“Where can I find a good leg of lamb?” Athanasios Demoulas was likely asked.
In 1916, Demoulas and his wife, both Greek immigrants, opened a small grocery store in Lowell, Massachusetts, under the name Native Lamb.
It is very unlikely that, at the time, they had any notion of what their family business, or family legacy, might become. It is far more likely that the Demoulas’ motivation sprang from the need to feed themselves and their young children, Telemachus and George, than to build an empire.
It is also likely, during the first generation of the family business, that any familial tensions affecting the business were ironed out on Sunday afternoons around the family dinner table, poetically, perhaps, over a leg of lamb.
One might say that Athanasios Demoulas, the CEO of the business, was also the CEO, or chief emotional officer, of the family. That dynamic allowed for the interests of the business and the family to be managed in harmony.
Eventually, the parents transferred ownership to their two sons who, ultimately, through impressive joint and several efforts would grow the business into one of the largest and most finely run privately held companies in the United States.
Most students of the recent Market Basket battle probably know the history at this point. George, while vacationing in Greece in 1971, succumbs to a heart attack, leaving his widow, four children and business interest in the capable hands of his brother, Telemachus.
Telemachus, then the patriarch of the family, catapulted the company into its present orbit. Along the way, as a court would come to opine, Telemachus economically favored his clan to the detriment of that of his deceased brother, George.
For 20 years the two clans would battle over control of the family-run enterprise. Most recently, the battle on each side was led by the third-generation patriarch of each clan, who, following Greek custom, both bear the name Arthur in honor of each child’s paternal grandfather, Athanasios, commonly referred to as “Arthur T.” and “Arthur S.”
If what is read is to be realized, it appears that Arthur T.’s clan will soon acquire all the equity interest that is owned by the Arthur S. clan, thus, bringing an end to each side’s ability to use the family business as a tool with which to inflict emotional pain on the other.
But what is next for the Arthur T. clan and its progeny? What can be learned from the emotional toll on the family and the untold fortunes spent on litigation? We suggest that Arthur T. might go back two generations and look to the experience of his namesake for guidance.
A small business, operated by father, mother and two brothers, surely had its moments of familial tension. With all the players both on the field and at the dinner table, however, the interests of family and business were susceptible to discussion and mediation.
Though, undoubtedly, there must have been individual frustrations, it is very unlikely that any one of the individuals felt unable to be heard, or shielded from an understanding of what actually was taking place in the business. Everyone knew their place in the business, and everyone understood that taking care of the business meant taking care of the family.
Three generations later enter spouses, children, grandchildren, great-grandchildren and more spouses, all beneficiaries in one way or another of the enormous family enterprise. The communal lamb dinner on Sunday afternoon has been rendered the sweet, distant memory of an immigrant family’s tale — a story the present generation may identify with, and even romance over, however, never practically experience.
Not all persons bearing the name Demoulas have a place in the business, nor should they. Adding to this schism is the fact that not all major positions in the business are staffed with someone bearing the name Demoulas, nor should they.
For those family members not directly involved in the business, absent concerted effort on the part of the company, the business of the business is viewed through the fog of press, rumor, assumptions and personalities. The non-operating members of the clan are left to rely on notions of familial loyalty for a sense of security that their interests are being managed prudently and equitably.
The members who are in operating positions may, rightly or wrongly, have a sense that it is they who are working hard, creating wealth, and providing for those less skilled, ambitious or invested. Resentments may follow, together with notions of entitlement. Despite our labels, we are first human, as Greek mythology reminds.
Arthur T. will be doing his clan, its progeny and the legacy of Athanasios a great service if he is able to create the type of familial transparency and harmony between business and family interests as existed in the days of Native Lamb. Given the mass of the business today, however, the task is not as simple as hosting a Sunday afternoon dinner.
Starting first with the business, at some stage in any business’s growth the notion that one man can be all-knowing and all-powerful must give way to an understanding that corporate governance is required to moderate and temper the natural individual leanings and temperament of the business’s founder so as to achieve a true democracy for the benefit of all shareholders.
Though he is not the founder of Market Basket, Arthur T. has been thrust into the role, at least in the press, of the all-knowing and all-powerful “Army of One” at the head of this very successful business.
Together with the arrival of Blackstone’s debt, however, will arrive all the trappings and architecture of corporate governance. That actually bodes well for both the organization and the family, as will be seen.
Though some might chuckle at the idea of Arthur T., now sole patriarch, attending and participating in mature board room dynamics, we suggest those observers would be prudent to give Arthur T. — who by virtually all accounts has become, during the course of his career, a brilliantly successful CEO of a ferocious competitor in an extremely competitive industry — the benefit of the doubt.
Though the reader might conclude from some of the recent board minute leaks in the press that Arthur T. was, in fact, removed as CEO because he refused to be managed by the independent board, those readers would fail to understand that Arthur T., rightly or wrongly, perceived nothing at all to be “independent” about the board.
Central to the psychology at work with Arthur T. had to have been that the board had been populated, directly or indirectly, by that other clan, which ultimately won the coveted 1 percent voting control.
Arthur T.’s relationship with the board, therefore, was likely never, in the eyes of Arthur T., “master-servant” in nature. Arthur T.’s power came from the fact that he recognized that true control resided in the employee base, before his nemesis. Arthur T. walked that power into the boardroom and wielded it unapologetically.
Accordingly, though perhaps disturbing and lacking in boardroom maturity and etiquette on its face, Arthur T.’s boardroom behavior cannot be measured from a purely parliamentary perspective any more than a street fighter might have his performance measured by a panel of collegiate referees, after the fighter had been thrust, against his will, onto the mat of a college wrestling tournament.
So, for the business, true corporate governance is on its way. It likely will be embraced by Arthur T. and likely will prove to be a positive change for the business enterprise moving forward.
What of the family enterprise, however? How might Arthur T. arrange clan affairs so that the fourth generation might remember Arthur T. for having secured, for generations to come, the legacy of Athanasios — an accomplishment worthy of Arthur T.’s forbearers?
Just as systems of governance will bring a maturity and transparency to the operation of the business that will provide guidance and fuel for its growth, so too may systems of governance bring a maturity and transparency to dealing with matters of the family that impact the business.
Just as Athanasios served at his dining table as chief emotional officer, sensitive to how the interests of family impacted the interests of the business, bringing structure in the form of governance to the family enterprise itself may allow for a similar dynamic.
That often occurs through the creation of a forum (or forums), with a constitution, where the interests of business and family may be mediated and integrated, in a manner that provides those non-operating family members with an opportunity to be heard, as well as a window into the operations of the business.
Furthermore, such family systems may serve to articulate familial objectives for both shareholders and other stakeholders, thus truly putting the stamp of the family on the organism that is the business.
It is a task for neither attorneys nor public relations types. Though both will have a place at the table, neither, together or alone, will be enough.
The reader should not infer from this piece, however, that what is being recommended as a solution is for all members of family business shareholder control groups, their management teams, and their boards of directors is to go into family therapy or sit around a camp fire and sing Kumbaya.
Rather, the directors of the company need to retain professionals who can offer counsel in two languages: the language of family and the language of business and law. That will allow capable professionals for this special challenge to teach the families and the other advisors to the family that, unless family interests are considered an important part of the business agenda, the type of carpet bombing that occurred between the two Arthurs inevitably will repeat itself, the next time perhaps with even more tragic effect.
Optimally, such an advisory firm would be comprised of multi-disciplinary professionals who could, if you will, write poetry in the language of either family or business, while at the same time, at a minimum, read the news in the language of the other.
Recognizing the power of the family to create conflict is a common skill. What is far more difficult for the members of family enterprises and their phalanxes of advisors is to understand that, in many cases, the power of the family can also generate the thrust needed for a special brand of excellence, measured not just by the balance sheet, but by the effect of the family on all stakeholders and the community at large.
What is required is for someone in the system to understand and an advisor group with the appropriate combination of skills to lead this process. There is ample literature, both academic and practical, to illustrate and buttress this point. But it is totally missing from law and business school curricula, as well as from continuing professional education.
Such skilled people who can understand the language of families, often spoken in dialect, and who can translate what was heard into the languages of business and law exist, and can be part of a solution to the unavoidable difficulties associated with generational family businesses.
Just as Odysseus returned from his 10-year journey an unrecognized man, perhaps Arthur T., bloodied and bruised after his 20-year epic struggle, will find it in himself to choose for his progeny a different and higher path moving forward.