Structure Alone Is Never Sufficient
As a sports fan who roots for my favourite teams, it’s not uncommon for me to watch a game and complain that the officials did a lousy job and cost my team a game.
Other times, my team may lose due to a “stupid rule” that never should have made it into the sport’s rulebook.
This got me thinking about both rulebooks and the referees, and how both need to be top notch to achieve good results and avoid problems.
“But don’t you normally write about families and the challenges they face in transitioning their business or wealth to the next generation?”, you may be thinking.
“Well yes, of course”, I might reply.
How about we try to tie these together?
Section 01
The Call for “We Need More Structure”
Soon after I conceived the idea for this post, the weekly edition of the FFI Practitioner arrived in my email inbox, and it was a call for “more structure”, written by a law professor who advocates for capturing rules properly to ensure that they’ll be followed.
See Intimacy Integration and Inheritance: Diagnosing Legal Risks of Family Dynamics.
I enjoyed the piece and recommend it, and I even bought the author’s recent book, but I couldn’t help thinking about the fact that while documenting rules properly is a good idea, it’s certainly not the first thing most people think of when they hear the term “family dynamics”.
I’m a facilitator and coach, not a lawyer.
“Family dynamics” is my area!
So, let’s explore the interplay between making sure the rules are clear and how the game gets played, to see what we can learn about both.
Section 02
Just What Is This “Game” You’re Talking About?
I suppose the first thing I need to do is clarify what I mean by “game”.
I do not mean to minimize this by suggesting that it is less serious because is “play” and not “work”.
It comes more from the aspect of “interplay”, and the way the family system actually needs to “live” within the rules that have been set out and formalized.
This is where the analogy of the referee and the rulebook truly comes through, or at least I hope so.
Write the Rulebook
Capture how things are supposed to play out.
Call the Game
Help the family live within those rules, in real time.
Lawyers write up the rules of how things are supposed to play out, and when those rules are not clear to the “players” for whom those rules were written, problems arise.
The players need to understand the rules, but it’s equally important that the rules properly reflect how the players intend to play the game.
Section 03
Family Business Vs Family Wealth
It’s interesting to consider the contrast between some families who own an operating company with those who are possibly in a “post-liquidity event” situation, who are now dealing with a “family wealth” scenario, rather than a “family business”.
In a family business, the FFI Practitioner article can be much more relevant, because the family often has many interactions that are never clearly written down, because it’s simpler to work in a less formal environment.
There, more clear rules is usually a good idea, as the author suggests.
In a family where the largest asset that the members co-own together is a proverbial “pile of money”, it can be the reverse; i.e. there are so many rules that nobody understands them and the game never truly gets going because of a paralysis while everyone tries to figure out the rulebook.
See What Can Happen to a Pile of Family Wealth.
Section 04
Continuous Iteration Revisited
Last week in Life As a Beta Test — It’s All Journey, we touched on the idea of “continuous iteration”, and we are back here once again.
What I am espousing is that the rulebook and the referee cannot exist without each other.
Those who write the rules need to understand how the game actually unfolds.
Those who help the game unfold, the facilitator and coaches who accompany the family on their wealth integration journey, or the referees, in this analogy, need to understand the rules.
Section 05
A Virtuous Circle or Cycle
Not only that, the referees and the players need to be represented in the rule-making body, so that the rulebook becomes a realistic reflection of the game the family has agreed to play.
This should be done in an iterative virtuous cycle or circle, where there is an intentional effort to ensure that the rules as written reflect the reality of the lives of the family members as they relate to one another and to the family’s wealth.
I hope this rulebook/referee analogy helps more families and advisors get this right.
At A Glance
The Rulebook / Referee Virtuous Cycle
Tap each card to reveal the principle.
+Principle IStructure Alone Isn’t Enough
“Documenting rules properly is a good idea… but it’s certainly not the first thing most people think of when they hear ‘family dynamics’.”
+Principle IIRules Must Reflect Real Play
“The rules properly reflect how the players intend to play the game.”
+Principle IIIBusiness Needs More Rules
“Many interactions that are never clearly written down… more clear rules is usually a good idea.”
+Principle IVWealth Can Have Too Many
“So many rules that nobody understands them and the game never truly gets going because of a paralysis.”
+Principle VMutual Understanding
“The rulebook and the referee cannot exist without each other.” Writers know the game, refs know the rules.
+The Virtuous CycleEveryone Writes the Rules
“The referees and the players need to be represented in the rule-making body, so that the rulebook becomes a realistic reflection of the game.”
