Five Key Considerations

Once a family has accumulated a good deal of financial wealth, at some point, it becomes wise for them to shift their focus from making their proverbial pie bigger, to figuring out how to preserve the pie and transition it to future generations.

This is typically a bigger challenge than expected, and despite having access to high-caliber experts to assist them, families often stumble here.

Many speak of family legacy (including me), but this week I’m pivoting to a related concept, to answer another question, i.e. “How do you build a family dynasty?”

Here are five important things to consider when thinking about this complex subject.

1. Families Grow Exponentially

As soon you mention the word “dynasty”, my mind quickly goes into “multi-generation” mode as a basic assumption.

We’re usually talking about wealth creation that began with one generation and then continued through at least one or two more generations.

Something that creeps up on families trying to stay on top of this is simple math. 

As you add each generation of offspring, you’re adding people (or households, sometimes a simpler way to count) at an exponential or geometric rate.

If you take an example of three children per family, you go from one household to four, as the three leave the nest, and then if each of the three have three offspring, that’s already nine more.

I’ll stop the math there, but once you add that next generation, it quickly skyrockets.

2. Will the financial wealth grow at the same pace? 

That takes some work, and usually lots of luck too!

  • What Got You Rich Won’t Keep You Rich

Wealth is often created via an entrepreneurial venture that becomes a family business, or more recently by success in entertainment or sports, or having shares in a unicorn business that goes public.

Those occurrences do not typically happen or repeat often, and so the odds of them showing up in the same family again within another generation or two are low.

My point is, the skills that got you rich are not the same ones that will keep you rich

That realization doesn’t always come quickly to the one who caught lightning in a bottle and then believes they have some special power and invincibility.

3. It’s More About People Than Money

I know that almost everyone thinks it’s mostly about the money, but that isn’t typically where things go sour.

Having lots of money and then staying rich isn’t that difficult if you’re only trying to satisfy one person, or one household.

When you consider a family that’s growing exponentially (see #1, above), making sure there isn’t a revolution, as they work to stay wealthy and become a dynasty family, you begin to realize it’s the people that you need to pay attention to, even more so than the dollars.

4. Family Governance Is Key

Long time readers of my work won’t be surprised that this post is now pivoting towards a pontification about family governance, because that’s a hobby horse I ride quite regularly.

Every dynasty family will continually need to work on answering three main questions:

  • How are we going to make decisions together?
  • How are we going to communicate effectively?
  • How are we going to solve problems together?

When people hear the term governance, in relation to family issues, they typically make an unpleasant face, and I get that. 

That’s when I share those three questions as my definition, which is easier for most to grasp.

5. The Work Is Never Done

Family governance itself has a few key characteristics that make it special.

  • It’s less about formal agreements, structures, and mechanisms
  • It’s more about informal agreements and ways of being together
  • You cannot simply buy it off the shelf from an expert
  • You need to co-create it as a family
  • It needs to evolve as the family and its needs evolve

For those reasons, plus the fact that each of the growing numbers of people also continues to evolve, this is never a “one and done” or “set it and forget it” situation.

Yes, there are some family dynasties around, but not that many.

If you look at them closely, you’ll probably see that they fully understand the points I’ve shared here.

Can it be done? Yes.  

Will it be easy? No. 

Is this for your family?

It’s Never Simple and Everyone Has Their Own View

One aspect of working with enterprising families that I truly love is the fact that situations are rarely simple, and typically quite complex.

I’ve long known that my ability to see complex systems and then simplify them, so that they’re understandable to others, is a strength of mine and probably part of my attraction to this work.

I’m equally enamored with the fact that each person in a family is living their own life and personal reality, so they all arrive from a different context when they come together.

This week we’re going to look at the intersection of complexity and context, and see what we can discover.

(And yes, I realize “complex” and “context” don’t rhyme, but they are pretty close.)

Another Blog Born During a Group Zoom Call

Regular readers know that I’m a huge fan of group Zoom calls, mostly with like-minded colleagues, in one form or another.

These meetings are often where blog ideas come from, and this one is no exception. 

I’m usually quick to credit the person who stimulated the idea, but this time it was actually me.

I will tip my hat to DG, who was moderating the call, because it was his asking each participant for a couple of closing thoughts that forced my brain to come up with something pithy to wrap up with.

It was then that I came up with the fact that this work is always complex, and that when we learn about it from a new context, we often gain new insights into everything.

Back to the Intersection of the Two

It always takes a long time to try to understand any family, and when they have a business or significant wealth that they own together, there’s a whole new aspect that needs to be considered.

Each person has their family relationships plus a whole other layer that most other families don’t ever think about.

But one of the ways I like to get a handle on what’s going on is to spend a lot of time one-on-one with each family member, so that I can learn about them, and especially about the roles that they play in the larger family system.The Complex Contexts of Family Enterprises

Over the years of doing this type of work I never thought of this “discovery” process as trying to understand each person’s “context” but that’s actually a big part of it, and I will keep it top of mind going forward.

In order for me to be a valuable resource to a family, I need to be able to understand things that they themselves do not.

Big Picture View and a Long Timeframe

The fact that I’m naturally curious is part of what makes this come easily to me, but so is thinking about things with a long timeframe.

A family will typically be trying to find ways to stay together for a long time in the future, and that’s something that they need to continuously work on.

But in order to look far ahead, I spend a lot of time asking about the past, because that is actually known, whereas the future is not.

I try to understand how things got to be where they are today, because that offers a number of windows into what might be going on under the surface.

But it isn’t just the timeframe that’s important, it’s also taking a big picture view, from the proverbial 30,000 feet level.

Trusting You Enough to Open Up

The toughest part of this work for some people is getting family members to trust you enough so that they will truly open up to you and tell you things that help you fit all the pieces of the puzzle together.

I’ve never claimed to be the most handsome guy around, but there must be something about my face that makes people feel comfortable sharing their deepest thoughts with me.

Of course I also work very hard to try to make sure that they never have a reason to lose that trust, but I am still often surprised at how much people share with me right from our first meeting.

These people are living in a complex situation, and if I can get a handle on their context, I can help them see things in ways that help them all make progress together.

And that’s good enough for me.

It’s So Much Easier Working with Other Families

Sometimes in my day-to-day, non-work life, things happen that contain lessons for my work life.

Some recent events fall into that category, and I’ve been thinking about the right way to share the experience here, but I need to set some context first.

I share real stories, as close to what happened as possible, but I also modify details for privacy reasons, including people’s names, to protect the innocent (and the guilty!)

Only the Good Die Young

After a long battle with cancer, my brother-in-law, “Jason” passed away a couple of months ago, in his early 60’s.

Jason was the brother I never had, and someone I learned a lot from, especially as I think about his way of being. Alas, only the good die young.

His passing left a void that will be difficult to fill, because he was a leader and master of ceremonies for every occasion, including my wedding almost thirty years ago.

The memorial activities that my sister and their family organized required someone to step up and play the role that the dearly departed would otherwise have naturally stepped into.

Jason being unavailable, Steve was called on to facilitate.

I was honoured to play any useful role for the family.

The US Memorial – As Planned

My sister’s family moved to the US in the 1990’s, when the parents were in their early 30’s, with a toddler, a newborn, and another to follow.

One single memorial just would not work, especially with travel restrictions due to Covid, and many mourners on both sides of the Canada-U.S. border.

So they began with an American memorial on one Saturday, attended mostly by local friends of the family, and where I knew only a small fraction of the 120 plus people who showed up.

The following Saturday would be back in Montreal, where much more of the family could easily attend.

I offered to MC and handle the microphone at the restaurant, and clarified how I hoped to run the event with my nieces and nephew, and they quickly agreed with my ideas.

Everyone followed my instructions and requests regarding acceptable time for sharing stories and it all flowed seamlessly.

The Canadian Funeral and Reception – NOT the Same

The following Saturday, we began with a church service, with a reception planned at a nearby restaurant to follow.

A huge crowd came to the church, and there was no way the reception could accommodate even a quarter of them, so an announcement was needed to dissuade many from following along.

I was conscripted for this “simple” task, which I apparently finessed, since we ended up with a “Goldilocks” number of people at the reception. At least that request worked.

I checked with the family and we agreed that the formula from last week worked, so we’d just do it again.

I announced that we’d stop the music every 15 minutes or so, and then a couple of people who wanted to share stories would each have 2 minutes with the microphone, just like last week.

Your Family’s Respect Is Different

This crowd, however, was very different from last week’s.

Many of those who wanted to speak were relatives of mine.

Cousin “Keith” started off by reading his speech that took about 10 minutes, way over my “allotted time limit”.

Before I could get the music going again and attempt to re-establish my “rules”, his brother “Roger” came up an read his tribute, and it was even longer.

Things were not going as we planned, and the family facilitation fail was on.

These people had their own ideas, and they weren’t about to take orders from me. 

Oh well….

Reading the Room – What Needed to Happen, Happened

As it turned out, what needed to happen, happened.  When families gather, you need an agenda and a plan, and you need to be ready to chuck them in the garbage and go with the flow.

Read the room and adjust on the fly.

The big lesson for me was one that I could have, and perhaps should have, foreseen.

It’s really, really, really difficult to facilitate your own family members, they just don’t see you the same way and respect the “rules” that you put in place.

I’ve seen it before and likely will again, but at least I’ll probably see it coming.

Rest in peace Jason. And thanks for one last facilitation lesson.

Figuring Out the Best Order for Your Family Succession

There are many blogs on my website that discuss the way some family enterprises transition from one generation of leadership to the next, and most of them refer to the fact that this transition is typically from “autocratic” to “democratic” in nature.

This week I want to look a bit more into detail around the steps that a family might want to take to accomplish such a transition in a smooth way.

With a hat tip to a colleague in one of the study groups I’m in, once again, (thanks DT) this is a concept that struck me right away as “blog-worthy”.

How to Go from One Leader to Two

“Dave” was talking about a family where Dad was preparing two of his offspring to eventually take over his business, and it seems that Dad was thinking about the transition as a future event that would take place.

In Dad’s mind, I’m surmising, he would finish work one Friday as the head of the company and on the following Monday morning his two rising generation family members would walk in and be co-leaders of the business and succeed him.

This isn’t altogether surprising to learn, because so many business leaders imagine things in this way, which looks at a transition like this as an event, or a transfer, or a transaction.

But when transitions like this are done well, they are handled more as a process, not a singular event.

A Transition Implies an Overlap Period

So if we’re considering a transition process, that implies a period of time during which there’s shared leadership, and this leadership can and should be divided among the members of both generations.

As Dad considers which of his responsibilities he needs to begin to give up first, he can consult his two partners and together they can decide which of the successors is best suited to pick up which of these new tasks.

Some time later, when he’s ready to back away from another area that he’s been handling, they can reconvene, and maybe this one will be better suited for the other incoming leader.

Finding Peaceful Co-Existence

The idea I’m trying to get across here is that all of the family members can learn what a peaceful co-existence needs to look like.

As Dave put it, instead of going from 1 leader to 2 leaders, why not go from 1 leader to 3 leaders, and then when Dad is ready to fully exit the scene, then they can go to 2.

Admittedly, going from 1 to 2 sounds simpler, but it’s definitely not easier to pull off.

Sometimes, the best way to go from 1 to 2 is actually to pass through 3 on the way. This would be one of those times.

And, recognizing what’s required to work with a goal of peaceful co-existence is the main part of my argument.

Proving That Democracy Works

I always try to imaging a scenario that might play out, where Dad is now out of the picture and the siblings run into a conflict and they immediately throw their hands up and say that they can’t work together, because this is a situation where a one-person leadership model is required.

If, however, they could look back at the period during which they were functioning as a 3-person leadership team, they’d likely approach things differently.

They would have practised the skills necessary to co-create their decisions.

But if they’d gone straight from 1 leader to 2, then they’d be set up for a tug-of-war from the start.

The Actual Numbers Aren’t Important

I hope you recognize that the numbers aren’t what’s important here, but the concept.

You might be going from 2 leaders (say Mom and Dad) to 3, with three offspring planning to take over. In that case, the numbers might be from 2 to 5 to 3. The key is the overlap and getting used to the peaceful co-existence part.

The other key learning here is that a transition is not an event, it’s a process, and that process has stages.

Picture a relay race, and notice that the baton isn’t instantaneously thrown from one runner to the next, but handed off, which includes a period of time during which both runners are holding it.

Please don’t neglect that period, because it’s probably the key to a successful transition

Getting Rich Is Actually the Easy Part

There seem to be way more wealthy people around these days, and a lot more striving to join their ranks every day.

So many of those who have “arrived” in the land of wealth are satisfied that they have now made it, and assume that all their problems will disappear.

When you have a family, though, and you begin to ponder the transition of that wealth to the younger generation of your family, things get tricky.

Can it really be that getting rich was the easy part?

Concentrating on Financial Wealth – Like Everyone Else

When a family becomes wealthy, via a family business, working for a company that goes public, or via stardom in entertainment or sports, there’s often a nice period of adaptation where the newfound abundance of financial wealth solves so many problems, so it’s all viewed as a plus.

At some point, which could be months, years, or decades later, everyone realizes that there’s probably enough money to do whatever we want, and this is when the various views, needs, and wants of the different family members start to rise to the surface.

How will the family make the decisions around the deployment of the financial wealth?

How will the family members communicate about the wealth and how it will be saved, grown, spent, invested, given away, and transitioned for future generations?

How will the family members solve problems together, when they arise, without resorting to legal remedies?

The Other, Non-Financial, Capital of Families

This is where it’s good to look at the other kinds of capital that the family also has, and can try to develop, in order to help figure out answers to the tough questions we just raised around the financial wealth.

Let’s take a look at the family’s Intellectual, Human, and Social capital, and see how the financial capital can be used in ways to support those, and determine if looking at things from this angle might provide some useful viewpoints.

Intellectual Capital – Between Your Ears

The first other type of capital we often think of is intellectual, as in the things that you know and have learned.

My grandfather used to say that anything that you can put between your two ears, nobody can ever take away from you. Having had almost every possession of his taken away, he knew what he was talking about.

Most people think of formal education as their intellectual capital, and it is often a big part of it and the simplest example, but there can be more to it, of course.

Human Capital – More About Your Soul

When we switch to looking at human capital, that’s a lot more about your soul. Your humanity includes what you care about, what you pay attention to, and how you relate to other people.

It also includes health and mental well-being, how you communicate and solve problems with others, and your general ability to get along with others in all situations.

The way you communicate with others and demonstrate respect for others also falls in this category.

Social Capital – Where the Family’s Heart Is

My favourite form of non-financial capital is social capital, and when looking at families, it can really come to the forefront.

The problem is, making it one of the family’s strongest forms of capital isn’t usually simple and easy, and it takes a lot of work.

When talking about how wealthy families stay wealthy, all three of these are important, and social capital is where they all come together and become part of what the outside world will often see.

They all combine into a family’s legacy, and you will likely note that those families who have stayed wealthy through a few generations, almost always have a legacy component that we can see, respect, and relate to.

It’s About Much More Than Money

I’ve written about some of this already, notably in Is Your Continuity PAL in Danger, as well as in When Your Greatest Desire Is Also Your Greatest Fear.

Research shows that when families lose their financial fortunes, the reasons have less to do with events relating to the financial elements of their wealth.

Families usually fail to stay wealthy because the family falls apart, because they haven’t been properly prepared to inherit their wealth, and they haven’t learned to work together to maintain it.

So the key to maintaining a family’s financial capital lies in developing the other kinds of capital, not being ultra-focused on the money.

There’s help for that, you know…

Lots of Angles Available for This Question

This week we’re staying in the same general territory as we explored last week in The Doing / Being Connection, while zeroing in on some of the various aspects of the “being” side of things.

Astute readers will recognize that the exact same game we’ll be playing could then be replayed using the “doing” side of things too.

(To receive extra credit for that, make sure to get your report in before the end of the semester.)

As usual I’ll share the genesis for this post, which once again came from a coaching call I had recently. I was the “coachee”, in this case, and Melissa, my long-time coach, was on the other end of the Zoom call.

The true spark actually came about 10 minutes before our session, as I jotted down some notes about what I wanted to tackle during our time together.

Coaches love it when our clients come prepared with a subject that’s top of mind.

Still in “Role Mode”

I was just coming off writing My “Role / Goal / Control” Life Hack and so the “role” part was on my front burner.

I had some ideas to share and explore with her; here’s what I wrote:

  •  Who AM I Being?    
  •  Who CAN I Be?
  •  Who Do I WANT to Be?
  •  Who Do I NEED to BE?

We spent the hour meandering around these questions, and without too much surprise, we didn’t resolve much of any significant importance for the short run.

We did, however, consider all these angles in ways I hadn’t anticipated.

An Objective, Non-Judgemental Listener

If you’ve never worked with a coach, you need to know how liberating it is to speak with someone who has no other agenda than to be there with you.

If they know what they’re doing, they’ll be objective and listen to you without judging you, and give you some new perspectives.

They’ll probably ask you a lot of questions that will make you think about subjects that you will then reflect upon between sessions.

So just how does this fit into the world of family enterprise?

I’m glad you asked.

Finding Who You Are in the FamBiz


You may have seen this coming, but considering and reflecting on who you ARE in your family, and then contrasting that with who you CAN be, just might be a worthwhile exercise.

Likewise, if you consider such ideas as who you WANT to be in your business, and then rethink these thoughts in light of who you NEED to be, those discussions with a good coach will also be ripe terrain for some useful insights.

Imagine now what could be accomplished if a few members of the family undertook some regular work on considering such important matters.

Who Actually Does This Stuff?

Of course this isn’t the kind of stuff that the average person who is part of a family business does.

But then again, I’m sure that the people who read my blogs regularly are not average, and neither are the professionals who serve them, and many also read my musings.

When you get right down to it, most people who read my stuff will probably nod their heads at times and agree that what I say makes sense, perhaps “in theory”, but it probably isn’t right for them, “in practice”.

But that’s where I wanna say “Whoa, hang on there!”

Looking at Successful Examples as Models

If you know anything about successful family enterprises that have lasted at least a few generations, you’ll know that they got that way by doing things that the average ones just didn’t do.

You’ll also know that very few of them got that way without any outside resources, guiding them at important times along the way.

It will take work, it will take effort and intention, and it will take years.

See: Contrasting Transition Timelines: 15 Minutes or 10 Years

There are now way more resources available to all such families, and some of them will do the work and succeed.  Others may try and give up, and some will have a modicum of success for a while despite a lack of consistent effort.

Leadership Is the Key

In the end, it all comes down to leadership, which of course requires some courage.

The courage to start, and the courage to ask for help.

What CAN your family be?

Who do you NEED to be to make that happen?

Bonus: What are you going to DO about it?

A Real “Chicken and Egg” Conundrum

This week we’ll be looking at an idea that has been turning around and around in my head for a long time, and it’s now high time for me to try to deal with it here.

At first I had planned to title this post “The Doing / Being Circle” because to me these two interconnected concepts feel like a wheel that just keeps rolling along, with each one taking a turn at being on top.

And then of course my opening sentence, which was spontaneously written as opposed to planned, used the phrase “turning around and around”.

So, please sit down to read the rest of this, because dizziness may ensue. You’ve been warned.

Sparked by a Quote from a Book

I consume books in various ways, from hard copies to the many audiobooks I enjoy on my long drives to and from our cottage, to the ones I read on my Kindle while pedaling my exercise bike.

When I see something I want to refer back to on Kindle, I typically take a photo of the page with my phone.

Yes, I’m aware that there’s a way to annotate Kindle books and probably even export quotes, but my kids have used the phrase “OK Boomer” with me, so I’m just glad to be able to do it, my way.

The book was Adam Grant’s Give and Take and here’s the quote:

                     “To paraphrase the writer E.M. Forster, 

                ‘How do I know who I am until I see what I do?’”.

Let’s just say that reading that brought this idea to the front burner of my mind pretty quickly.

Don’t You Have to BE, Before You Can DO?

I guess the factory setting in my brain worked the other way from Forster’s, because I used to think that you had to be someone or something before you could do anything.

Now I’m not sure what to think.

Actually, what I’m not sure of is whether either one of these really does “come first”, just like the old “chicken and egg” quandary.

As I consider how this whole subject fits into my work with families who own and manage assets together, it has me harken back a few weeks to My “Role / Goal / Control” Life Hack.

There, the first step was to determine what role one is playing in a given situation, so that’s all about the being, and figuring out who you need to be for that role.

What you then need to do will flow from that. 

But does it always work that way?

And What About “Modus Operandi” vs “Modus Vivendi”?

Almost a year ago now, in Family Governance, More Than a Modus Operandi, we looked at this very same question.

Here’s a direct, cut’n’paste quote:

                 I feel like I’ve been over this territory a lot, but it’s so 

                       important that it bears repeating nonetheless.

                          This “territory” is the distinction 

                            between “doing” and “being”.


Because “Modus Operandi” is about doing, it refers to how family members “co-operate” together.

Modus Vivendi, for its part is more about how family members “co-exist” and “co-habitate” together.

But of course these are all inter-related and cannot and do not exist in isolation from each other. 

We can, however, benefit from thinking about each separately.

Interdependence Strikes Again

Like so many aspects of this work with people, interdependence strikes again. Not just with the fact that the people are interdependent, but the concepts that we need to work on with them are as well.

What you do, over and over, becomes part of who you are. And, it follows, who you are will necessarily influence how you do all the things that you do.

When you run into a tricky situation with one, you may want to look at it from the other side, to see what you might learn about how to deal with it.

Like the “family alignment / family engagement” issue we talked about in Family Engagement and Family Alignment – Chicken and Egg when you run into something from one, you can look to the other for a next step towards enlightenment and resolution.

Questions, More Important Than Answers, As Usual

I also like that this is yet another illustration of the fact that knowing the right questions is more important than having all of the answers.

When you work with members of a family on their relationships, it’s mostly about getting them to communicate in productive ways, so that the “right answers” for their particular situation will emerge, and that they end up co-creating their own solutions.

They’ll do what they’re going to do and be who they’re going to be, and we just need to guide them.

Resisting the Cry for Help Can Be Difficult

Let’s face it, when people are happy to see you because you have some specialized expertise that they could use, it feels good to know that they’re looking up to you in such a positive way.

While I continue to wrestle with the best words to describe myself to the field of family enterprise consulting, one word I shy away from is “expert”.

There are some professions that lend themselves better to the “expert model” of service, and when I go to a doctor or to get my car fixed, I know I also arrive with an “expert, please help me” look on my face.

I work with families who share ownership and/or management of a business or assets together, and sometimes they feel like what they need is an expert, and that’s understandable.

But that doesn’t mean that that’s what’s truly best for them.

A Group Call Inspires Another Blog

Regular readers know that I participate in many groups that get together to discuss the field in which we work, and that one by-product of those is blog topics like this one.

Stay tuned for another one soon, featuring Clifford the Big Red Dog, which is another topic that arose during the same FFI-Virtual Study Group call I was recently a part of.

But this one about “experts” came from out of the blue during a discussion and I quickly jotted down the words of my colleague (thanks DC) because I’d never heard this subject phrased this way.

I don’t even recall the exact discussion, but she said, “Oh, like when they say ‘Hey the expert is here!’”, and I knew exactly what she was driving at.

Just Tell Us What We Should Do

Although there are people who put themselves out there as experts, most of the issues that the families I serve are facing aren’t the type that can be resolved by one single “right answer” provided by any expert.

And this is even true of those “experts” who would be rightfully considered expert in their field.

An expert can be quite useful to guide you and help you avoid making some terrible mistakes, so that’s positive. 

But when such professionals then extrapolate what happened to work in one situation and continue to serve up the same solution to others, whose circumstances may be similar in some ways, but quite different in others, then it’s no longer positive.

Solving for One Person, or for a Family?

One of the simplest explanations for why this continues to happen and why it’s sub-optimal comes down to the fact that when I work with a family, the family is actually comprised of many individual people.

So it’s rare that any simple solution to an issue will be the optimal solution for each and every member of that family.

The old-fashioned way of ignoring the needs and desires of the younger generation on the assumption that they should just be happy with whatever they get is thankfully going the way of the dodo bird, although not as quickly as might be appropriate.

Well, They’re the Experts, so this MUST Be Right

Another by-product of this thinking that affects families is believing that solutions proposed by well-regarded experts in their city must necessarily be accepted because they come from “the best firm in town”.

But this is admittedly a tough one, since we can’t blame the families who are searching for resources from hoping and believing that there’s someone out there who can “save us” by giving us a simple solution to our issues.

And likewise, we can’t blame such experts from selling their services and believing that they are doing what’s best. Or can we?

Every family that reaches a certain stage of size and complexity will require the assistance of several different experts from different fields of specialty.

So it behooves all of us to do a better job for these families by learning to work together, perhaps as a “team of experts”, as opposed to any one of them being the expert.

Simple => Expert; Complex => Team

Revisiting the title of this piece that came from the quote of a colleague, when I started writing this, the keyword was clearly “expert”.

Now that we’re winding down, I realize that perhaps the keyword was actually “the”!

Experts, working together, are fine, and we need to learn how to work together well.

Based on a True Story

When you spend a lot of time in the wonderful world of family enterprises, you hear all sorts of stories, many of them entertaining and sometimes even instructive.

This is a true story that I recently learned more details about, and thanks to the way the patriarch shared the details, it also includes a wonderful contrast that we can all learn from.

The setting is an annual awards evening for local family businesses, for which I had the privilege of acting as the MC.

I had also been part of the jury that evaluated the applications, interviewed the finalists, and selected the winning family.

Transition # 1 : From G1 to G2

Part of the celebration that evening involved viewing some fantastic videos that had been made this summer at the place of business of the three finalists, and included candid clips with every family member involved in each business.

So while we had learned a great deal from the applications and our evaluation interviews, there were some new nuggets of information that came out that evening.

Some of these came from the videos, while others were revealed during a fireside chat with one family member from each of the finalists.

It was during the video that the patriarch from the winning family shared that when his father, the business founder, brought him into the business decades ago, that whole transition lasted “about 15 minutes”.

Transition # 2 :  From G2 to G3 

So about a decade ago, when he began to think about the next generational transition, where he would be the one planning his exit rather than his entry, he was trying to think about the appropriate timeframe.

When some advisors told him that ideally such transitions happen over a ten-year period, he was dubious and could not imaging why it would ever take that long.

During his acceptance speech, he confessed that ten years was, in fact, a very appropriate amount of time to do things right.

It seems like both these transitions could actually be deemed “successful” though, so what’s there to learn here?

I’m glad you asked.

Short and Sweet – Yes, That CAN Work

Let’s start with why the first transition above actually worked, because there are a couple of key details one might miss.

The first one is that the founder had grown the business to the point where he was no longer able to handle it, and was beginning to feel overwhelmed and in need of help.

The second key is that once his son arrived and Dad recognized that he had greater ability to lead than his old man, Dad got out of his way.

This doesn’t typically happen, especially with business founders.  

I have a client in a similar situation and there’s another parallel between the situations that’s also worth mentioning.

The first generation built a relatively small business, so the next generation was taking over something that was actually quite simple.

In the case of the award winners and my client, the business is now way too big and complex to hand over quickly and easily.

Slow and Steady Wins More Races

Once the business achieves a certain size and complexity, there are a lot of things that need to be brought into consideration.

When you think about any large business out there, what are the chances that the best person to run it is actually a descendant of the founder?

So if you’ve decided that you’d like to have your offspring take over your business, eventually, then it’s usually better to give yourself a long runway.

Time moves pretty quickly, and it’s much better to be ready too early than too late.

There’s More Than One Transition

A big reason things take long is that you’re not simply handing someone the keys to the front door.

You need to transfer your know-how and knowledge, as well as your contacts.

The leadership that the new person in charge, or more likely the new people in charge, will require, does not shift very easily overnight.

You need to plan to transfer authority and responsibility as well, which are not as easy to do as you might think.

There’s likely some ownership that will be changing hands as well, and that alone will take some time and getting used to.

So if you have a choice, better plan for a ten-year transition, not 15 minutes.

Developing the Leadership to Find the Right Mix

Colleagues sometimes ask me what it’s like to write a weekly blog post, typically wondering how I constantly find topics to write about.

I normally note that I only write once a week, and I get ideas much more often, so it becomes more about sifting and sorting than dreaming up subjects.

Quite often, like this week, an idea hits me between the eyes and I cannot put it down, and then the tough work begins as I try to figure out how best to share it with readers.

I’ve gotta say, this one could go any number of directions, because it’s so foundational to my work.

Thinking Out Loud, In Writing

Selfishly, I write in order to force myself to clarify my thinking, and would do so even if I didn’t make my writing public.

It’s my version of “thinking out loud”, which I’m known to do, but I do it in writing. It’s kind of my personal journal, open for viewing.

So what was it that “hit me” this time, that I’m about to share?

I’m taking a series of online courses through Coursera, and there was a video in which a presenter uttered a sentence that made me immediately hit pause and rewind.

I’ll spare you the details of the courses, but note that they’re in the area of Positive Psychology, a recent interest of mine.

I don’t have the verbatim quote, but got the five key words.

      “…the right mixture of governance, culture, and leadership…”

Whoa, some of these words are right up my alley, but I’ve never heard them put that way before.

He’s Speaking My Language

Regular readers know how often I write about governance, despite the fact that that word has less than positive connotations for many people.

I also write about leadership often enough, or maybe not often enough, since it’s so important in so many places, especially in enterprising families.

Culture isn’t a word I use much, but it’s also key, and never far from the subject either, even if I don’t use that word.

So while those three words caught my ear, it was the ones right before them, “the right mixture” that got me thinking.

As I considered the idea, I couldn’t help coming to the conclusion that governance and culture fit together nicely as different ways that people work together, formal and informal, but leadership seemed to stick out a bit.

Mixing Governance and Culture

Governance is mostly about the formal structures, procedures, and mechanisms that are put in place to make sure that things run well, and that there are actual written ways that remind us all how we have agreed we will act together.

Culture is more about the informal “that’s how we do things around here” that are almost never written anywhere, yet they’re typically even more powerful in guiding actions than the written rules are.

Finding the right mixture of those two elements, the formal and the informal, is where a lot of the magic happens, and I use the word magic because it’s something that we usually can’t explain and perhaps don’t even try to comprehend.

The Right Mixture Needs to Be Found

But that “right mixture” does need to be found, and it will often happen with trial and error.

It will also vary from one family to another, as well as from one decade or generation to another within the same family, depending on where they are in their evolution of working together, and who the key players are.

But it’s not as if there’s a dial that we move to the left or right to adjust to the right setting, it just sort of evolves.

How and Where Does Leadership Fit?

Maybe that’s where leadership fits in, after all?

Who moves the dial towards a need for more formality, or towards more informal discussions, with the goal of moving the entire family system to a more appropriate equilibrium?

That work can only be done by those who take on that leadership role.

Lest you think that such leadership roles are assigned, or given based on age or seniority, let me remind you that this is not the case, and when leadership is set by this “default” setting, sub-optimal results normally follow.

Someone needs to step up to these roles, and take them.

Is that you?