Subtle Differences Can Be Huge

Some subjects are complex by their very nature

For example, when you take a business that already has its own complexities and overlay a family system, the overall complexity necessarily increases.

But does that mean that everything also needs to be complicated?

Regular readers will recognize that I’ve re-entered the fun world of discussing vocabulary, and looking at the meanings of similar words, to see what we can discern from their subtle differences.

The world of family business, along with all its variations like “enterprising families”, “families in business”, “dynastic families”, “legacy families”, (I could go on) is complex enough already, simply by virtue of all the interdependent relationships they contain.

So how do you make sure things don’t get too complicated?


Complexity Without Complications?

Please recall that these are top of mind thoughts in a blog, not scientific research in a thesis. Thanks. Here goes.

Complexity is used to describe things that happen automatically or naturally, while complications are man-made and result from a person or people intervening for some reason.

So if the complexity that comes from family members working together in a business, or owning assets together, or managing property as a group, is innate or natural, then there isn’t anything we can do about that.

We need to come to the realisation that things are complex and learn to live with that reality, and deal with it accordingly.


What Can We Control?

Yes, things could be simpler, i.e. less complex, if we weren’t in a situation where we were managing the family relationships along with the business/financial/ownership responsibilities. 

Many families eventually get to a stage where this becomes too big of a burden and then decide to separate who owns what or how things are managed, because the complexity outweighs the benefits.

Those situations are especially unfortunate when that result comes from the fact that the people involved were simply unable to avoid some of the complications that they somehow added to the situation.


Man-Made Complications

My “A-Ha” moment as I considered how to write about these two words came when I realized, while in the shower, that complexity is a reality that we need to accept and live with, while complications are things that we can and should work to minimize.

By my logic here, you can’t even truly simplify complexity, since it “is what it is”.

What we can do is to try to make sense of the inherent complexity of a situation by using models to map out what’s going on, so that everyone can get a better understanding of what the complex systems are, and how they’re inter-related.

Tagiuri and Davis’s Three Circle Model does this extremely well, and has been successfully used for this for over 40 years now. 

See Three Circles + Seven Sectors = One A-Ha Moment

The Law of Unintended Consequences

Families who’ve managed to stay together through the complexity inherent in co-owning assets together over generations have succeeded because they managed to keep things as simple as possible, since they’re already complex enough.

See Stopping the Disintegration of Family Wealth

Those who cannot manage to keep the wealth of the family together often fail because someone introduced some extra complicating factors into the situation.

Ironically, this is often done with the best of intentions by someone, but thanks to the law of unintended consequences, these moves sow the seeds of the family’s ultimate demise.


Two Main Instigators Come Up

One of the ways the complications show up is when one family member has what I playfully refer to as a “superiority complex”.

You know the type, I’m sure. They feel like they have earned or simply deserve an outsized portion of the wealth or their say over it

This can lead to actions designed to allow them to benefit from this, and when other family members react negatively, things go south in a hurry.

The situation was already complex enough, but now it’s too complicated.

The other major way to overcomplicate things is to focus way too much time and effort on the financial wealth, at the expense of the human, intellectual, and social capital of the family.

Well-meaning professionals propose complicated structures designed to minimize taxes and/or limit people’s control over things, and the additional complications this introduces is enough to kibosh everything within a few years.

Enterprising families are already complex enough. Don’t make things even more complicated.