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This is part of a series with Dennis T. Jaffe, Ph.D., in partnership with First Republic’s Family Engagement and Governance team. Dr. Jaffe is a leader and an author in the field of family enterprise consulting. An organizational consultant and a clinical psychologist, he helps multigenerational families develop governance practices that build the capability of next-generation leadership and advises financial organizations and family offices on serving family clients. First Republic is honored to collaborate with Dr. Jaffe and share a special series highlighting his findings from successful family enterprises: 8 Insights From Long-Lasting Global Business Families |
Three groups with divergent skills and perspectives dominate the lives of a generative family:Over time, the business needs to move toward more professional management by including nonfamily advisors and leaders. But professional management is not enough; the family must also initiate a focus on change and new ventures. These twin challenges are faced by every generative family.
- Elders: Legacy values, wisdom and experience of the older generations
- Professionals: Expertise of advisors, nonfamily executives and family members with advanced skills
- Business professionals are not necessarily nonfamily members. Young family members can become professional managers, but they need to understand that they must develop skills, pursue education and get work experience that is far greater than that of their parents. As the business grows and thrives, each generation must enter a larger and more complex business and a changing business environment. They need very advanced capabilities to be able to succeed, and what they know and can do may not be enough.
- Rising Generation: New values and commitment to innovation
These three constituencies can work at cross-purposes or one can dominate the others, but to be generative, they must balance and work in harmony.
Generative families engage each new generation as they come of age. They listen to their voices and see their development and commitment as an investment in the future. Innovation, new ideas and opportunities often arise from the rising generation. Older generations are stewards, sustaining family resources for the use of succeeding generations. But when their successors receive these gifts, they must be responsible, capable and prepared for the huge responsibilities that fall upon them. Even when they have many professional advisors and nonfamily leaders, family members must continue to innovate and renew their legacy. For example, they must listen to each other, including those who are not part of the business.
Learnings from long-lasting global business families
Ask what each group wants and bring them together to listen and learn.
Each stakeholder group in a family enterprise tends to keep to themselves and lose touch with other groups. Elders talk to other elders, advisors talk to other advisors, and young people talk to their friends and personal networks. Each one faces their own culture, and if they remain in this “bubble,” they will become less tolerant of others and less capable of working across boundaries. They associate with people who agree with them and tend to see the other groups as “foreign.” Generative families understand that they are composed of these three groups and that their fate is determined by contributions, capabilities and perspectives of each of these stakeholder groups. Each group has its own perspective and agenda, but they have to remain open and find ways to connect and reach out to other groups. Having open meetings where input from everyone is listened to and the groups take time to learn from each other is what the generative alliance is all about.
Build a collaborative business culture — professional but values based.
The generative alliance is a professional group: It is responsible for huge business and financial efforts and has a deep responsibility for the future. The foundation of the family enterprise must contain a professional business culture that has standards and expects a certain level of competence from its members. From its values, the family defines a culture and expectations of behavior that form the foundation every family member must adhere to. For example, areas like transparency, respect for employees and environmental impact or how the family acts in public may be clearly defined so that the role of family members in relation to the family office or businesses are clear.
Develop a platform for continuity as well as innovation and change.
The generative alliance is a balancing act — not just of different perspectives, but also of emphasis and efforts. It must respect and sustain the values and concerns of each member of the alliance. The legacy values of the elders, the professional business practices of advisors and the new experience of the rising generation must be listened to — but no single group can have control. New ideas cannot drown out the need to sustain what exists: the “golden goose” that generates capital. New ideas with high risk must be prudent and well researched. The whole culture must be able to experiment with enough mutual respect and with a shared commitment so that no individual or stakeholder group is blamed if an option does not work out. A successful enterprise will make many mistakes, but it is always ready to recover and forge ahead.
The core of the generative alliance is balance. In a family enterprise it means that inclusion is important. In appropriate ways, family members, elders, major owners, advisors and nonfamily executives all work together to guide the complex family enterprise. Each group knows its role, its responsibility, and how to be reasonably heard and involved in various facets of the enterprise.
Insight 7 Develop A Capable And Committed Rising Generation
Introduction: 8 Insights From Long-Lasting Global Business Families
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