After an entrepreneur or family member has created a successful business or significant family wealth, what more needs to be done? Wealth creators often believe that the important work is already done, and all they expect from their children and successors is that they don’t waste or lose it. Is that enough? What important work needs to be done by the generations that follow wealth creation in a family?

These working papers discuss the family drama and hard work that successful families undertake as they face deep challenges while growing and changing over generations. The tasks of each new generation look very different than the achievement of the founding generation, but they are often as difficult as creating wealth. The family must not only sustain the family’s wealth, but also steward the family’s legacy in many other areas, such as developing responsible members of each new generation, maintaining connection, alignment and motivation, and using the wealth and resources that have been created in wise and impactful ways.

What are the next steps? Business founders and wealth creators often wish to see their success passed on to the rising generation. Their goal is to create a family enterprise that is able to last across generations. So, you wonder, how exactly do you build on your success and prepare for this challenge? Wealthy creators often turn to their advisors for help with this challenge, but given how unique this endeavor is, often the business creator and their trusted advisors don’t really understand the full scope of what is needed and what can be done. This series of working papers is designed to equip family members and their advisors to face the challenge.

These working papers also discuss what has been done by 100 large global business families that have thrived and continued to create value — financial and nonfinancial — as a family for more than three generations. In our interviews, we asked them to look back to their first and second generations and share what they did to set their long-term success in motion. And their story was not only about their business achievements — they also attributed their success to:

• How they’re working together as a family;
• Transmitting their legacy of shared values;
• Building a shared culture;
• Developing new generations of leaders; and
• Making an impact beyond the business within their community and environment.

The special nature of family business

A majority of businesses worldwide are family businesses (both large and small), yet only a modest percentage survive past the second generation. But those that survive are often large and have a powerful impact. What makes these long-lasting family businesses successful? Of course, good business choices and market dynamics are effective. But to understand the success of these long-lasting family enterprises, we need to look beyond the business and instead look at the nature, culture and values of the family enterprise founders — including both their private and personal behavior.

Family enterprises often differ from public corporations in two important ways:

• They nurture personal relationships among members and motivate them to pursue more than financial goals.
• They have a long-term focus because they see their family enterprise and wealth as gifts to succeeding generations, and therefore invest in innovation and the future as well as in the growth and development of leadership within each new generation.

These qualities combine to allow the family to lead the enterprise to act in ways that are not possible for other forms of business. The family acts as a resource that maintains a consistent mission, while adding worth to the enterprise. They are stewards for family values and sustain the enterprise for future generations. These qualities lead to an expanded view of who they are and what they do, which leads them into other areas than business. Each family has nonfinancial values and goals that grow in importance as their wealth increases. Over time, these families move from an ownership perspective to what we call a stewardship orientation. They create business and financial ventures that pursue nonfinancial goals stemming from their family values, mission and culture, and these other ventures actually lead to their sustainable success and longevity.

As a family enterprise, each family has a core identity and set of values and goals that go beyond financial wealth, which define what is important and meaningful to them. Over generations, these nonfinancial values and goals become more essential to sustaining alignment and connection within the growing family. These are not static; new elements emerge as the family redefines who they are within each new generation.

We use the term “generative” to describe successful, long-lived family enterprises — enterprises that measure up to more than just a single business, as the family often owns several shared assets — because they continually create wealth across generations. This wealth is viewed as more than just financial: Each generation adds additional value to the achievements of the wealth creators, adding to the legacy of social and human capital of the family. These eight articles explore how family culture and behavior contributes to business vitality, resiliency and innovation.

While most families in our study have diversified beyond a single legacy business, more than 80% of them still own an operating business among other assets — although many of them have shifted from family to nonfamily leadership, gone public, or acquired or invested in additional businesses. They are extensive and represent every category of business — manufacturing, resorts, finance, food service, engineering, transportation, media, forestry, farming and service companies. By the third generation, most families own more than one business or a business that has expanded globally. The families also have real estate, investments, family banks,[1] venture capital funds, family offices and charitable foundations.

Considering all this diversity, we were surprised to discover these families shared eight key insights that form pathways to continual renewal and value creation. Their family successes offer alternatives to the conventional expectation that a family will eventually fragment and produce dysfunction, demonstrating that a family can take initiative to counteract this potential decline.

Each working paper in this series will focus on one of the eight key insights articulated by these long-term generative families. Our intention is to help earlier-generation families take steps toward developing capabilities for using their wealth wisely, and develop new generations who share the values, culture and goals of the family.

Insight 1: Build And Sustain A Great Extended Family

Insight 2: Foundation Of Values To Define Culture And Focus

Insight 3: The Culture Shift From Paternalism To Partnership

Insight 4: Initiate Interdependent Pillars Separating Family And Business Governance

Insight 5: Continually Evolve And Renew The Ownership Portfolio

Insight 6: Active Cross Generational Stakeholder Alliance

Insight 7: Develop A Capable And Committed Rising Generation

Insight 8: Work Together To Build A Better World

This information is governed by our Terms and Conditions of Use.

[1] A family bank is a formal or informal arrangement whereby the family sets aside funds to support family ventures that may be profit-making or social enterprises. The family defines policies and practices to do this fairly and with proper accountability.