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BRIAN KENNY: Here\u2019s a fun fact. Did you know that with 2.1 million employees, Walmart employs more people than the Chinese Liberation Army, which makes it hard to believe that in July of 1962, when Sam and Helen Walden opened their very first store, it was just another mom-and-pop operation. The vast majority of family-owned businesses never reach the incredible heights of Walmart or Ford or Mars, but together, these 5.5 million companies represent 64% of the US GDP and provide 62% of the nation\u2019s jobs. And what\u2019s even more remarkable is that only about 30% of these companies transition to the second generation and a mere 3% to the third generation. Managing family dynamics can be challenging all on its own. Throw a business into the mix and things can get really complicated.

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Today on Cold Call, we welcome Professor Henry McGee and guest Jessica Johnson-Cope to discuss the case, \u201cJohnson Security Bureau: Building Multigenerational Success.\u201d I\u2019m your host, Brian Kenny, and you\u2019re listening to Cold Call on the HBR podcast network.

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Henry McGee studies the governance of nonprofit organizations, especially those in the arts. He is the former CEO of HBO Home Entertainment, and he is a third time repeat customer here on Cold Call. Welcome back.

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HENRY MCGEE: Thank you.

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BRIAN KENNY: Actually, this is your fourth. I went back and looked at the episodes. This is your fourth. We\u2019re like Saturday Night Live, when you get to the fifth, you get a special jacket.

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HENRY MCGEE: I\u2019m looking forward to that.

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BRIAN KENNY: Okay. And JESSICA JOHNSON-COPE is the president and CEO of Johnson Security Bureau. One of the rare family-owned businesses that has passed through three generations. She is the protagonist in our case. Welcome Jessica.

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JESSICA JOHNSON-COPE: Thank you, Brian. So happy to be here today.

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BRIAN KENNY: We\u2019ll talk a little bit today about some of the insights that the students get out of the case, but I think people are going to be interested from a couple of perspectives. I do mention that it\u2019s really rare for a family-owned business to survive as long as this has, and not only survive, but thrive. So I think people will be interested in hearing what your strategy has been and how you\u2019ve been able to make that a reality. So great to have you both here in the studio and let\u2019s get started. Henry, I\u2019m going to ask you to start by telling us what the central issue is in the case and what your cold call is when you start the discussion.

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HENRY MCGEE: Great. Well, let me give you a little bit of background, Brian, before we do that. The case is taught in the course \u201cScaling Minority Businesses.\u201d During COVID, surveys showed that minority-owned businesses were failing at a much faster rate than white-owned businesses. And then of course in the spring of 2020, we had the murder of George Floyd. So I got together with a couple of my faculty colleagues, Jeff Bussgang and Archie Jones, and we launched this course that was really focused on two things. One, it would both simultaneously study the special challenges faced by minority entrepreneurs and it would also give the students an opportunity for hands-on learning with working with these businesses as they tackled either a strategic challenge or an operational issue they were trying to solve. And so we\u2019ve been doing the course since I guess the fall of 2020.

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And so I came across Jessica\u2019s business really in an article in the Wall Street Journal in September of 2022. She had been participating in the Goldman Sachs 10,000 small business program. And it had been very successful for her as this program provides mentorship and contacts for small businesses. And she agreed to first participate as a business that the students worked with. And it was such a great experience that we decided to write a case study on her. And so she\u2019s here on campus today to talk with this year\u2019s students about that. We pose a question to the students, and that is, as a small business \u2026 Growing small, medium-sized business, she\u2019s got three issues she\u2019s got to think about in terms of scaling. Three opportunities. One is should she double down and continue to focus on the New York market, Should she think about geographic expansion? Rr should she think about entering a new area which is the field of cyber security? And the students will debate those three options.

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BRIAN KENNY: That\u2019s a good way to start. Jessica, let me turn to you for a minute. It\u2019d be great if you just tell us a little bit about Johnson Security Bureau. How would you describe it in your own words? And I know your journey began after your father passed away, that\u2019s when you stepped in to take over the business as the case describes it. Can you tell us more about what it was like for you to step into those shoes? It\u2019s got to be a really difficult thing to be able to do.

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JESSICA JOHNSON-COPE: It\u2019s a challenge, but it\u2019s a welcome challenge. I was fortunate to be able to grow up watching my grandmother and my father run the business together for several decades. My grandmother, my grandfather had migrated to New York from the deep south during segregation looking for opportunity. And they saw entrepreneurship, starting their own business as a way to create opportunity not just for their children, but for the children who lived on their block, for the people who went to church with them, for the people that served in the unions with them. And so to be able to step into the business, even in spite of the situation that put me into the business and losing my dad, I consider it the opportunity to carry the mantle that my grandparents set, the foundation that they set to be the embodiment of my elders\u2019 greatest dreams. And so every day I\u2019m fortunate to be able to just be a living witness of what happens when families stick together, see opportunity, put in the work, and are able to bring other folks together into the fold to carry on the business legacy.

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BRIAN KENNY: That\u2019s great. So tell us what the business is.

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JESSICA JOHNSON-COPE: Oh, Johnson Security is a 62-year-old business, third generation based in the south Bronx, New York that provides physical security services. Our guards serve in capacities of facilities that include banks, hospitals, and outpatient health clinics, transportation facilities and government facilities. And we\u2019ve been doing that since 1962. Now, 62 years. Mostly in New York City. We\u2019ve added armored car services under my leadership. More recently we started working with the federal government to provide security screening in airports. And there\u2019s just a breadth of different opportunity in the security space that we\u2019re excited about.

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BRIAN KENNY: Yeah. And you\u2019re in a huge market, obviously New York. Huge market for security services. But the case starts off at a point where you\u2019re at a crossroads as you\u2019re stepping in here and there are some decisions that you\u2019ve got to make. What are the kinds of decisions that were on the table?

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JESSICA JOHNSON-COPE: Well, the decision is do we stay small, play small