Family Harmony Is Very Important, But…
One subject that I harp on a lot is family harmony and making sure that everyone gets along together.
This is important for families who want to ensure that the business they built, or the wealth they’ve accumulated, will be able to continue after the next intergenerational transition.
And while harmony really is something that families need to work on if they don’t already have it, in many cases it will not be sufficient.
I came across something recently that made me think about this and how I may not have been doing justice to some other key considerations in this space.
This week, I want to address a couple of them here.
If You Aren’t Growing, You’re Shrinking
The first thing many families ignore at their peril is the importance of competence.
Of course this can take many forms, but bottom line, if no family members are competent in managing the business or the wealth, dissipation will often be the result.
I’ve noticed a lot more being written in this field about the importance of having an entrepreneurial spirit in families, so that with each generation, there is some renewal of activity to maintain and hopefully grow the family wealth.
In cases where there isn’t anyone with the inspiration and ability to at the very least maintain the family wealth level, some choices around how to manage things and what the next generation family members can expect to pass on to their offspring will need to be made.
If you just take a look at how many households are being supported by a business in the first generation, and then extend that down even two generations further, the geometric expansion in that number will be difficult to match without an equally rapid progression of the family’s wealth.
So if all you have is “one big happy family”, but nobody willing and able to drive the amount of wealth forward, it becomes a matter of time before dissipation will kick in.
Complementary Roles for Family Members
Besides competence, another area that becomes important in many families is the existence of complementary skills in the sibling or cousin group who will be taking on leadership roles after the next generational transition.
If everyone is good at the same thing, and there are areas where nobody has any skill or desire to take on leadership, there could problems.
Having too many cooks can cause unneeded conflicts, and having skill gaps can lead to being blindsided in certain areas.
Of course when a family attains a certain wealth level there are some benefits that are easy to see, such as having an ability to find roles for just about any interested and motivated family member.
And when they have skill gaps, a family with enough resources can typically hire outsiders to fill such roles.
Competent + Compatible = Complementary
As I was writing this I got to thinking that maybe complementarity is the intersection of competence and compatibility. Let’s work through this and see if it holds up.
If you have people who are competent, i.e. good at something, and then you get to the point where the group of people get along, i.e. are compatible, can you not then ascertain that they are complementary?
It feels almost like this fits with one of my favourite ways of pointing out synergy, which is to say that “One Plus One Equals Three”.
Earlier I mentioned the geometric growth of the family and now I just opined on synergy, I guess this is a good place to link to The Exponential Magic of Family Collaboration.
So Strive for a Complementary Team
This may be a stretch, but perhaps either competence or compatibility are scalar, while putting them together gives you complementarity, which is a vector quantity.
I just flashed back to my High School Physics class there, and since that was over 40 years ago, I admit that I needed to Google this to get the terms right.
As Mr. Henry used to say, “velocity is speed with a direction”.
So if you strive for a complementary team in your sibling or cousin group, you’ll be able to combine everyone’s ability to get along with a direction and a purpose.
This isn’t to be confused with complimentary, although if they also develop the habit of saying nice things to each other, that’s OK too!