The Purposeful and Empathic Enterprising Family Leadership Journey: Setting the Table
Dr. Mark W Auger
May 11, 2021
The adage «Failing to plan is planning to fail» may be applicable to enterprising families. Transforming from a single business founder to a multigenerational enterprising family organization means shifting from an «I» to a «We» leadership mindset. To keep a system of many kin in harmony for many family generations as opposed to just worrying about self can be quite complex. This article aims to seed ideas about the building blocks enabling the pursuit of enterprising family organizational longevity with purpose and empathy.
Enterprising families are actually one of the oldest, the most observed, and the most enduring organizational forms on our planet. Scholarly research reveals that some long-lived enterprising families are skillful in creating winning conditions to succeed beyond three generations. These winning conditions are as follows:
- Remain socially cohesive – Family Unity – Care of family & individuality
- Establish and retain their social position – family brand/reputation management
- Successfully prepare and complete multiple leadership transitions – Strategic Thinkers & Stewards
- Continuously entwine their family, their business and social endeavors
- Nurture conditions 1 to 4 for more than 3 generations or 1 generational wave1 (about 100+ years) 2
The Fords, the Agnelli, the Merck, the Viellard Migeon, the Weston, the Molsons are but a few examples of long lived enterprising families. The Henokiens represent another set of longevity outliers. This global association comprises a membership of only bicentennial family enterprises3.
The enterprising family idea is not so simple. As you can infer from the often negative media coverage of business families, the context is complicated. Embedded in these families are many individuals entwined in multiple relationships with varying logics in communication and power differentials. Think of the parent-child, youngest-oldest sibling, or the family board director-family CEO relationships. Each of these roles are carved from human relations with sometimes conflicting behavioral expectations. Birth order, gender, education, and personality are some of the many factors which can explain or predict your social position and sense of belonging in the enterprising family.
Picture how confusion pervades some family conversations if it is not clear at the outset from which perspective the parties are interacting. Am I speaking to Dad as father, shareholder, board chairperson, or CEO? Boundaries often overlap and signals can get crossed. Unclear roles and perspectives can ignite and sustain misunderstandings. Eventually and quite frequently, these misunderstandings turn into conflicts which tear apart relationships and significantly impair the enterprising family’s wealth and wellness. These outcomes are tragic considering the origins of the family were supposedly born out of love. Therein lies the expression «From shirtsleeves to shirtsleeves in three generations». Sadly, very few enterprising families successfully break this cycle.
Why so few families break the cycle? Is there a better way? What can enterprising families do to mitigate the risks connected with unproductive family member relationships? Family leadership learning and development substantively answers this question.
Long-lived enterprising families’ founders and prospective leading family generations exhibit tremendous leadership skills. These family leaders have strategic thinking and stewardship mindsets. These family members have a masterful, holistic and long term view of all the enterprising family’s moving parts, its environment, and stakeholders. They are adept at balancing the tensions between the enterprising family’s collective and individual interests.
Long-lived enterprising family leaders know that family capital growth is not limited to the compounding of financial capital over time. Rather, these family leaders appreciate the power of compounding human and social capital multi-generationally. Stewarding the stock and flows of diverse knowledge, skills, and abilities of each individual enterprising family member is key to fueling harmony and growth. The enterprising family with its family members facilitates opportunities and abilities to capture benefits or advantages by virtue of their membership in social networks or other social structures. They never underestimate the value of who knows who and what.
Easy enough. Just focus on developing your family leadership talent. Yet why are not more enterprising families favoring these best conditions? Because the challenge is the business of family not the family business.
Some founder and family leader archetypes can get the ball rolling in terms of family leadership learning and development. While other archetypes curtail the emergence of enterprising family leadership to subsequently undermine leadership succession and enterprising family continuity. Some scholars have labeled these archetypes as James Bond, Eternus, United, and Steward families4.
Leadership in James Bond families disassociates family and business. Leadership capabilities remain with and die with the founder. The Eternus family is reigned by an authoritarian founder or leader who is a self-proclaimed business and family leader. Family and business are connected according to the leader’s rules whereby excluding family members who are not aligned with the ruler. These two leadership archetypes typify the command-and-control decision making model.
United families integrate family and business. This archetype approaches the definition of an enterprising family. The founder or family leader sees the value of developing human and social capital at the family level as a means to identify and to select the best successor to run the business. However, talent development is focused on the succession of a single leadership role. Their odds of survival are better than the Eternus and James Bond families.
The Steward families are configured as long lived enterprising families. These families enable the winning conditions to sustainably compound human and social capital. The multi-generational family leaders understand that happy, caring, and engaged family members, family cohesion, entwinement of family, business, philanthropy, and community are goals only achieved through deliberate learning and practice. Family and corporate governance, although distinct, are seen as symbiotic. Decision making and perspective taking is encouraged and shared amongst family leaders. Empowerment and trust underpin their decision-making model.
People embody leadership and therefore conceive and enact strategy, any strategy. This also applies to enterprising family leadership and its family strategy. To effectively compound human and social capital requires a purposeful and empathic family leadership strategy that is led by a Chief Learning & Development Office (CLDO). This is no different than looking to compounding financial capital through the leadership of a Chief Investment Officer (CIO), all the while optimizing taxes and cash flows with the strategic guidance of your Chief Financial Officer (CFO).
The depth and breadth of leadership capabilities and capacity are at the root of organizational adaptiveness and continuity. Leadership is a renewable individual and organizational resource. Culture, vision, goals setting and monitoring, creating companies and family offices, setting up boards and family councils, and making capital allocation and succession decisions are rooted in the leadership’s capacity to act.
Focus on self and one will be bounded by one’s own limitations. Include others and you expand the frontiers of what is doable. Long-lived enterprising families sustain their family capital by encouraging family members to know thyself, know others, and know thy context over generations. Building shared mental models which transforms into productive behaviors takes time, foresight, and planning.
1 Generational wave refers to three living family generations at any point in time. G1, G2, G3, G4 family members form the 1st Generational Wave. When G1 family members decease, G2 family members now become G1 family members of the 2nd Generational Wave which is composed of G3, and G4 of the 1st Wave, and G5 members, and so on and so forth.
2 Auger, Mark W., Built to Last: Exploring Family Strategy in Dynastic Business Families, ©2017
3 https://www.henokiens.com/content.php?id=41&lg=en
4 https://ffipractitioner.org/how-to-keep-a-business-family-alive-families-that-fuel-next-generation-family-business-leaders/