature in our Pioneering Family Firms book. We feature 15 different families in that.  

Dita Sharma 

So, in short, where are we in the education space? Some universities like mine, just have been doing it and continue to do it quite effectively. Other universities are stepping up really quickly.There are those we say are stepping up. What we say is they're putting a new saddle on the horse. That means our MBA program or undergraduate program is the same that it used to be for the last 50 years but we've now put a few sustainability courses on top, or we've changed the names of some courses and added the word sustainability in there. In our case that's our horse. 

Kirby Rosplock 
Well, and I just, I just, it harkens to the idea of greenwashing or sustainability washing. This is the Soup du Jour, but really this is what we all should be consuming and that this is the new normal. And you obviously have been part of a university that's been blazing this for many decades, far, before it became fashionable. And I do feel that often there is a disconnect, sometimes. Some are aware. The way that  universities think about enterprise, and that they're wanting to sort of conveniently move in a direction that is now in fashion when in fact  this isn't novel or new, right. 
This is something that's been around. 
 

Dita Sharma 
No and it really helps. That's one of the things that family businesses are struggling with because those who have been around, say, for three generations, are saying, I don't really know what sustainability is. 
  
Kirby Rosplock 
Yes. 

Dita Sharma 
They are whispering in my ear, saying, you know, kind of confessing that they don't know what the sustainability thing is. I often ask when you leave a room, what do you do? Yeah, inevitably they'll say I switch off the lights. Well, that's making sure no resource is being wasted. What do you do to your people? Well I make sure I take care of them, otherwise I won’t have my business. Well, now, we wrap it all under one label called sustainability because they’re taking care of their resources. They have been that far along in the journey, that comes naturally, but there are things we are learning that can be integrated in businesses today.

Kirby Rosplock 
That's excellent. I just want to shift gears and talk a little bit about this sustainability realm and how family farms are approaching it. What are they trying to do better or differently as they kind of take this strategic pivot? And then my second question is, how is succession, right? How is an evolving multi-generational, family fact pattern also influencing these more expanded goals on the sustainable development front? So two questions in one for you.

Dita Sharma 
So I did start my academic journey thinking about, reading about talking to business families about succession. At that time, we were thinking about succession, and many people still do think about succession as passing a baton. And we tried to guess. In my dissertation, we tried to ask people, well, how many years does it really take to pass the baton. And the best answer a doctor and we could come up with, is 5 to 10 years. It's like, OK, that's good and we kept harping that 5 to 10 years. It's going to take your time, so be patient about it, but in working on the research for Pioneering Family Firms, these families did not start with sustainability as a mission. Many of them would have a mission like exceeding customer expectations. That's an example that just came to my mind at State Garden out of Massachusetts. Their motto, right from 1937, has been exceeding customer expectations and as the expectations kept changing, they kept evolving. So for 80 plus years, what they did in the beginning, they are still processing fresh produce. They started as a celery produce processor. They would wash celery stocks, process and wash them, and then put them in smaller bags and then take them to the grocery store. So that's how they started in 1937.

Dita Sharma 

And then they kept increasing. They kept investing in technology. So it's one of the larger food processors in New England now. Then they started hearing their customers or really the grocery store chains saying, “Oh, people are asking for this thing called organics. Do you guys know what organic salad is? We need organic salad”. This is between 2000-2020 . So, in 2000 95% of their production was conventional  salad. They'd bring stuff from warmer regions of the country. So that would be the West Coast.  Transport it all the way, process it in Massachusetts, repackage it, and take it to a grocery store. Now, over the journey of this, there's three generations.

Dita Sharma 
So now they're in the third generation and the leadership is the three brothers. And when they started transitioning from conventional to organic, it took them 20 years. So in 2000, they're doing 5% of conventional. Sorry, 5%  organic, 95% conventional. By 2020, it's the opposite. So, now, imagine that journey. There's three brothers, and now there's the younger generation. The seven of them, or the eight of them are beginning to join. As you are transforming a business from sustainability, you know, from conventional to organic, you still need to deliver the conventional because that's what most customers want. They don't want expensive salad, which has an organic label on it or is organic. So, you need a bigger band width of people you can trust. And they weren't able to make this slow transition because they had two generations working together. Three members of the third generation, and increasingly more members (there's over 33 members of the next generation) and all of them are working full-time. And they're going to continue working together for another 20 years.  

Dita Sharma 

So, the passing the baton is no longer passing the baton. It is more like a family marathon. If families are trying to convert from their past ways, whatever they might be, to more sustainable ways and prepare themselves for the future. So the succession, the strategic planning, the engagement of next generation, the keeping busy of the current generation, there is just so much work to be done. Everyone needs to work together. So, it's more like a family marathan then a passing of the baton, which really means that pressure of you've got to do the succession really quickly, has been removed or at least these families have that removed. And that is like a whole load off of many people that I work with.

Dita Sharma 
So, in helping them transition to this mindset and helping them identify opportunities they'd like to pursue. There is a misnomer. I often get asked, so is it the younger generation coming up with all the brilliant ideas? No. Sometimes  it's a combination of generations. Mostly, it's a combination of family, non family members. It's not one that comes up with these ideas. We have, you know, I could go on 15 cases but that's an example.  

Dita Sharma 

In the state garden case, this is Olivia's Organics by the way. Did they have difficulty engaging next generation? That's another issue that we hear from business families. Oh, my children or nephews and nieces don't want to work here. They have 6, 7, 8 in generation four and everyone is excited to work in this business because they're doing something cool. They believe it! They are making money! 

Dita Sharma 

 I can give you a beautiful example. I love it. You can see how excited I am about this topic. So if they have 80,000 of organic waste every week. These might be celery stalks or lettace or,you know, something that you can't really sell in grocery stores because it’s slightly wilted on the side. Yeah, but it's fresh produce. It's washed, it's comes from our land that hasn’t used any pesticides or insecticides for years or for decades. So this is fresh organic produce that’s washed and processed. It's ready to eat, but it can't go in the grocery store. They had 80,000 pounds of this every week. That's 4 million pounds per year. So, what they're doing, they were spending $800,000 to dispose of that. 
  
Kirby Rosplock 
Oh, no. 

Dita Sharma 
A portion of it was going to the food banks, a portion of it was going into the animal feeds, but they were spending a $800,000 disposal cost per year of what they call ugly greens. There's nothing wrong with them. A non family member and a younger generation family member were put on a project  to figure out a better way to use this. The project outcome is with a $300 investment and bringing in the top mixologist in the country. They are now generating 6 to 8 million in revenues through vegetable juices, pestos, and it's still only half the usage. So they have a long way to go. So how did they use this? They had the next generation, born in the nineties and onwards to join the project of generation four and non family members. So the more seasoned people are coming from the non family and the younger generation loves it because it's in the same business, but it's not something they've inherited from their patterns. So, it has more of their entrepreneurial spirit and it's looking beautiful.

Kirby Rosplock 
So, I love that example of the creativity to create something innovative. It's almost an entrepreneurial family venture within the family enterprise which, again, gives a sense of ownership, and a little bit of agency, but also the sense of pride that you're not just taking what you've been given or succeeded into rather, you're creating and innovating something new. This is back to this whole topic of sustainable development. I think this is what is so enlightening and inspiring and potentially shifting. I was thinking Dita when you are talking about succession we focus so much on the family succession versus the actual business succession. What a shift in energy from making it all about family names. people and persona to how do we make sure our business is productive and contributing, not just making more waste, more product, more widgets that gets thrown into a garbage dump at some point. It's such a great mind shift from thinking about successions as being around people to, maybe its succession is all around the business shifting to these more productive sustainable development goals.

Kirby Rosplock 
So, tell me a little bit more about what you think, the impact of having sort of a sustainable development emphasis is shfiting. Where are some of these family firms going? What do you think is going to be better or different as a function of us moving in this direction?
  
Dita Sharma 
First, I see from our students, undergraduate and graduate students, just how much heart and mind and genuine interest. In my previous research, I would call it effective commitment, the next generation joining your business. So it's not out of obligation. It's not out of greed. It's not out of need. It's out of genuine desire because the business is providing an opportunity here. Now, when we think of opportunity, we think of how much money you are going to make. They are not really hungry for money, but this is especially for those who are growing up in the business families of the boomers. This is a generation that has had a buffet for every single meal of their day because that's what parents like me tried to do. We tried to give them everything. Whether it's education, whether it's physical clothes or gadgets, we tried to give them everything, too, to support their development and education. So this is not a generation growing up starved.

 
Dita Sharma 
And when we teach entrepreneurship, we go, you know, that hunger actually makes you think of good ideas. Well, how is this generation gonna think of new ideas, when they've had a buffet three times a day? They're not hungry, but this challenge is so exciting and so big, that previous generation doesn't have the answers, so it becomes exciting to think about something new and think about something new together. So, the depth of engagement with our students, they're not even interviewing for places that are not some sort of a sustainability certification. There's 150 of these certifications but they first check on, you know, how are they doing. If my values don't match, I don't want to join. 

Dita Sharma 
So, I think that's energizing, and you know, I've been teaching now for about 30 years and it It can get boring, unless you are regenerating yourself. Now, I'm talking about the senior generation. You know, if you've figured it out and you've mastered a skill and you're  doing well in business. You've been doing well at the same business for 30 years, you want some energy  too. And here's another part that's really helping these families, when I say these families, I mean the ones in the Pioneering book. Human health is better. Those of us that live today, unless we have some sort of an accident or a health issue, we're going to live longer lives and more productive, more healthier lives for a longer time. 

 
Dita Sharma 
So people like me, who are now in their sixties, will think about nothing is wrong with me. I don't have to retire at 58 or 60, or 62 because I'm not feeling that I need to slow down. We're seeing that in our politicians. We are seeing this in our sportscasters and newscasters. We're seeing that all around us. It's not that these people are hungry, and I can't speak for others. I'm not hungry to teach another class, but I'm going. I’ve got so much energy. I’ve got so many ideas. I'm just excited about my journey. So, this transition,  we differentiate in our book, about those who are starting. So the entrepreneurial companies that are in this first generation are starting with a clean slate, with sustainability woven into their business models. So that's 315 cases, but then the rest are the ones that we call transformations. So they're transforming the traditional business into a sustainable business, like organic. It's like with wineries, it's not like you can upload the entire vineyard. Then you've got to uproot it and let  it fertilize for two years before you can begin to make it into an organic vineyard. So it's good to take a slow piece by piece process.  

Dita Sharma  

The energy of the junior generation is helping. So, they are working together. The sustainable development goals are giving people a language to focus on. I mean, now we have these 17 goals we've been talking about. You know, you've got to figure out your dream. My seniors, I would say, they have tried to do that for business families. Lots of advisors built their entire career on finding, helping families find a dream. Now, that same task is happening with the sustainable development goals. Now, we have these 17 goals. We used to generate values or generate words that mean something to you. Now it's like here are 17. Which one do you gravitate towards? And then families start discussing, you know, this could be interesting and that's how they discover they way they are going to go on this journey. And it doesn't have to be one journey per family. There are some really innovative mechanisms where families are going. The left hand is going to keep doing what we are doing, but family members here to the right hand are going to start pivoting or developing something different. So that's like an incubator on the side and we have those stories, too. It's fascinating to read the inspiring stories of business families in this book.

 
Kirby Rosplock 
Well, I think the stories are so helpful for people to socialize. One to make it accessible and two to see a roadmap that somebody else is taking. It may not be your own roadmap, but it gives you an idea of: where did they start? How did they move into this? How did they align this with strategic planning? What are their operating goals and budgets? So, the finance hand, talking to the management and the visionary side. Then it's all about execution. Wetalk a lot, theoretically, around sustainability, but to see it in action, right, to see families, putting it into practice, and creating outcomes that are moving the needle, to me, is, perhaps, the most inspirational and exciting aspect of this. So I see where you get your passion and your energy, and I can appreciate how this is moving the needle for so many families who didn't know what the next generation was going to do, or what their lives were going to be like. This gives the automatic hook or an automatic application and opportunity for them to step up and shine differently than their grandmothers and grandfathers or the many who came before us, right?

 
Dita Sharma 
Absolutely. Yes.

 
Kirby Rosplock 
Tell us a little bit more about your program that you're offering. Is it at the undergrad or the graduate level online? In person hybrid, tell us just a little bit more. So we know if people are interested. I know you have some materials that we can share. 
I'd love to learn more.

 
Dita Sharma 
Absolutely. You know, before I go to the programs and I was just thinking of an online certificate program. I'm excited about where I am because when we came up with the first book and I'm still going through related presentations, and I just came back from Spain, where we gave a presentation for a global summit. People ask questions. When people ask questions, that's when it triggers. We need to understand that. So there is so much that we don't know. I'm already working with three other colleagues on our next book, where we're working on 8 B corp cases. OK, so eight journeys, but this time, our focus is  about the tensions as you go between people, profit and planet. So if I focus more on people, of course, I've got to make money, and more is better. How do I balance the two when those tensions come up? So we're focusing on those kinds of tensions, which means the journey for me, as a researcher, as an educator, is so exciting because none of us knows the answers. So, we're learning.

Dita Sharma 

As we are learning, and why it made me think of our online master level graduate program, which is asynchronous. So, people can take it from anywhere in the world. It's three courses of eight weeks each, and there's rolling admissions. Now, the first course, there's two required courses, and the third, you can pick whichever you want from the rest of the offerings. The first course I do myself, it's based on our pioneering book, mostly. The second course, I started hearing these are really cool ways people are using things. For example, one of my colleagues who works here on environmental sciences. Her research is on how blockchain technology is being used in farms in Africa. And we started chatting and she said these are all family businesses. They're connecting with the really large brands of the world through blockchain technology. And I got curious about how that works? So in the second course, I have these guest speakers who are at the cutting edge in their areas which we haven't even touched and the family business research. So I'm as excited about learning from them and with them.

Dita Sharma 
There's a session on philanthropy, I know that's your area of expertise. So do you know about One Percent of the Planet? So a non-profit that's based out of Vermont,  the CEO of One Percent of the Planet, which is a non-profit organization, does one module of that. And she talks about how non-profits and how family businesses are using and collaborating with non-profits to leverage and broaden their impact. So, the items or the topics that are in these are so exciting. I want any family business or any advisor around the world who's interested that they don’t have to leave their day job. Nor have to leave their kids or have to put another ounce or pound of carbon dioxide in the air by traveling all over. But just take the content sitting in the comfort of their home when it works. That's why I'm super excited about this online certificate, which is Unsustainable Family Enterprises. We also have a larger five course certificate on sustainable enterprise, which is not necessarily family businesses and so, that's our kind of continuing education program. Our MBA program, called Sustainable Innovation, MBA, is a totally embedded one-year, full-time, online, intensive program. And then our undergraduate program has sustainability as one of the themes. It has sustainability entrepreneurship or globalization. So those are the three themes. So those are our educational programs right now from the Grossman School of Business, at the University of Vermont.
  
Kirby Rosplock 
This has been fantastic.  Just putting our toe in the water to sustainable development and the family enterprise. You are a wealth of knowledge. And we could be having this podcast all day long. I'm so grateful for your participation today.And now we'll have some additional materials. People can learn more about the different programs, to see which one's right for them, if it's right for them. And I hope people will read your incredible books and articles, I mean, Google promoted Dr. Sharma and she's done so much over the years, and we're so grateful for your contribution to this space, but also innovating and pioneering this space. So thank you so much for joining our Tamarind Learning podcast today.

Dita Sharma 
Thank you. It's been fun, It's a fun journey. Thank you.