This week we’re going to go over some old ground, and cover some things that are brand new to this space.

There’s an “A-Ha Moment” involved, as well as a new way to attack an old problem.  

One thing most regular readers will recognize is that we’re once again visiting the wonderful world of “family governance”.


Never Start with a Constitution

Let’s set up the family governance part off the top.  Back in 2018, in Behind the Flawed Family Constitution we talked about the fact that for some reason, having a “Family Constitution” had become a really cool thing that families thought they needed.

Or at least, there seemed to be renewed interest in such a deliverable, likely caused by some professionals who discovered the idea of possibly selling this idea to their family clients.

I’ve also since met with families who’ve come to believe that a family constitution could be an appropriate thing for their family, and I usually try to get them to back away from the idea, once I realize that they’re still very early in their family governance’s evolution.

 

Start Small, Let It Evolve

I’ve tried making this point in various ways over the years, with families as well as with other advisors who are a bit newer to the area of getting families they work with on a proper path to governance.

Then recently, form an unexpected place, I got the killer line I think I’ve been looking for to seal the deal.

I was watching a WBECS coaching webinar recently, where David Burkus was talking about working with teams in businesses and other organizations in work situations.

A big part of such teams’ success stems from getting to the point where they understand the value of teamwork. Then he said the magic words.

“I want them to make a Declaration of Interdependence”. 

It hit me right between the eyes.

Why Didn’t I Think of That?

You see, back in 2015, I wrote a blog titled Independently Wealthy VS INTERdependently Wealthy, in which I first shared this notion about families being interdependent.

And, as most of you hopefully already know, in 2019, I published my second book, which happens to bear the title Interdependent Wealth.

But I had never thought about using it in an expression like “Declaration of Interdependence”.  But of course that ends now.  

And a little bit of knowledge of U.S. history also leads to a way to use it in the context of families, especially when they think they might want a family constitution.

 

A Time Lag of Measured in Years

Even though I’ve lived my whole life in Canada, it’s all been spent within an hour’s drive of the U.S. border, and there’s been a constant American cultural barrage, first over the TV airwaves and more recently over the internet, that most Canadians have become quite used to.

So I know that the U.S. Declaration of Independence was signed on July 4, 1776.  

I also hear about the U.S. Constitution on a regular basis, especially since I’m kind of a politics junkie.

I admit I had to Google the date of the Constitution, because it’s less well known. It was signed in 1787 and then had to be ratified by the 13 states, which took another few years.

 

The Family Governance Version

So now, whenever anyone talks about a family adopting a constitution, I’ll ask when they signed their declaration of interdependence.

Now, I need to clarify how I look at this, but it’s certainly not far fetched.

You see, while the U.S. was declaring itself independent from Great Britain in 1776, whether they admitted it to themselves at the time or not, they were simultaneously declaring themselves interdependent with each other.

And that’s the most important part for any family to realize.

 

Families and Wealth – Intention and Commitment

When I work with a family it’s usually understood that they have twin goals of keeping both their wealth and their family together through the generations.

That work takes some intention and commitment, because, as I love to remind them, that stuff doesn’t just happen all by itself.

This is where all the governance stuff comes in, along with working on engagement, alignment, and clarity.

And while some families will end up with a Family Constitution, eventually, there are more important things to take care of first.

Understanding and accepting that all family members, from all generations, are truly interdependent, is the first key step.

Don’t you Mean Continuity Planning?

One of the most popular topics in the area of family business is always succession planning. I’ve known this for a while, yet I rarely use that term in my writing, especially not in the headline.

So in order to prove that I can “zag” as well as I can “zig”, I did it this week. Why the change?

I’ve just spent several weeks refreshing my website, and my “web guy”, who is really good at what he does, told me that I needed to write about succession planning, because that’s what a LOT of people are searching for.

 

Yeah, But….

When I explained that there’s a better term that people like me now use, “Continuity Planning”, he patiently nodded his head and reminded me that if people are searching for one thing and you continue to call it something else, many of those people will never find you.

Alas, I acquiesced.

It kind of feels like I went back to build a worse mouse trap, hoping that the world would now beat a path to my website.  I guess we’ll soon see if new folks find me.

 

So You Want to ACE It

 

So in the spirit of writing something newish, catchy, and useful about family business succession planning, I decided to share a mnemonic way of thinking about it. 

A few months ago, in Family Engagement and Family Alignment – Chicken and Egg I shared the idea that engagement and alignment were two sides of the same coin, and two of the most important aspects of getting a family’s planning and governance on track.

Since engagement starts with an “E” and alignment starts with an “A”, I knew I had the makings of something. A good mnemonic should be something that spells a short word, so vowels carry a premium.

I just needed the right consonant to hold everything together.

4 aces in a deck of cards

Clarity to the Rescue

After kicking around a number of other options, I finally settled on “clarity” to complete my catchy word, “ACE”.

I was tempted to use “communication”, which would have given me the same word, and communication is, of course, crucial to family business success over generations.

But bringing things right back to the “succession planning” angle I was going for, I thought that clarity was a better word.

So let’s look at how this ACE holds together.

 

Does the Order Matter?

What I’m hoping people take away from this post is that family business succession planning can be a success IF you concentrate on the three items in the ACE mnemonic: Alignment, Clarity, and Engagement.  That’s it.

Now, are they in the right order? 

No. Or Yes. I’ll settle for a hard Maybe.

Does it matter? Definitely not.

Succession planning is not an event, it’s a process. And because it is a complex process, it’s definitely NOT linear.

You don’t do “Step 1” and then “Step 2”, etc. 

 

It’s NOT an Estate Plan

Some people may want to argue this, and I think that most of those folks are probably confusing family business succession planning with a related process, that of estate planning.

Estate planning is a specific subset of succession planning, and it can certainly be much more of a “linear” operation.

When we talk about family business succession planning, there’s a LOT more at stake, and it MUST involve those who will be expected to play future roles.

 

Engaging and Aligning, with Clarity

Whereas an estate plan is mostly about who’ll be the legal owners of specific assets after their current owner passes away, a succession plan is more about who will do what.

It’s about how a group of people will interact and decide things together, for the common good of the whole family.

That means that these people need to be aligned in their thinking. They also need to have a common and clear understanding of everything that’s at stake.

This stuff definitely doesn’t just happen by itself, which is why you also need to have everyone engage in the process.

 

Incremental Iterations Work Best

You need to constantly go from engaging to aligning, and back again, while making sure to always strive for more clarity.

This happens over time, as the family members learn to work together and understand that they are interdependent.

Small gains add up over time, and incremental is a good word to keep in mind.

Keep at this over time, and you will ACE it.

Surprising Word Choice Proves Revealing

Regular readers know about my penchant for word play and finding lessons in unexpected places thanks to vocabulary, grammar, and translation issues.

If that kind of blog is up your alley, you should enjoy this one since there’s some of each of those on tap this week…

A few months back in Social Capital in the FamBiz World we looked at the human need for connection

Since then I’ve realized the importance that social interaction plays in my life, and I’ve also developed a new level of gratitude for the social capital that I enjoy.

 

Joining Yet Another Group

I’m a member of a number of groups, mostly with peers, that get together over Zoom from time to time for various forms of discussion and interaction.

Most of them actually pre-date this pandemic, so I feel like I had a head start on many people in learning to get the most out of this way of meeting.

I recently joined a new group, and one of the first meetings we had was the source of inspiration for this week’s post.

Unlike all my other groups, this one conducts its business in French, which is my second language, but being a lifelong Montrealer, I’m sufficiently fluent, and I speak it both professionally and socially on a daily basis.

 

Colleagues Learning from Colleagues

Our facilitator, Jessica, was setting up a discussion and at one point I thought I knew what she was about to say but then she went in a different direction and it threw me off a bit.

We were talking about choosing the kinds of things advisors might decide to specialize their practices in, and as she was listing ways to make such choices she began to mention “Dans quoi on est…” which translates literally to “In which one is…”

My mind jumped ahead and filled in “bon”, which is French for “good”.

Of course, we want to choose to do things that we are good at, right?

But then, instead of saying “bon”, she said “bien”, which means “well”.

 

There’s a Lesson (or Two) in There

Jessica was making the point that we should concentrate on doing things that we’re “well” at, or, as a better translator might say, things that make us feel well.

Could she be on to something, suggesting that things we can feel good about doing and that make us feel well and good is even more important than concentrating on things that we are good at, i.e that we execute well?

And although we were sharing ideas amongst advisors to family enterprises, what are the implications of such a “discovery” for the members of the families we work with?

Couple relaxing on bed

Doing Versus Being

This is all about the difference between “doing” and “being”, which are two really different yet related ways of looking at oneself. 

And, interestingly, the way they interrelate evolves over time. The more you practice doing something, the more it becomes part of who you are.

Of course this also brought back memories of a piece I wrote last year, Ikigai: a Four Circle Model of Human Capital

That was about finding the true sweet spot of things we do well, things we like to do, things the world needs, and things we can get paid to do.

 

Examples for Legacy Families

While reflecting on these questions is important for professionals who work with families, they can take on even more significance for members of those families.

And, they give rise to another aspect of belonging to such a family, as I noted earlier this year in Where Do You FIT in your Business Family?

I think it’s interesting that I noted at the beginning of this piece the importance of social interaction in my life, as I continue to figure out where I fit in this wonderful world of working with enterprising families.

 

Feeling Well and Doing Good

Being part of this evolving field and making whatever contributions I can makes me feel good and I think that I’m doing a decent job.

Members of legacy families can often minimize the importance of finding activities for which they get paid, by virtue of the fact that they may have other assets off which they can live.

When I work with families, part of what I’m hoping I can help them achieve is that each person can do some good for the family while also feeling good about their place within the group.

That’s often way more important than money.

Since 2014, one of the highlights of my year has been a trip to the annual conference of the Family Firm Institute each October.

It recently wound down for this year, and for a change I didn’t have to fly anywhere or check into a hotel. Alas, it was held virtually for the first time, and I’d be lying if I said it was virtually the same.

Oh well, all we can do is do our best, and I was still able to consume a huge amount of content relevant to those who inhabit the family enterprise space like me.

 

Worldwide Leaders Coming to Share

This space can often feel like a real niche, and so in order to find a critical mass of others who do similar work, a global network is actually almost a requirement.

While family businesses dominate the economy of almost every country on the planet, the vast majority remain typically small enterprises, who don’t necessarily require much special attention.

At the larger end of the spectrum, however, where we look at multi-generational family dynasties, spanning several countries, held up by complex family groups, the needs of families do warrant special attention and specialized professionals.

Source: https://digital.ffi.org/ffi-global-conference/

The Rising Generation as a Focus

There were a couple dozen presentations over two days, and often two sessions running concurrently, so there was literally something for everyone present.

There were over 300 people registered, from dozens of countries and six continents, and while cultural variations in the family enterprise world exist, there are more common elements present, making global sharing worthwhile.

One theme I noted was a focus on the rising generation in families. There were sessions on family culture, family engagement and family learning, that all spoke to the importance of getting the younger family members interested and involved.

There was talk of “values based investing” that brought all generations to the table, and a focus on having younger family members get their “Operator’s Licence” to begin running things in the family business too.

 

Complex Family Dynamics Always at Play

Aside from the focus on a particular generation, there was also a good deal of discussion around complex family dynamics that never seem to be far away when talking about family owned and operated enterprises.

There were sessions on family meetings, ethical dilemmas in families, and mediation for families who have conflicts that are difficult to resolve.

There was even some reflection for advisors to consider how comfortable we are with conflict, so we can assess whether or not we are the best person to serve our clients in such cases.

There was a great session on mental incapacity that left me with some great take-aways.

 

Repeated Messaging for my Own Good

As part of a number of different organisations that serve parts of this field, I’m privileged to cross paths with a number of great leaders who tirelessly share their thoughts in various forums every year.

The messages can feel a bit repetitive at times, but I’ve learned that even though I’ve heard someone on a subject before, I still learn something by attending again, because surely I didn’t catch everything the first time through.

The first example was Jim Grubman on mental incapacity.  I’ve heard Jim discuss it before, but this time something really stuck with me.

We’ve all known people who’ve begun to lose their ability due to age-related mental decline, and it can cause enormous complexity for a family to deal with.

Grubman highlighted part of the reason for this, and it hit home for me.

 

Legal, Medical, Business, Emotional, and Ethical Views

The reason they are so complex is that they are viewed differently through a variety of different lenses.

A person whose mental decline has begun raises issues in law, medicine, business, family emotions and ethics.

No wonder these things are so hard to deal with!

 

Dennis Jaffe Delivers Again

A few weeks ago I wrote about Dennis Jaffe in Legacy Families Rely on a Generative Alliance. He was the closing speaker at FFI, and even though I’ve seen him present many times, I still got something new out of it.

I was also pleased to have been featured myself, as Dr. Mariana Martinez and I kicked things off during the first day’s early morning session with Bowen: From Theory to Practice. Thanks to all those who gave me great feedback!

Looking forward to FFI 2021 in London next year; fingers crossed that it will be in person!

 

 

 

No Single Advisor Can Do It All

Thinking back to when I had my calling to this work with families, one of the first realizations I had was just how complex such work can be.

A family enterprise has lots of moving parts, especially as the family approaches an upcoming transition from one generation to the next.

Between the amount of wealth involved and the complexity of the family’s situation, there are important considerations that ultimately require the support and advice of a number of outside specialists who serve the family.

Getting these expert professionals to work together makes so much sense, at least in theory, so that the family client can get the best results.

 

The Theory Versus the Real World

Of course just because something makes perfect sense in theory, that doesn’t mean that it will work simply in the real world.

Thankfully, those who designed the FEA Program where I had that calling already knew about this “real world” challenge, and had purposefully included a team project into the curriculum.

For example, my project team included an insurance specialist, a CPA, a private banker, and me, who at the time was someone still trying to find his place in this field. 

I played the role of facilitator, and still very much enjoy that role today.

In fact, as my team came to learn, that role of coordinator and facilitator often turns out to me way more important than the other professionals ever imagined.

 

Many Challenges and Obstacles Remain

Such facilitators have a key role to play in how the actual collaboration will play out with the family. 

To many of the tactical specialists, we are often an “afterthought” because they haven’t necessarily been used to dealing with an entire family.

So many professionals have been accustomed to serving families more in theory than in practice, because they typically deal with only the head of the family or perhaps a couple.

Opening up the service offering to the entire family, which means at least two generations, means that there are many new considerations.

This poses certain challenges that can often be seen as more trouble than they are worth.

Rest assured though, that from the perspective of the family members from the rising generation, this difference is well worth the efforts in the end.

One Direction Only?

While the idea of collaboration is gaining wider acceptance and more advisors grasp the importance of working together, there is still much work to be done.

In fact, there seems to be a sort of “divide” that exists between the folks like me who specialize in the “family circle” and those whose practice involves the “business circle” and the “ownership circle”.

See: Three Circles + Seven Sectors = One A-Ha Moment (I’m referencing another blog from 2013, two weeks in a row!)

Whenever I have a client who needs something taken care of in those other circles, I always happily help them find the right resources and advisors so that they can be well served. 

Everyone else I know who works the family circle does the same.

There seems to be a general reluctance for those who specialize in the other two circles to return the favour.  Or maybe it’s just me.

 

Varying Degrees of Complexity Exist

Of course we aren’t talking rocket science here, and relatively simple family situations can obviously be handled by many advisors without the need to reach out for another person.

However, those whose entire career has been built on expertise in a particular domain aren’t expected to be adept and comfortable beyond a basic level of complexity and family conflict.

This is precisely where bringing in someone who has trained for this work make sense.

 

“Plays Well with Others”

Some professionals hesitate to bring in another advisor for fear of “losing the client”.

I can say with certainty that nobody is looking to “steal” your client. 

As children, we all got comments from our teachers that noted how we “play well with others”, and we get that the client family’s needs are what matter most.

 

What Do I Mean by “Win-Win-Win”?

And in case it isn’t clear what I mean with my “Triple Win”, the first one is the client family and the second is the advisor with the wisdom and courage to bring in another resource to deal with the family circle.

The third and final win is for that family circle expert who helps tie it all together.

From the Backyard to Twitter

In our backyard we’ve had a rather elaborate set-up of four bird feeders for the past few years, and my wife has assumed the role of the “bird queen”, regularly keeping them filled all summer.

We’re treated to almost daily sightings of cardinals and blue jays, among others.

Thanks to “spillage” the visitors make a big mess below, allowing some local rabbits from the neighbouring golf course to also feed on the seeds, which is a nice bonus.

Of course there are also other, less welcome, rodents.

 

Acrobatic Squirrels

Witnessing the efforts that squirrels go through to get their share of the bird food, you can only be amazed at their creativity.

They’re also cute enough, and certainly prove themselves worthy of the food they steal from the birds thanks to their work ethic. 

It’s been pointed out that without their fluffy tails they’re just rats that know how to climb, but they do have those cute tails.

So many people make the effort to feed only birds and not squirrels that there are literally hundreds of designs of feeders available that have been conceived specifically to thwart the squirrels’ efforts.

 

The Twitter Cartoon

Being a witness to the heroic efforts put out by both the squirrels and my wife to keep the feeders full for our avian friends, my antennae are attuned to stimuli relating to this constant battle.

Lo and behold while scrolling my Twitter feed recently I noticed a little cartoon that hit home.

The drawing featured a squirrel in a precarious position getting his fill from one of those feeders designed to keep him at bay, much like the one in this photo:

 

 

And the Thought Bubble Said…

The punch line was in the thought bubble, which let us in on what the little rodent was thinking as he feasted on the seeds:

     “This squirrel feeder sure wasn’t designed very well”

I had not seen that coming, and enjoyed the chuckle. 

And then I thought about how this lesson could be tied into the wonderful world of families who are preparing for an eventual transition of their business or wealth to the next generation.

 

Isn’t That a Bit of a Leap?

I mentioned my antennae earlier, and they’re attuned to this world 24/7/365, so it wasn’t much of a leap for me.

There are certainly some analogies and metaphors that I can derive from this cartoon, but I’m not sure that any are conclusive.

But we can have some fun kicking them around, so I hope you’ll join me here.

 

Your Family of Birds

I think it’s pretty safe to assume that the birds that you want to feed are the family members.  You want them to have food so that they survive and thrive and keep coming back.

So who are the squirrels? This is where it gets more confusing, or maybe just more fun.

The squirrels could be all the other forces of nature that work against families who are trying to avoid the fate of families who succumb to the “shirtsleeves to shirtsleeves in three generations”.

 

What About the Cartoon Squirrel?

We can’t hold anything against squirrels in general, because they’re just doing what their instincts are telling them to do, and they also need to eat.

But what about the particular squirrel from the cartoon, who actually thought that the food was being set out there for him?

I have an idea about who he represents and I need to be careful how I put this.

In my role guiding families through their intergenerational transitions, those families invariably work with other professionals who take care of the legal, structural and tax minimization details.

On occasion, some of those experts can take on a bit of a squirrelly attitude.

 

Don’t Do It “Bass Ackwards”

I suppose they’re also only doing what their instincts tell them to.  When families approach such experts not knowing what’s most important to them, priorities may get skewed and tax avoidance or limiting what heirs can do may end up driving things.

To me when the structures are put in place before the family has figured out what their legacy should look like, it’s kind of “bass ackwards”.

You really should figure out the family part first and then get the pros to draft the perfect structures to fit that.  

The priority needs to be the birds, not the squirrels.

Wordplay Rears Its Head Once More

Regular readers will recognize my penchant for engaging in interesting wordplay in this space whenever the opportunity presents itself.

Thanks for indulging me once again.

There’ll even be a “sidebar” bonus, because last week I didn’t have space to include another tidbit that fits into this category, and I hate to let a juicy bit of trivia slip by. 

 

A Client’s Defiant Daughter

This one begins with a coaching client of mine who was sharing a personal story with me (as clients typically do) about his daughter.

The young woman was being defiant, and they each stood their ground.  I’ll spare you the details of what happened for privacy reasons and since it’s still a work in progress (what isn’t?).

Let’s just say that her defiance became a focus of our discussion together.

It was funny because during our previous call, before a bit of a summer break, he was pleased with some of the progress he’d been making in his relationship with her.

I’d even given him some ideas around allowing her to choose the ways that she participated in certain family projects, rather than having Dad point her in the directions he preferred.

 

Playing the Translation Game

Neither of us actually used the word “defiant”, but it was certainly an adjective that could have applied to what he was relaying to me.

A few days later, when the word defiant came up, during a meditation recording of all places, a bell rang in my head (I mean a proverbial bell here, not the one that ended the meditation).

I thought of the noun, “defy” and a close and related French word, “défi”.

The English translation of the word “défi”, is challenge.

Ding, ding, ding.

 

If the Defiant One Challenges You….

So how should you react when a defiant one challenges you?

Inspired by “fighting fire with fire”, my conclusion is to challenge them back.

It isn’t even that far off from where I had him exploring with her a while back, letting her choose her own way to be involved.

Maybe all we need to add is a bit of a challenge to it, to encourage her to not only make it her own, but to really make the most of it and outdo herself.

 

Translation Sidebar

Last week, in Stuck in the Mud? Don’t Wait for “MayDay”, it pained me to not have space to include some more “bilingual trivia”.

Did you know that “MayDay” actually comes from the French “M’aider” (roughly “help me”)?

Likewise, the term “Pan Pan” that was also featured last week, also comes from the French “panne”, which is roughly a “breakdown” for example regarding one’s car (“mon auto est en panne”).

Hats off to any creatives who thought the “pan” in Pan Pan was about being in the pan just before going into the fire of “MayDay”. 

End sidebar.

What Do the Defiant Want?

Let’s get back to the matter at hand, i.e. finding appropriate ways to handle family members who are defiant.

First off, it may be worth taking a moment to think back to how we might have handled situations when we were their age.

This spring when many people had young adults return home unexpectedly, many of us got to live a situation that had both positives and negatives.

When my wife was less than thrilled with the reactions of our two homebound college students, I quickly reminded her that if I had been forced back home at their age, I might be a bit churlish too.

 

I’m Impressed. Please Continue.

I’ve shared with anyone who will listen how impressed I am with today’s young people. I’m hopeful for the future of our world, largely because I have faith in our young people to do a better job than those who are running things now.

For those of you who agree, and who are lucky enough to have young adults in your family, I think you should share that feeling with them.

“I’m Impressed” is something most people enjoy hearing.

“Please continue” to impress me, might just be the kind of challenge that will keep them moving forward.

It seems like something worth trying, and is clearly a Win-Win.

And it sure beats trying to deal with constant defiance.

There’s energy in defiance, and if you can harness it like a martial artist, maybe you can even make it work for you.

From Paddling Hard to Going with the Flow

Summer is in full swing and with it come some activities that we look forward to because we haven’t been able to do them for a while.

For me, one of those is kayaking on the tidal river at my cottage in New Brunswick, where I get in touch with nature while lazily paddling around looking at the sky in search of the occasional bald eagle.

Having recently arrived here, I received a text message from a friend asking me if I was enjoying myself, “floating downstream” on my kayak.

Regular readers won’t be surprised that something so simple would become the inspiration for a blog post.

 

Tidal Rivers and Delayed Gratification

While I’m no expert in tidal rivers, I can tell you that sometimes this river flows towards the ocean about a kilometer away, and then a few hours later it will flow in the other direction.

When heading out from the dock for a kayaking excursion, I always make sure to go into the flow of the current, so that I can coast back home, going “downstream”.

My wife and I learned this lesson the hard way years ago, when we went rollerblading, not realizing that we had the wind at our backs, only to turn around to go back home and quickly realize our misfortune of having a strong headwind to deal with.

It’s a simple example of delayed gratification, which I love to preach. See Marshmallows and Filet Mignon

 

Climbing the Hill and Coasting Back Down

The flowing river metaphor is similar to the uphill / downhill one that we hear about when talking about where people are in their life cycle.

Older people are described as “over the hill” while the younger ones are continually “climbing” towards the top.  Getting to the top and remaining there are the goal, we’re led to believe, and in many ways that makes sense.

But in the same way that I like to save the coasting part of my kayak trips to the end, why don’t we look at life the same way?

And if we’re part of a business family, isn’t there a way that one generation’s trip down the other side of the hill can serve as a boost to the next generation’s rise?

 

Capitalizing on the Strengths of Each Generation

The “rising generation”, as people like me have been referring to them for some time now, typically have more energy to devote to building their lives and careers, while their elders will normally have more experience.

Similarly, the younger members of a family will be more comfortable with technology, while the senior family members will often have a lot more contacts and long-standing important relationships that they can leverage.

Smart families figure out how to make the most of these complementary strengths, which takes a certain amount of self-knowledge and understanding, along with the ability to set egos aside for the common good of the family.

 

Stepping Away from the Top Spot

The ego component varies from one family to the next, but seems to be rather prevalent in cases where it’s the business founder who wants to remain in charge well past the point where their leadership is what’s best for the business.

Somehow once we get past that first generation transitioning to the second, it’s less of an issue when going from G2 to G3, and then G3 to G4 and so on.

Playing with this hill metaphor in my head, I’m picturing someone stepping off the top of the hill while pulling on a rope, which in turn is helping someone make their way to the top.

I guess there’d need to be some sort of pulley or rappelling device at the top for this to make sense.

 

Many Years in the Making

I don’t want to give the impression that generational transitions should take place quickly.  In fact, properly planned and executed changes in leadership will often take years.

That’s because while we think of these situations as singular events, there are actually transitions happening at several different levels.

There needs to be a lot of coordination to properly transfer all of the knowledge of the retiring leader, as well as the authority, which all takes time, and we haven’t even begun to talk about ownership.

So it’s best to get started early, and be sure to check which way the water’s flowing before you take off.

Our new shared reality has shaken up a lot of things in everyone’s world, and many of the negatives remain at the forefront.

Being a “glass half-full” kind of guy, I’m always on the lookout for the bright side of things.

So, with that in mind, here are 5 “silver linings” for family businesses that could come out of this pandemic, for those families that are ready, willing, and able to take advantage of them.


 

Reflect on, and Learn from, Previous Challenges

Any family business that has survived to include more than one generation has probably gone through some sort of crisis before.

The younger family members may not have been around or old enough to understand everything then, so this is a great time to bring them up to speed with the lessons about the historical resilience of the family and its business.

Knowing that the family has held together before, and reflecting on what strengths that required, will help everyone as they look forward together.

 

5 Pandemic Silver Linings for FamBiz

Co-Create the Pivot

This crisis is creating an opportunity for different generations to work together and co-create the changes that will bring the enterprise forward for the coming decades.

A family with younger members involved in the business has the chance to bring in newer, fresher ideas, that can be led by younger members with more energy, more tech-savvy, and a longer view into the future.

By combining these strengths with the wisdom and patience of their parents’ generation, they can co-create whatever pivot they need to, to adapt to the new realities of the world.

Diversity is an asset, and being able to harness the best of all their human capital is something that many business families are particularly good at doing.

 

 

Bolster the Family Brand

Since this crisis began, there have been so many examples of family businesses doing the right things for the right reasons.

Especially in smaller communities, the long term support that this creates for the family brand should last a while. While this isn’t the reason to do any of these things, it can be a nice side effect.

Family companies need to find subtle and balanced ways of getting the message out there about their efforts for the common good, and in the long run they will be rewarded by customer loyalty.

 

 

Surrender the Baton (Or at Least Part of It)

Many families put off serious discussions about the future and who will become future leaders as one generation eventually steps aside and another takes the lead. It’s what many call “continuity planning”.

Given what’s been going on recently, the current leadership may get a jump on, or at least have some more reasons to consider, moving towards their next life chapter, knowing that things are in good hands.

Crises create opportunities for new leaders to step up, which may be just what the current generation was hoping for.  

Someone who has taken on the hard choices you’ve all been facing recently just may be catching the eye of a leader who has been waiting for the opportunity to begin backing away, and surrendering some of the roles to them.

Many advisors are advocating for this quite strongly, for a great example, see The Next Generation Should Get Their Licence to Operate Now

 

Re-Emphasize Family Governance

As I wrote about a couple of weeks ago in The Crisis as a Test of your Family Governance, many families have recently realized that things were not set up exactly as they had assumed and imagined.

So, the family’s governance systems and structures may have been tested in the past couple of months.  What better time than now to revisit and re-invigorate efforts in this direction?

Might it be a time for the current business leadership to shift their focus from working IN the family business to working ON the business family?

 

Plenty of Clouds, Even More Silver Linings

There’s no question that everyone’s lives have been affected, mostly for the worse.

But, for the families that are little bit more forward-looking, there are many opportunities that just suddenly landed on our proverbial doorsteps.

What does it take to seize them?

Well, important things don’t typically just happen by themselves, not even in the best of times.

I believe that the key lies in the family’s ability to tap into all of its human capital, from every generation.

That all starts with a family meeting to discuss all of this, and if it has to be done over Zoom, that’s OK too.

From Societal Transformations to Intergenerational Transitions

Thanks to the pandemic, there’s no denying that the whole world looks very different today than it did just a few weeks ago. 

Few could have predicted how quickly and profoundly things could change, and so far, most of what we’ve seen has been for the worse.

But while most of us haven’t figured out what it’ll all mean in the long run, some families have already started making some big moves to try to get out in front of the tectonic shifts that are happening.

From societal changes that are happening in plain view of everyone, right down to key transitions within families, it seems like everything is in motion right now.  

As a family enterprise advisor who lives and breathes the world of business families and their family offices, I want to share some of what I’ve already been noticing.

 


Broad Societal and Industry Moves

Let’s start with the things that we’ve all been seeing on the news. 

With shortages of necessities like personal protective equipment (PPE) for medical personnel, hand sanitizer and ventilators, many companies, including plenty of family businesses, have begun to shift their production from their usual products, to helping fill the sudden demand for what frontline responders need right now.

There are examples, big and small, from all over the world, because every country is being affected by the current pandemic. 

On a more local scale, many family-owned restaurants and grocery stores are moving to deliveries to deal with the new reality of the “lockdowns”, as well as getting food to overworked medical personnel and to food banks having trouble keeping up with local needs.

 

Family Offices and Impact Investing

At another level, looking at things with a longer lens, family offices are already lining up future investments in industries poised to be part of the long term solution and new realities that the world is suddenly facing.

This crisis is presenting all sorts of opportunities, not only from an investment perspective, but also for the betterment of society. 

The field of impact investing, often a favorite of the younger generation of successful intergenerational enterprising families, is also rightfully excited by the chance to get involved on the ground floor of some of these widespread changes.

This ties in nicely with a piece I wrote last year on the natural fit between family offices and impact investing.  See Family Offices and Impact Investing: A Great Fit

Pandemic Creates Spectrum  of Opportunities  for Enterprising Families

From Macro to Micro

Within any given family, as much as the societal and industry shake-ups affect their businesses and the assets they own, there’s typically an upcoming generational transition that’s never more than a decade or so away.

Enterprising legacy families always need to look at the long term trends in the world at large, while making sure to never lose sight of the life cycle realities in their families.  

They need to look at the macro world and its opportunities with one eye, without forgetting about the micro reality and potential threats that might present themselves if they don’t sufficiently prepare the members of their own family to be ready to take the reins one day.

As the world faces major shifts, it becomes more important than ever for families to seize these opportunities while proactively involving the younger, rising generations of their family.

 

The Strengths of Each Generation

While the senior generation has the experience, wisdom, and patience to run the operations, the next generation of the family will normally be much more tech savvy, have more energy, and be well connected to peers all over the world.

Yes, the generations have different strengths, but in many ways, they have even more things in common.   See: Is There a Generation Gap in Business?

While the MIT-Sloan article above isn’t aimed at #FamBiz in particular, the similarities between members of various generations are even greater when we consider members of the same family.

There are so many opportunities to mentor and “reverse mentor” each other in such families.

 

Opportunities Abound – Will Your Family Capitalize?

This pandemic will create some enormous opportunities for those families that are poised to capitalize on them.

Families in business together can move into action more quickly than most corporate entities, because they’re more flexible, they aren’t focused on the next quarter’s results, and they understand the values that have made them successful over generations.

These crazy times are turbulent for everyone, and smart family enterprises are already beginning to capitalize on them.