A father and daughter are sitting in a conference room with their attorney. The conversation started as a discussion about updating the buy-sell agreement. Ten minutes in, the daughter says she feels like her contributions to the company have never been valued. The father says she’s always been too sensitive. The attorney is now refereeing a family argument that has nothing to do with the document on the table.
If you’ve been in this work long enough, you’ve been in that room. Maybe not that exact room, but one shaped just like it. The presenting issue is technical. The real issue is relational. And nobody—including the professionals—can quite name what just happened.
What happened is a collision of circles.
Three Circles, Seven Positions, One Source of Confusion
In the late 1970s, Renato Tagiuri and John Davis at Harvard Business School developed what became the dominant framework for understanding family enterprise systems: the Three-Circle Model. Three overlapping circles—Family, Ownership, and Business (Management/Employees)—describe the distinct stakeholder groups in any family enterprise. Where the circles overlap, you get seven possible positions a person can occupy. A family member who is also an owner and an employee sits in the center, where all three circles intersect. A non-family employee sits only in the Business circle. A family member who owns shares but doesn’t work in the company sits at the overlap of Family and Ownership.
Simple enough on a whiteboard. In practice, it explains almost every recurring conflict I’ve seen in business succession planning work.
Here’s the key insight the model offers: most family enterprise disputes are not about the thing people say they’re fighting about. They’re about which circle the conversation is actually happening in—and the fact that people at the table are standing in different circles without knowing it.
That father and daughter? He was speaking as a business owner evaluating employee performance. She was speaking as a family member asking whether she matters. Same room, same words, completely different conversations.
Three Patterns That Show Up Everywhere
Once you start seeing the circles, you see them in nearly every family enterprise situation that lands on your desk. Three patterns come up more than any others.
The first is role confusion. This is the most common. A family conversation sneaks into an employee performance discussion. Or a business decision gets made at Thanksgiving dinner. A patriarch tells his son-in-law he’s “not pulling his weight”—but is he speaking as a father-in-law, a majority owner, or the CEO? The son-in-law doesn’t know which version to respond to, so he responds to all three at once, badly. Advisors see this constantly: the meeting that was supposed to be about the operating agreement devolves into a conversation about who Dad loves more.
The second is fairness confusion. Families tend to operate on a principle of equality—everyone gets the same, because that’s what love looks like. Businesses operate on a principle of merit—you earn what you contribute. Ownership operates on a principle of equity—your stake reflects your risk, your investment, or your role. When a family member who works eighty hours a week in the business gets the same distribution as a sibling who lives in another state and has never attended a board meeting, which version of “fair” applies? The answer is: all of them, depending on which circle you’re standing in. And nobody is wrong. That’s what makes it so hard.
The third is decision-rights confusion. Who gets to vote? Who gets to be informed? Who actually decides? In a well-structured enterprise, these questions have clear answers rooted in governance. In most family businesses I’ve worked with, they don’t. Dad decides, because Dad has always decided—even when there’s a board, even when there are other shareholders, even when there’s a son-in-law who is technically the CEO. The governance exists on paper. The power still flows through family relationships.
The Things Nobody Wants to Say Out Loud
Here’s where it gets uncomfortable for us as advisors.
We can see these patterns. We can see that the family member who isn’t in the business resents the one who is. We can see that the founder’s refusal to define roles is creating a succession crisis in slow motion. We can see that the daughter who married into the family is being treated as a permanent outsider in ownership conversations, and that this is going to become a problem.
Patrick Lencioni writes about this in Getting Naked—the idea that consultants and advisors need to “enter the danger” with their clients. The conversations that are obviously being avoided are precisely the ones that will determine whether the plan works. The family member who isn’t performing. The compensation structure that everyone knows is unfair but no one will name. The founder who says he wants to transition but won’t let go of a single decision.
We avoid these conversations because we’re afraid of losing the engagement. Or because it feels like it’s not our lane. Or because the family’s implicit rule is that we don’t talk about this.
But here’s what I’ve learned, sometimes the hard way: the plan you build around the conversation you refuse to have is the plan that fails at the worst possible moment. The trust that doesn’t account for the sibling dynamic. The buy-sell that doesn’t reflect the real power structure. The succession plan that names a successor but doesn’t address why two other family members believe they were promised the role.
These are not soft issues. They are structural risks hiding in plain sight.
A Practical Starting Point
You don’t need to become a family therapist to use the Three-Circle Model in your practice. You need one question and one structural recommendation.
The question: “Which hat are we wearing right now?” Ask it at the start of any meeting with a family enterprise client. It sounds almost too simple. But it does something powerful—it gives everyone in the room a shared language for the confusion they’ve been living in. It gives the family member who feels unheard a way to say, “I’m speaking as family right now, not as an employee.” It gives the advisor a way to say, “I notice we’ve shifted from an ownership discussion to a family discussion—should we pause and address that directly?”
The structural recommendation: separate forums. Family conversations happen in a family council. Ownership conversations happen in shareholder meetings. Business conversations happen in management meetings. This is not bureaucracy. It is a kindness. It protects people from being ambushed by a conversation they didn’t know they were having. And it surfaces the issues that need to be addressed in the setting where they can actually be resolved.
If you do nothing else after reading this, draw three overlapping circles on a piece of paper. Write the names of your client’s family members in the positions they occupy. Then ask yourself: where is the friction? And which circle is it really coming from?
Over to You
Think about a family enterprise client where you could see the problem but didn’t say anything—where you knew the circles were colliding but let it go because it felt outside your scope, or because you were afraid of the silence that would follow the question. What would you say now if you could go back into that room?
Originally published on LinkedIn on 2026-03-13. View the LinkedIn version.