Transcript

Michael Palumbos (00:02.079)
Welcome everybody to the Family Biz Show. I'm your host, Michael Palumbos, with Family Wealth and Legacy in Rochester, New York. And today we are joined by Cathy Carroll. Cathy is the author of a brand new book out there called Hug of War, How to Lead a Family Business with Both Love and Logic. Cathy, welcome to the show.

Cathy Carroll (00:24.078)
Thank you, Michael. It's a treat to be here.

Michael Palumbos (00:26.719)
Cathy has been on the show before. She's a guru in the area of leadership and family business. And Cathy and I know each other through the Purposeful Planning Institute. So when Cathy talked about this book, I was just excited to have her on the show to share her wisdom and experiences with everybody. Cathy, one of the things that we always do, this world of advising, family businesses is not something that, you know, today it is. There are college classes and studies that you go down that road, but when you and I started down this journey, that was not the norm. So do you mind sharing just a little bit about your journey, how you went from your college to career to ending up in the leadership world and talking with family businesses?

Cathy Carroll (01:25.07)
sure thing. Well, I'm actually going to back up a little bit even before college because I grew up in a family business. My grandfather, it was the entrepreneur in our family. So I'm actually a G3. And when I was a kid, no, not at all. It was a holding company. He had some private companies and he had a public company. And it was a holding company of anything from a railroad to a shrimp fleet, to tool and die, to watches. And it was really...

Michael Palumbos (01:34.815)
Okay. What type of business was it, do you mind?

Cathy Carroll (01:55.374)
He was not industry loyal. He was more looking at the opportunities from a business perspective. Yeah, so when I was a kid, my father, who is one of four, there was just a lot of drama in that generation. And so the last thing I wanted to do was be a part of that. So I went corporate for 20 years. I started as an actuary.

Michael Palumbos (02:02.079)
of it.

Cathy Carroll (02:20.91)
for six years, then I went back to school, got an MBA, and then I spent 12 years in the travel industry. And that brings me till 2009 when my father sucked me back in to the family business base and asked me to run his businesses, which are quite different from my father's business, from my grandfather's. My father actually has companies that serve the team roping rodeo market.

So I say that slowly because people often say, wait, what? And I say, yes, team roping, which is a competitive rodeo sport. And we make ropes and saddles and training equipment for professional and amateur athletes.

Michael Palumbos (02:48.383)
Okay.

Michael Palumbos (03:05.343)
Nice. I happen to have a client that does some roping. So I have a little bit of a background on that, but that's a very competitive sport, very competitive and fun to watch and fun to watch. Great. Okay.

Cathy Carroll (03:06.67)
to.

Cathy Carroll (03:10.286)
Great.

Cathy Carroll (03:17.55)
It's a very competitive sport. Yeah, it's fascinating. Yeah, for sure. So basically, just to catch up, I ran his business for a few years and then I left and there's a lot to that story. I actually talk about it in my book. And I realized it was hard working for my father. I found it incredibly challenging. We were on the opposite ends of everything you could possibly imagine, which informs the concept of polarities in my book.

And so I left and I thought at first I was going to go buy and lead a business because I had this newfound confidence that I could lead. But it was during the financial crisis, shortly after the financial crisis. So it was a tough time to find a business to buy. And eventually I said, well, what do I want to be when I grow up? And it was in my mid 40s at the time. And I said, you know, I think I want to be an executive coach. But I really didn't know what that was. So I.

went to a training program, I got accepted into Georgetown, the Georgetown coaching training program, and it changed everything for me because I first realized that coaching's not what I thought it was. I thought I'd get to tell people how to lead, but coaching is not giving people the answers, it's asking the right questions. Second, I realized I really could have used a coach when I was working for my father. I think that would have helped me.

tremendously and frankly my father could have benefited and honestly my grandfather two generations ago if he had had a coach we could have had a very different life outcome. And I looked at my life and I realized this is what I meant to do and so I'll be celebrating my 11th year on July 1st.

Michael Palumbos (04:57.023)
Congratulations, congratulations. And today, I know that you specialize in leadership and working with the executive team at that level. Most of your coaching clients are on the family business side of things.

Cathy Carroll (04:58.414)
Thank you.

Cathy Carroll (05:17.422)
Yes, the only marketing I do is in the family business space and it's not even much marketing. Yeah. I mean, I do occasionally have other clients, but the vast majority are in the family business space for sure. Right. Yeah.

Michael Palumbos (05:21.215)
space. Okay.

Michael Palumbos(05:27.903)
Good, and I just say that so that people understand, one, you lived it, you went through it with your family, but then you've been coaching and working with other family businesses for quite some time now. So I appreciate it. So Hug of War, I know what a labor of love it is to take this idea and these concepts and these things that your experience is and then.

Cathy Carroll (05:40.558)
I have, yeah.

Michael Palumbos (05:54.975)
to move that from our heads into a 238 page book is, it's a feat. It really is to get it from point A to point B. So walk us through, what is Hug of War to you? And let's talk about the overarching concepts that you go through and then we'll dive into it if that's okay with you.

Cathy Carroll (06:20.238)
Sounds great, yeah. Well, to me, Hug of War is not only the book I wish I had when I worked for my father, it's the book I wish my grandfather had had when he was an entrepreneur and leading what turned out to be our family business. The concept is that there are multiple truths. There are often two truths that are in competition with each other in a family business.

one truth is the business mindset, which is driven by, ration reason, and it values profits and competition and meritocracy. And then you've got an equally valid truth. You've got the family mindset, which is driven by emotion and it values, fairness and sharing and unconditional love and belonging. So when you're making a decision like how much should I pay my children?

The business mindset says, well, you just pay them a market wage. That's what all businesses do. And then the family mindset kicks in and says, well, gosh, I couldn't possibly pay my children something different. They might think that I love one more than the other. And they're all raising families. They're all raising my grandchildren. I want to make sure that they have enough to provide for my grandchildren. So I'm going to pay them all the same. And

Those are two legitimate right answers that are in opposition to each other. So it creates this really vexing challenge in a family business because how do you actually integrate these two opposites together so that you can operate without pulling your hair out?

Michael Palumbos (08:04.415)
Love that, I love that. And what else? What are some of the other concepts inside of the book? And I want to dive into these separately if that's okay.

Cathy Carroll (08:12.366)
Sure, yeah. Yeah, I opened the book with how these different, this polarity, this core polarity between the family mindset and the business mindset actually manifests in day -to -day leadership because there are some very unusual power dynamics that show up in family businesses that do not exist in any other domain. I'll describe them here. The first one is this concept of domain crossover power. And this is when...

people in a family business use power in one domain to get what they want in another domain. For example, there was a father and son that I met and the son really wanted to run the business. He was pawing at the ground and he was frustrated that he didn't have full autonomy and authority to lead. And his father was in his, I think late 70s, early 80s. And so the son was like, I want to lead this business. And he said, look,

If you want to see your grandchildren, you're going to turn over this business to me." And the dad was scared. He was scared. He wasn't confident his son was ready. He was very concerned about losing access to his grandchildren. His wife was even more concerned and it was a very painful experience for that family. But that's where one person leveraged power in the family domain to get what he wanted in the business domain. And then I've got an example in the inverse as well.

There was a man that I worked with who was succeeding his father in a law firm. And the son didn't get along with his father's new wife. And so the father said, you're going to get demoted until you make friends with my new wife. And until you can play friendly in the sandbox, you're not going to advance at this company.

So the dad used power in the business domain to exact what he wanted in the family domain.

Michael Palumbos (10:15.327)
Yeah. Wow. So you just in a very short period of time summed up almost all of the conversations that we have with families. And I really love, you know, how you how you pulled that together. I love the concept of the domain crossover power that just makes really good sense. Talk to me if you would about your grandfather.

Cathy Carroll (10:27.182)
you

Michael Palumbos (10:44.223)
if this is all right, how would this book have helped your grandfather and your father in the conversations and leading the family business that they were working with?

Cathy Carroll (10:57.398)
Yeah, thank you for that question. My grandfather was a brilliant businessman, incredibly successful in business, and put all of his energy into the business at the expense of the family. And so the children in his family struggled, competed for his attention, for his approval.

They really, I think, were underserved by a father who was more focused on business than his children. And so to a certain extent, this book tries to complete the circle that my grandfather started. He started the business. And I'm hoping that Hug of War can introduce more of the value of investing in the family, investing in the relationships, building those.

shared values, having those brave conversations that create the foundation and the platform for the trust that's needed for a family business to really thrive. And there wasn't a lot of trust, yeah, in my father's family.

Michael Palumbos (12:07.423)
I love it.

Michael Palumbos (12:12.447)
So we must be running in some kind of parallel universe right now because in 2024, we launched something called the Strengthen Series. And the Strengthen Series for the families that we serve is all about the non -financial forms of wealth. It's how do I strengthen the family? How do I strengthen the relationships and the culture in what we're doing? The intellectual and, you know,

capital, the social capital of the family. And yours, it's interesting, yours came from personal experience with your grandfather and your father. And mine was born out of, I had a client in hospice, non -business owner client, just somebody that I happened to be, it was a family friend and somebody who had, you know, was a client.

And while he was in hospice, he and I spent a couple of hours together. And I asked him the question, what do you most regret? Which I think is a tough question to ask somebody in hospice, but we had that type of a strong relationship that I felt comfortable. And he said, working too much, which is, that's the one that we hear often. And he gave another one that he said that he didn't spend enough one -on -one time with each of his adult children.

He said as adults, they were different people than his kids, and they were different when they were in the community of together, all four of his kids together versus separate, and he wished that he had done some of those things. And so what was born out of that for me was I don't want anybody that is in my universe, and the people that I serve, to ever get to the end of days and say, I regret anything.

And so we're building out this strength and series to get people thinking about all the what ifs so that we don't have regrets later on in life.

Cathy Carroll (14:15.854)
What a gift. What a gift that is. Yeah, it's incredible. And we are living in some parallel universe because there's a story that it's actually very reminiscent of what you just shared. Oddly enough, my father's sister's ex -husband was, because he was also an attorney in the family business. He was at my father's, my grandfather's bedside two days before.

Michael Palumbos (14:17.407)
Right?

Michael Palumbos (14:33.663)
Okay.

Cathy Carroll (14:45.198)
My grandfather died. And my grandfather said to him, you need to tell my children that I made a lot of mistakes and I see it now. And I didn't ever have these kinds of conversations with him. And my uncle said, this is for you to tell your children. I'm not the one to tell your children. And he said, all right, well, I'll tell them. But then he died before he could. So my grandfather recognized his missed opportunities as a father. And...

and tried to actually communicate a little bit on the late side, but tried to tell the children in an effort to really help and heal.

Michael Palumbos (15:23.263)
So let's talk about some more of the business and family, the two truths as we're going through. What are some of the other ways that those two truths play out and that you talk about in the book? The power dynamics is one of them and I agree 100%. I see that so often when we're coaching and consulting with family businesses. My famous one is make me president or I quit.

which plays in just like yours did. It wasn't quite the same, but I will tell you that the outcome feels the same. And we're trying, right now, all I can think about is how do I unwind the actions that you brought to the table here so that neither one of you, father or son, gets to be, you know.

at that age and regretting the fact that that was the path that you chose, it's hard for families. So I mean, I really, I can't wait to get ahold of your book and share this with other families, because this is exactly it. And to your point, I want to also, I love the fact that it's two truths. There's, after doing hundreds, you know, over a hundred of these podcast episodes, most of them with family -owned businesses,

there is no right or wrong in how they choose to do it. Some families have the rule that you must go and spend three to five years outside of the family business and then choose to come back. Other families are, they've been doing it since grammar school and high school. They wouldn't know anything else as soon as they were done with college. If they went to college, they were right in the family business without anything. And both sides have been successful.

And both sides have had issues. So that part, I really appreciate the fact that you're not telling anybody which way. It's just there's two truths. Talk.

Cathy Carroll (17:24.622)
Yeah, and the crux of the book is about actually getting out of the question of should we do this or that, and actually getting into the question of how can we get the best of this and the best of that. And that is the fundamental way to integrate or harmonize these polarities, these opposing truths. I'll give you some examples. You talked about succession. There are a bunch of polarities involved in succession. One that...

is commonly discussed in the advisory space is equal and fair, right? Or what I call equal and equitable. And there's value in equal and there's value in fair or equitable. And so we have to think about as a family, what is it that's important about equal as you're talking about succession or ownership or transition or value to the next generation? And then what's actually equitable given the unique circumstances and dynamics of this family at this moment in time?

I think same and different is sort of the same thing as is equal and equitable, but it can show up in different ways as well. Another one that's really big in estate planning, which is connected, it's closely connected into succession is reveal, conceal. A lot of owning families struggle with the question, should I reveal my estate plan to my children or should I conceal it? And there's value in both, right? If they're...

six years old and you show them the entire plan. First, I'm not gonna understand what any of your words mean, right? But it's probably a little bit too early to share the fulsome of an estate plan. The big fear that most parents have is, well, if I share the details, then I'm gonna have entitled kids, right? They're gonna sit back on easy straight, they're not gonna work, they're just gonna think they can live off their inheritance. And understandable fear, right? That's any parent's fear.

So the question then instead of becoming, should we reveal or should we conceal? It becomes when and what and where do we reveal? And then when and what and where do we conceal? And it's a question that gets changed over time. As my kids are in their single digits, it's a different answer than when they're in their teens, which is a different answer when they're in their twenties. It just changes over time. And so these polarities are dynamic.

Cathy Carroll (19:50.35)
questions. They're not static. You don't just answer it once. You continue to wrestle with it because there aren't right answers to polarities. Just the way polarities work, there are tensions that constantly need to be managed.

Michael Palumbos (20:04.671)
and in your title, The Hug of War, I think it really, you know, I'm looking at the cover right now. And that's really what it is because a lot of this is for both sides of the polarities, it's coming from a place of love. They're not, more often than not, it's not that they don't trust or that they don't, you know, that they don't think that it's all gonna work. It's just that they haven't thought of either both sides. And so they're coming at it from their perspective on the side that means the most to them.

But it is that tug of war, the hug of war that they're going through.

Cathy Carroll (20:41.326)
Yeah, yeah, it's very, very metaphorical that cover. Yeah, and it's, yeah, I love the reveal conceal polarity because it reveals another important principle of polarities and that every person has a preference. We all have poll preferences, right? Like some people in the family prefer to reveal. There's value in revealing, right? You're actually helping the next generation have the knowledge and skills to be able to plan for their future. That's great.

Michael Palumbos (20:44.895)
It's perfect, I think.

Cathy Carroll (21:10.478)
And other people have a preference for concealing. And there's value in concealing, right? There's upsides to making sure that kids don't get too much information too soon, especially in a social media era, where it could feel a little bit dicey, right? That said, our poll preferences come from an aversion to the downsides of the opposite poll. So I said earlier that people who have a preference for conceal,

often have a deep fear that if they reveal, they will raise entitled children. That's the deep fear which makes them cling to the concealed polarity, right? And then other people have a preference for reveal because they're concerned about the overuses of conceal. And there are overuses. If you hold back, like if you die and suddenly your children inherit an enormous sum of money and they have no idea that it's coming, they're not prepared. This is actually a really

problematic outcome to have happen when children are unprepared for substantial wealth. So there are some who then have a preference for reveal. And what that creates is a force against force in a marriage, in a family, in a system, because both people are right. Both people are right. There's value in revealing, there's value in concealing. And so we've just, we put force against force and we spin our wheels and go nowhere.

Michael Palumbos (22:28.031)
Yeah.

Michael Palumbos (22:36.991)
So I like the way that you phrased the fact that it's constantly asking those questions. It's constantly reiterating the conversation so that there's growth. What are some of the ways for those people, those of us, like, I can share this. When I started coaching families based on,

my experiences with the families that I served, I started creating a set of biases. Today, I can tell you again, after serving many, many more families, I'm definitely in the Cathy Carroll camp of there is no right or wrong. It's, you know, it's having these conversations, it's opening up the floor and realizing that there's power in both and there's good and bad in both and that it's a conversation that we have to have without the conversation, it's a problem.

When I'm stuck in a camp, what are some of the tools and what are some of the ways that you have coached to help people to open up that other polarity and to help them see maybe something that they might not see naturally?

Cathy Carroll (23:55.79)
It's such a good question. I make it really simple. I pull out a piece of paper and I ask people to draw a huge plus sign on the piece of paper and landscape. And then I say, all right, the poll that you seem to prefer is whatever it is. Let's say it's invest. Let's say you're talking about profits, how to manage profits in a business. And the person I'm working with really wants to invest the profits back into the company. Totally legit. OK, great.

Let's talk about the upsides of investing. And then what happens if you harvest money? What are the downsides of harvesting? And those answers become really clear. So on the left side of the paper, on the upper left quadrant, they'll put all the reasons why it's great to invest back in the business. And then the lower right side, they'll talk about all the problems that happen if you harvest from the business. And then I say, all right, let's go tackle the other two corners of this.

matrix, if you look at the lower left corner, what's the overuse of reinvesting in the business? And that's a really hard question because a lot of people haven't thought about the overuse of a particular strategy as it relates to managing the tension between invest and harvest. So it's often a blind spot for people when they have to force themselves to think about, well, what happens if we only, if we never distribute any dividends from this business?

what's the risk that could happen in a situation where it's overdone? And then I say, what are the upsides of harvesting?

Michael Palumbos (25:31.039)
Can I ask you, I'm sorry, I'm gonna ask you to repeat that, because you pulled out for just a second. So we were talking about the, not over, but as we're having that conversation of when I haven't looked at that other quadrant before.

Cathy Carroll (25:40.814)
Let me just do it.

Cathy Carroll (25:53.582)
Okay, great. So it's very clear the, the poll prep, the upsides of our preferred poll and the overuses of the opposite poll. Those we know really easily. The harder ones are the ones where it's the overuse of our preferred poll. That's our blind spot. So if this person is really having a strong attachment to invest, I invite them to consider what's.

the worst, what are some of the downsides if you only invest back in the business? What happens into the family? What happens in the business? What are the consequences of not distributing a penny of dividends? And that's often a blind spot that they have to think about because they're so clearly attached to their being right that investing is back in the business. And then I invite them to look at, well, what are the upsides of harvesting from the business? And again, that's a really hard question to answer because...

They haven't probably even thought about it. And so when I take their brain, when I invite their brains into the opposite, I call it diagonal of the polarity, because we've mapped it out and we have our upsides of our preferred, the overuses of the opposite. And then I take them the opposite diagonal, the upsides of their non -preferred pole, the overuses of their preferred pole. And suddenly it forces them to acknowledge, I guess there are some upsides to harvesting. I guess it can be risky.

to not, to only exclusively reinvest in the business. And once that acknowledgement takes place, then their brain's starting to expand a little bit and they're starting to think about things a little bit differently and they're starting to hold these two truths to be true simultaneously.

Michael Palumbos (27:34.399)
It's a very powerful tool. And I love the fact that you took a very simple way of doing this and just inviting their brain to think about both truths at the same time. It doesn't have to be complicated. It doesn't have to get into psychodynamics of all of these things and where we're at and your biases. It's just, let's just map this out and talk about it. I love that. Can we talk about some of the other polarities that you've seen?

as you're going through, I think it's important for people maybe to like to hear them for the first time. This would be a great place for them to hear about them.

Cathy Carroll (28:12.334)
Absolutely. Yeah, we talked about some of them in succession. The ones that really pop up a lot in the just family business in general, there's a tension between independence and interdependence. And here's what I mean. We all like to have our freedom like we like to have our independence. We want to be able to do our own thing, have our autonomy, live our own lives. And when you're in a family business,

you have to make group decisions about a shared asset, which creates this interdependence because the decisions that I make affect everyone else in the family. And so this tension between independence, I want my freedom and interdependence, what I do, what's right for me may not be what's right for us. And what's right for us may be challenging for me, which is another.

polarity, I call it the me -we polarity. That creates this vexing dynamic because I want to be able to do whatever I want to do. And at the same time, I know the decisions that I make affect the people that I am related to. And that tension is hard. There's another tension, and this is a really core human tension, which is the independence and the belonging, which is a different polarity. But we want our autonomy, we want our freedom, and we want to fit in and belong in our family.

And that one's a really difficult one. I'll share a story about a client family that I worked with. Four children, the youngest was really struggling to thrive in the business. The older three were doing great and they were all contributing. The older three were furious with their younger brother because he was not contributing in the same way and he was getting the same pay and all the same perks. And it was really hard. And this...

this younger son, his biggest fear was, well, if I leave the family business, I'm no longer going to be a part of the family because our family is our business. There was such a fusion of family and business that for him not to work in the family business felt like he didn't belong in the family. And that was terrifying for him. He was scared. He was actually scared to go off on his own. He didn't, he had lost a lot of confidence in his skills and he had really done well in other domains outside of the business world before, but in the business world, he was really struggling.

Cathy Carroll (30:39.374)
So he didn't have the benefits of autonomy, nor did he have the benefits of belonging. He was struggling in both of those areas. So credit to the family. They did a really nice job of separating, here are the benefits of being an owner, and here are the benefits of being a family employee. And he let go of the family employee benefits, but he retained the ownership benefits because he's a member of the family and a shareholder.

And he went off on his own and he's doing great. He's thriving now. He's got his autonomy and he belongs in his family.

Michael Palumbos (31:15.455)
Beautiful and it's so important to be able to separate those pieces along the way somewhere to be you know It's easy for you and I to see that but as a family it's just the way that it's always been done and so we you know if we don't stop and take Inventory of our thoughts and the polarities and the pieces out there, you know, you just continued the the bad habits or

what's worked so far, what's worked so far. And I think that's really important to remind people is that, you know, what got us here and what made us successful all these years may not be what gets us there as they say, right?

Cathy Carroll (31:46.094)
Yeah. Well, you do.

Cathy Carroll (31:58.414)
Well, you're teeing up another great example of a polarity, and that is the tension between tradition and innovation. In a family business, tradition is really highly valued. There's so much honoring of our ancestry in a family business. And if you over -focus on tradition, you may be the proud owner of a company that makes buggy whips in an era of aviation and automobiles.

And so there's value in innovation. And sometimes innovation can be a strength overused as well. If you over innovate and you let go entirely of your tradition and your history, you may innovate yourself out of work because you may make some bad bets. So it's holding that tension between honoring tradition and making sure that you're creating some innovative new things in the marketplace so that you could stay relevant over time.

Michael Palumbos (32:54.783)
I think that's such a good point. And where I've seen that come through is often with branding. You know, grandma or great grandfather created this logo, created the look and feel of who we are. And that's great, but that doesn't carry into, you know, 2024 the way that it did in, you know, 1944. And so we really need to think about, you know, how can we take

what we have and increase, you know, and change it to today and still honor, you know, where we came from.

Cathy Carroll (33:33.102)
Yeah, that's a beautiful example of integrating in tradition and innovation. You get the best of both.

Michael Palumbos (33:39.839)
Right, right. I've seen, you know, people in that branding space that, you know, that's their core job is, you know, it doesn't even fit on the shelf any longer, so to speak, the way that it was. And so we have to bring it into the 21st century, 22nd century as we're moving through these times so fast and make sure that it fits on the shelf today, but still remember where we came from.

Cathy Carroll (34:10.062)
Mm -hmm.

Michael Palumbos (34:11.071)
What are some of the other polarities that you've run into? And I love the stories of how you connect these for us. So feel free if you've got something else that is a polarity and there's a story that goes with it, I think it just helps to bring them to life.

Cathy Carroll (34:28.046)
Yeah, that's a good question. All right, let me think about some good stories.

Cathy Carroll (34:39.214)
Okay, this will sound familiar. This is a governance polarity. And this is related to people who marry into the family. It's not uncommon.

Michael Palumbos (34:51.231)
This is such a great topic too, because it is so hard for a lot of people to be thinking about what's the right thing here, you know, for the people. Oftentimes they get the nickname, the outlaws, just for this purpose. I was very excited. Thank you.

Cathy Carroll (35:03.47)
life.

Cathy Carroll (35:07.822)
Yeah, no, of course. And it's the the big questions are in what we often actually let me rephrase what we often ask ourselves is should we include these people who've married into our family or exclude them from ownership from family meetings from conversations and then all the various ways that you can include or exclude and again When you're facing a polarity, it's the wrong question, right? the real the better question is

when and how should we include the folks who have married into our family and when and how should we exclude the folks who've married in, in service to our greater goal? What is our greater goal, right? Let's get clear on what our shared interests are. Let's make that our North Star. And then let's have a really honest conversation about where it's actually in service to our North Star to include these wonderful people who've married into the family and where it's appropriate to actually keep them apart.

from the conversations or the ownership. And that's a completely different conversation because so often the families, and I'm thinking of a bunch where there's just one member of the family married someone and it's adamantly clear to that person that their spouse should be included in everything, no matter what, 100%. This is a full member of the family. And then you've got...

the siblings and sometimes the parents who go, divorce is real. That could happen. If we open everything up, we're exposing ourselves to an enormous amount of risk. They're both true. Those are both true. So how do you actually get specific about what does inclusion mean to you and to your family?

What does exclusion mean to you? What's valuable about exclusion? And then get creative about how to get the best of including and the best of excluding.

Michael Palumbos (37:06.783)
And I'll add to that, we talk about the married -ins. And in this day and age where we have, you know, divorce Israel, as you mentioned, and sometimes people are bringing their kids from another marriage or from a previous spouse into the family. And those, the adopted family, the stepchildren are really awesome members of the family, but we have this rule of blood.

Cathy Carroll (37:10.03)
Mm -hmm.

Michael Palumbos (37:36.127)
only and then we lose out on the capabilities and whatnot and like you said I'd love that when and where to include when and where to exclude and there's a right you know there is a right time and a wrong time for all of those and there is no right answer either.

Cathy Carroll (37:52.686)
Mm -hmm.

Yeah, well, and the answer may change, which is another polarity, and that's structure and flexibility. So let's talk about governance documents, right? It's a family employment policy. Let's make one up. Let's say it's you have to work outside of the business for five years and you need to have an MBA, right? So that's the clear policy. Everyone agrees. Everything's fine. Then all of a sudden someone marries someone who's got oodles of experience but has a CPA, not an MBA.

And this person would be a phenomenal asset to the business, right? But because they don't have the MBA, which is what the letter of the law says, they wouldn't be eligible to work in the family business. So that's an opportunity to say, you know what, we have structured our governance in such a way, and we're going to allow for flexibility when it's really in service to our North Star, which is bringing in this person. And it's a...

evergreen conversation to have, which can be frustrating because some people want to lock things in and call it done and done. And some things get locked in for six months. Some things get locked in for six decades. As long as it's. As long as you're holding in managing the tension between these two truths in a way that serves the family well, hold it for as long as you want. And then when it no longer serves the family, reopen the conversation and get clear about the benefits of both.

truths.

Michael Palumbos (39:24.895)
Rowan, and I don't know where this fits in your conversations, but what about forgiveness? Where does that fit in all of this? Because oftentimes, we ended up down a path where we weren't flexible. And in hindsight, we look and say, yeah, we should have been flexible. We should have been more open to a different idea. And we weren't.

But we are today because of that. How do you manage that piece?

Cathy Carroll (39:59.662)
Mm, that's such a great question. I'm gonna back up and tell a personal story. When I worked for my father, I mentioned it earlier, we were on the opposite ends of every polarity you could possibly imagine. He was bold and loud and big, and I was humble and small. And he wanted to...

to change everything. I wanted to stabilize everything. He was a marketing person. I was a finance person. We were on opposite ends of everything. And I was convinced I was right. I was convinced that I was right, that I was the better leader, that my way was the right way. And so my mindset when I worked for him was, all right, I'm just going to run this business and make it incredibly profitable.

on his behalf because his way of leadership is so disruptive, so problematic, so screaming and yelling, so fist pounding. He doesn't know how to lead. And what it took me a very long time and frankly, I had to write a book to figure it out eventually that we were both right. There was great value in many of the aspects of leadership that he brought. And there was value in the aspects of leadership that I brought. And so I had to start by...

forgiving myself for being such a egotistical, close -minded, confident person that I was right and he was wrong. And of course, all of my assessments of him were born from childhood, right? The way I formed was almost as if I was born to be his opposite. And so it took me a long time.

to finally recognize and appreciate and value all the goodness that he brought as a leader in the business that I could compliment because he was in many respects in the overuse of his preferred polls. And I was like by definition in the overuse of all of the opposite polls to balance him out. And so I had to start by forgiving myself and forgiving my father. Neither of us knew, we didn't know.

Cathy Carroll (42:16.462)
We just were both very confident we were right and the other one was wrong. So as far as forgiveness is concerned, to me, that's just something that comes over time with wisdom and it's hard fought. And the earlier we can become aware of our own biases and our own self -talk and our own stuff that gets in our own way, the faster it is we can access that.

level of forgiveness for ourselves and for our family members who make us crazy. Wow, yeah.

Michael Palumbos (42:47.135)
The way you led me through that was really helpful because I think at the end of the day, it's not about the process or how you do that. It's about recognizing that there are two truths. And that's the beginning of that piece. And I've been doing some work around this. When we talk about forgiveness, it keeps coming up lately for me. And I don't know why, but there's a Hawaiian forgiveness.

process called hapanoapano and I'm not sure if I'm pronouncing that right but it's to start with self and it's you know please forgive me I'm sorry please forgive me

Michael Palumbos (43:33.439)
man, I just did it wrong. I couldn't put the pieces together. Thank you and I love you, thank you. Those are the four steps of that. And so I'll say it once one more time so people can get this, but it's a pono a pono. Forgive me, I'm sorry. Thank you, I love you. And then you put those pieces together and just thinking about that to yourself.

in regards to your father and just saying that to yourself and directing it towards your father will lighten a whole lot of different pieces. But I just thought it's a beautiful process to be thinking about and it doesn't necessarily say that you have to go out and say that to that person. That's really powerful if you can do that, but just directing those thoughts towards that person is a really good place to start.

Cathy Carroll (44:27.246)
my god, I just love that. I love that. I mean, it's so hard to show grace to others when you can't show it to yourself. Right? And so start, yeah, start by showing yourself some grace for your imperfections, your fallibility, and that opens up space in your heart to actually hold forgiveness for others.

Michael Palumbos (44:35.647)
Yeah, I would agree.

Michael Palumbos (44:51.007)
So you're sitting on the panel in front of 50 family businesses right now. We've taken them through all of this conversation around your book and you're getting ready to wrap up. What would you say, what would you wanna leave them with? What would be some of the other pieces of wisdom that you wanna make sure that, wait, no, I can't forget this.

Cathy Carroll (45:17.486)
thank you, Michael. What comes to mind in this moment is if anyone listening is very confident that they are right and they're in opposition with another member of the family, to check themselves and ask if they're in a polarity. Is there truth?

I'll give you a simple way to assess if you're in a polarity versus a problem. A problem has a right answer. A polarity doesn't. I'll give you the most basic polarity that we all manage every day, inhale and exhale. What I love about this polarity is that you cannot have an inhale without an exhale. The terms define each other. In all the polarities that we've talked about so far, you don't have...

tradition without innovation and vice versa. So if you're in a strong opinion that you're right about something, ask yourself if you might be caught in a polarity, you may have some blind spots, because what is the poll that the other person or persons in your family believe to be true? And do those opposite words define each other? If that's the case.

start to explore whether or not you may be in a polarity, get your plus sign out and start mapping the upsides and the overuses and see if you can actually invite your family member to do the same and then decide for the sake of what are we managing this tension? What is our shared North star? And can we find a way to come together where we both get the best of the opposites to serve that North star?

Michael Palumbos (47:01.983)
As you're saying that, it's just kind of the image that comes to my mind is Patrick Lencioni's five dysfunctions of a team. And, you know, it's, we get into business with our family members. I think it's so much easier to get into business with family members oftentimes because we do trust them. They know at the end of the day, they have our back. And so that trust piece is already built in. The question then becomes, can we have healthy conflict with one another?

And so your platform of doing the plus signs, that's that how do I have this conflict conversation and talk about your side of the polarity versus my side of the polarity and how I see these things. And then what you just talked about is looking at those two pieces together to say, where can we commit to the path forward? And so it just, it kind of just follows up that piece that Lencioni put out for us years ago.

I think it just fits perfectly in how to map through those conversations. So appreciate you sharing that.

Cathy Carroll (48:04.558)
Lencio, my pleasure. Yeah, I actually have a process in the book about how to have those hard conversations and I break them into two kinds. There's, and I'll credit Adam Grant in Think Again, there's task conflict, which is just, you know, two people trying to address a problem. And then there's relationship conflict where it's person versus person. And they have a different process to address both kinds of conflict. Task conflict is important. It's needed. It's necessary. It's actually in service to the greater good relationship problem.

conflict is problematic and when it exists, important to work through.

Michael Palumbos (48:36.895)
Bye.

I love that, I love that. It's like I said, I can't wait to grab my copy of the book. I know it's in pre -order right now on Amazon. And again, the title of the book is Hug of War by Cathy Carroll, How to Lead a Family Business with Both Love and Logic. Cathy, you have just imparted lots and lots of wisdom and experience with us today. And I just wanna say thank you so much. Do you...

Cathy Carroll (49:07.246)
Thank you, Michael. It's always a pleasure.

Michael Palumbos (49:09.727)
And so not just the book, but if somebody wanted to contact you, what's the best way to contact you?

Cathy Carroll (49:16.686)
They can go to my website legacyonward .com or they can email me at [email protected]. Cathy with a C.

Michael Palumbos (49:27.263)
Perfect.

Cathy, really appreciate you sharing with us. Thank you everybody for listening. My name is Michael Palumbos with Family Wealth and Legacy in Rochester, New York. And we look forward to sharing with you some more innovative and traditional ideas and concepts with you in the future on the Family Biz Show. Have a great day everybody.