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Doing Better than the 4 D’s

Doing Better than the 4 D’s

This week I want to talk about the “4 D model” that I’ve heard David York speak about on a few occasions.

Now, lest you think that the word “model” is being used here in a positive sense, as in “a model that you should follow” or “role model”, please erase those thoughts immediately.

And furthermore, if you think that I’ll be arguing against York’s views, again, that ain’t it either.

York coined the term “4 D Model” to describe what has been going on for far too long, and we are in full agreement that there is a better way to go.

 

Background and Context

I first met David York in Denver a few years ago, at the annual Rendez Vous of the Purposeful Planning Institute (PPI).

Regular readers know that PPI is one of my absolute favourite organizations and that the Rendez Vous in July each year is the one gathering each year that I never miss.

I personally see York as one of the rising young stars in this field and love the way he conveys his important message.  This TED Talk of his is a great example.  His books are great too.

 

Traditional Estate Planning

York has long described the traditional “4 D Model” as follows:

Dump, Divide, Defer and Dissipate.

He’s also well aware that many of his estate planning attorney colleagues continue to follow this model.  Let’s look at the 4 D’s one by one.

DUMP

This is the part where the assets of the parents are transferred to their offspring upon death, usually after the second parent has died.   Little is done to transition any wealth while the parents are still alive, because that might require some real thought.

DIVIDE

This refers to the fact that upon death, those assets will be automatically divided equally between the offspring, regardless of any other circumstances, like ability, needs, etc.

DEFER

The deferring is mostly about trying to avoid paying any taxes until absolutely necessary.  So delaying any transfers of assets is part of that strategy too, because if you can’t avoid paying taxes, deferring them as far off into the future is the next best thing.

DISSIPATE

The final D is mostly about the results, as the family’s wealth dissipates after applying the first three D’s.

When the wealth has been treated in this way, with financial wealth as the sole issue of concern, and where no effort was ever made to involve those who would inherit it, it shouldn’t be surprising to learn that in many instances, that financial wealth will be handled by the inheritors in ways that could be described as sub-optimal at best.

 

More Purpose, Please

So far we’ve spent lots of time on how NOT to do the work necessary to transition wealth from one generation of a family to the next, and now it’s time to look at some positive moves a family could make to do a better job.

Notice that I said “moves a FAMILY could make” because ultimately the onus is on the family to do what is right for them.

Unfortunately, most families rely on outside experts to help them with this important work, and if a majority of advisors are stuck in the “old ways”, it can be very difficult for families to get the kind of help they really need.

Truck dumping grabbage

Involving More Parties – Inside and Outside

If the Four D model has survived this long, it’s largely because it’s very efficient.  It’s quick and relatively easy.

Making purposeful plans involves a lot more people so it naturally takes more time.

The first group of extra people are the other family members.  How can you make important plans for the next generation without involving them?

I don’t know, but most families have done it that way.

 

Multidisciplinary Advisors

The other group of extra people that need to be part of the solution are the advisors.

Every great plan will need to include input from a variety of outside specialists.  Ideally they will collaborate for the good of the family.

But most importantly, most of them should only be brought in after the family has figured out the most important questions around how they want the wealth to serve the following generations of the family, not before.

Rendez Vous 2019 will feature a breakout session featuring David York as well as one featuring Steve Legler and Joshua Nacht.  We all hope to see you there.

Gifts of Presence from FamBiz Advisors

This week we’re going to look at a variety of subjects that are all connected to the same root word: presence.  Okay, it may be “cheating” a bit, but I’m also going to use related words, like “presenting” and simply “present”.

The other thing they have in common is that they all have to do with benefits families can get from working with a family business advisor.

 

The Presenting Problem

When a family calls in an outsider to work with them, it’s almost always because of some particular issue that they’re looking for help with.  Many people will refer to that issue as the “presenting problem”.

One of the gifts that a good advisor may be able to offer the family, after getting to know them and their situation better, is that he or she will also be able to offer new perspective on other issues.

It’s certainly not unheard of for families to think that they only really need help with something minor, and later realize that there are bigger issues beneath the surface that are more important, and need to be dealt with.

 

Dealing with What Is Present

An area that can be connected to this can be in helping the family deal with what is present.  When families are so used to being together and dealing with each other in the same old ways, an outside advisor can bring a lot of value to them by simply observing and indicating to the family members what they see, as an independent outsider.

Like the fish who doesn’t see the water or even know that they are swimmers, families can be oblivious to much of what is going on and how they are together, and that goes for the good as well as the bad.

 

Keeping you in the Present

A good advisor will also try to ensure that the family keep their focus on the present, with an eye to the future.

Families can dwell on the past way too much, to their detriment.  Rehashing old family stories and replaying past wrongs that one sibling did to another can be a huge time and energy drain.

A good advisor will work to limit the focus on bygones and keep the family in the here and now.

 

Who Should Be Present

Families in business are composed of a few interdependent systems of people: namely family, business, and ownership. See: Three Circles + Seven Sectors = One A-Ha Moment

Because many of the same people are part of the various groups, some of these families have a lot of trouble making the distinction between the groups, which can create confusion during discussions.

A good outside advisor will help keep things clear, and making sure that the family members are there for family discussions, the business people are there for the business meetings, and the owners are present for when ownership is being discussed.

 

Presenting Alternatives

Returning to the fish analogy from earlier, often family members who’ve been working together for a long time begin to suffer from “groupthink”.  They’ve been over the same subjects many times and they all begin to see things in exactly the same way.

An advisor who comes in from the outside can offer new perspectives to the family that they probably haven’t thought of, even though they’re often right under their proverbial noses.

The perspectives will almost always come with new alternatives for the family to consider.

 

Their Mere Presence

Sometimes the mere presence of that outsider, “someone with a different last name” as I often describe them, can do wonders for a family meeting.

When you were kids and there was a guest over for dinner, didn’t everyone behave just a little better?  It can be remarkably similar for business families when an outsider comes in to facilitate their meeting for them.

If this person is also trained in mediation, they will be able to work with all family members in getting the concerns and interests of everyone onto the table so that they can be dealt with.

 

Bearing Gifts?

When I arrive to work with a family I don’t come bearing gifts, at least not anything that is wrapped and with a bow on it.

I come armed with my skills and wisdom, and a deck of cards to randomize the speaking order.  Does your family deserve the gift that such an outsider can bring?

 

 

 

5 Ways to Invest in your Enterprising FAMILY

5 Ways to Invest in your Enterprising FAMILY

Each week in this space I write about business families and families of wealth, and I usually prefer to emphasize the family and its members, over the business and its assets.

This is in sharp contrast to much of the focus, not only by the professional advisors to such families, but often too many of the family members themselves.

Today I’m going back to a format used pretty frequently in the past, the old “Five things you should know…”, by looking at 5 Ways to Invest in your Enterprising Family.

 

  1. Formal Education

Post-secondary education is certainly one simple way for families to invest in their rising generation members.  As my grandfather liked to say, anything that you can put between your two ears, nobody can ever take away from you.

Some families have an urge to get their kids into key roles in the business ASAP, with the attitude that they don’t “need” to go to school any longer, because they’ll learn everything they need to know at work.

My bias is to look at everything with the longest time lens possible, so while encouraging young family members to go to college may delay their entry into the business, they will bring much more to the table, including more self-confidence, with a university degree a few years later.

 

  1. Family Retreat

When looking for ways to invest in the family as a whole, organizing a family retreat can be an interesting option.  Getting the whole family together at a different location (not at the office, and not at home or the cottage) can be done in many ways.

The important things to remember are to make sure that the activities and subjects covered will vary, and will certainly not be “all business”, and to make sure that many voices will be heard over the course of the retreat.

If the plan is just to have the parents download information and their wishes onto the next generation, you may as well not do it.

Please see Geography 101: “Where” Matters for more on this.

 

  1. A Series of Family Meetings

Even better than a single retreat would be to begin to hold family meetings on a regular basis.  This could be done annually, more frequently or even less often, depending on the size of the family and other matters around complexity.

These meetings can take place at a home or office, but ideally would be done in “neutral” locations most of the time.

The central reason for holding these meetings is to “force” the family to come together to talk about important matters that would otherwise not get discussed.

Presumably not everyone works in the family’s operations and these meetings are a great opportunity to share what’s going on, even with those who you may not think really care. (Hint: they actually DO).

 

  1. Family Business Conference

Families ready to take the “next step” can look for family business conferences where they can learn from other families facing similar circumstances.

I can almost guarantee that many family members who attend one of these types of conferences for the first time will have the following reaction: “Wow, I never realized that so many other people are experiencing the same issues as we are.  It’s nice to know we aren’t alone”.

 

  1. Hire a Family Facilitator

Now you may see me coming when I suggest that a family may want to hire an outsider to guide them down the road to figuring out all the issues relating to their alignment and governance development, but I already know that very few families will ever go this far.

As mentioned in My Notes from a Great Keynote a small percentage of business families do actually hire an outside consultant, and it is analogous to hiring someone to give you private lessons.

This blog is about investing in your family, and hiring this person will cost you some money of course, but the real investment will need to be each family member’s time in the meetings and other activities that you all undertake together.

The facilitator you hire can become the architect or project manager of the family’s journey to creating and implementing their family governance plans.

 

Logical Progression?

As it turns out, the five ways I’ve outlined above actually flow in a more or less logical progression. You don’t need to follow them in order though, just get started anywhere!

Roles and Rules for Enterprising Families

Back in January after the Institute for Family Governance’s third annual conference, I noted in Family Governance: One Step at a Time that that one day would end up being the source for a number of future blog posts.

I’ve officially lost count already, and here’s another one.

Its inspiration was the second presentation of the day, by John Ambrecht and Michael Whitty, entitled “Governance Structures that Actually Fit a Psychological Model of Human Behavior”.

Looking over their 75-page slide deck some 10 weeks later, there was a LOT of information in their talk.

 

From Roles to Rules ©

The psychological model they referred to is detailed in a 2004 paper that was published in the California Trusts and Estates Quarterly titled “FROM ROLES TO RULES©:† A NEW MODEL FOR MANAGING FAMILY DYNAMICS IN THE ESTATE PLANNING PROCESS”

I’ll leave it to the most curious readers to examine this in more depth, and I’ll simply talk about family business roles and the importance of eventually making rules that everyone needs to learn to abide by.

 

In the Beginning…

When family businesses start, things are usually rather informal, with few real rules and with poorly defined rules, if any.

As the business grows, the division of work necessitates that roles become clarified, and many family companies have some difficulty even with this roles component.

When that man tells me what to do, is he my boss, or is he my Dad?  (Of course the answer to that question is “Yes”)

Role Clarity and Making Rules

You may be thinking that in order to properly define each person’s role, making some rules around things would make a lot of sense. And I think you’d be correct.

While Ambrecht and Whitty suggest that there’s an evolution “from roles to rules”, they certainly don’t mean that you finish with roles completely and then arrive at the rules stage.

It’s more of a change in emphasis as the family business matures.

 

Formality is your Friend

Regular readers will recognize the expression “formality is your friend” as one I return to from time to time, and this is another such occasion.

Both roles, when they are well defined, and rules, when they are clear and are actually enforced, certainly help out with formality.

I hope that you noticed that I just added some conditions to both roles and rules there.

If the roles are poorly defined, they won’t do much good, and if the rules aren’t clear, or worse, if they aren’t enforced, it may be worse than not having any rules at all.

 

Rules Lead to Governance

Sticking with the formality, that feels like it fits really well with the rules idea.  And as a family makes more formal rules, they can (hopefully) eventually end up in the wonderful world of family governance.

Recall that this post began with a mention of a conference devoted to the subject of family governance.

As I wrote a couple of years ago in Family Governance, Aaaah!, my personal views and feelings around the “G-Word” have evolved.

Families will often have a negative view of governance because it sounds way more formal that what they are ready for and for what they think they need.  And they are often right about that.

 

How Are We Going To…..

When someone explains to them that family governance doesn’t have to be that complicated, and that it really involves answering three simple questions, people can get on board more easily.

Those questions are:

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

Three questions that can have some pretty long answers, agreed, but still only three categories to worry about.  And the third one is really mostly a repeat of the first one, but with an added emphasis on trickier situations.

 

Back to the Roles and the Rules

While governance feels like it’s more about rules, it is also very much about roles too.

All those decisions that need to be made will be made by people, and the bigger and more complex the family’s wealth becomes, the more important it is that they find ways to make those decisions in ways that satisfy the family group.

Business decisions can often appear much simpler than those that affect the family.  Please see The Unsung Role of Family Champions for more on key roles in enterprising families.

As families approach key generational transitions, it becomes especially important to pay close attention to these ideas.

 

Business Families: Looking for Glue and Grease

Business Families: Looking for Glue and Grease

This week we’ll look at some characteristics of successful business families, with some analogies to hopefully make my case more compelling.

Longtime readers with great memories may recall that I’ve noted this “glue and grease” idea before.

In late 2017, in My Notes from a Great Keynote, I touched on this idea for the first time.

The keynote speech in question had mentioned that one of the benefits of clarifying a family’s values is that they provide some “glue” that is important in keeping a family united.

I added that in addition to keeping things together, it’s also important that things continue to run smoothly, so that “grease” is also a key element, in addition to glue.

 

My Kingdom for Some Greasy Glue?

At the end of that post, I asked if any readers could provide me with examples of substances that had qualities of both glue and grease, in the hopes that there would be some product that I could point to when talking about this subject.

Alas nobody come forward with any ideas, which was a bit disappointing, but certainly not surprising.

The idea has continued to simmer in the back of my head ever since.  I was determined to revisit this and so here we are.  I wish that I could claim that I had a “eureka” moment, but alas, I haven’t.

But I may be getting closer.  We’ll wrap up this post with that, but in the meantime, let’s talk about those important qualities for enterprising families.

 

“Family-Ness”: Finding Goldilocks

For any family hoping to succeed at keeping their wealth together over generations, they really need to have enough “family-ness” to keep everything and everyone together to a certain degree.

In the first generation or two of the building of the family wealth, this is usually much easier, since most of the family members will have grown up in the same household, or at least in close proximity to one another.

When you get to the third and fourth generations, it’s quite common for people and family branches to have spread out to different geographical locations, and even other countries.

When family members don’t see each other as regularly, it can get more difficult for everyone to feel like they’re still a part of the same family.

That’s why it’s necessary to ensure at least some recognition of this, along with the intention to make enough of a sustained effort to be sure that some family events are always on the calendar.

But can there be too much family-ness?

 

Krazy Glue is NOT Ideal

While many family members love spending time together, there’s always the possibility of having too much of a good thing.  There are limits.  I enjoy spending time with my family members, and I hope that they enjoy spending time with me. But I’m not sure that I’d invite them to stay with me for an extended period of time either.

Even siblings who get along famously can run into issues after they each get married and you throw the in-laws into the mix.

Trying to force the issue of family time can be worse than not having enough.

 

Grease: Communication and Flow

When people feel too stuck together, because the glue has hardened and now they can’t escape, new problems can arise.

As important as it is for everyone to feel comfortable to enter the family space, they need to also feel just as comfortable to exit.

While my grease analogy is certainly about lots of clear communication, including making sure all family members understand what the glue is that is keeping them together, it’s also about the flow of people into and out of the system, each according to their own comfort level.

Salad Dressing: My Little Eureka?

Salad Dressing: My Little Eureka?

The best analogy that I’ve managed to come up with for my glue and grease is salad dressing. I’m a huge Costco fan, and they always have a variety of salad kits, of which I’ve tried a handful.

When you open them up, some of the leafy greens typically find their way onto the counter.  Until you add the dressing and mix it in.

Then things hold together better. And when you add in the other ingredients, they all hang together nicely, while still sliding around freely.

Salad without any dressing is clearly missing something.

Likewise families need glue AND grease.

A hand making the sign of peace infront of a sunset

FamBiz Conflict:  In PIECES for the Sake of PEACE?

Many advisors who work with business families have their own inherent biases.  This isn’t a big problem, especially when we recognize them and admit them openly when the situation warrants.

Personally, I love it when both a business AND the family behind it can remain together for the long haul, including through an intergenerational transition.  Of course, such transitions are a point where many family businesses face their longest odds, because it isn’t always easy (or even possible) to get everything “just right”, as one generation leaves the scene and another one follows in their place.

When the family and their advisors, recognize that it probably isn’t going to work, that’s when some key decisions need to be made.

Family or Business as Priority?

The main question that often arises, even if it’s seldom expressed this way, is whether they’re going to prioritize the business, or the family.

The outside professionals who are working with the business are much more likely to prioritize the survival of the business, even if it’s at the expense of the family.

The business is the “main entity” of concern, they’re business specialists first, their client is the business, that’s the circle that they understand the best, that’s who they invoice, that’s what they know.

In contrast, I work in the family circle, so my bias is always to find ways for the family to be the major priority, not the business.  In my view, the business is an asset, that happens to be owned by the family.  Assets can be bought and sold.  Family harmony?  That’s a very precious intangible asset, and you can’t buy it, especially when you really need it.

 

Who Needs a Monolith?

Thankfully, the era of one monolithic company is not as common as it was decades ago.  As noted a couple of weeks ago in “On Enterprising Families and Family Wealth”, it’s much more common these days for successful families to be involved in more than one enterprise.

In addition to diversifying the family’s financial risk into different industry sectors, another great benefit can be that there are more places for family members to excel in their own part of the overall family wealth spectrum.

Different Paths, Similar Destinations

Over the years we’ve all heard stories about the family with two kids and one store, who opened another store so that each of the siblings could have “their own”, or the brother who moved away to open a new location in a different territory.

Occasionally there would be a company that needed to be “split into pieces” to accomplish the same result, and it was this type of situation that I had in mind when conceiving this post, with the “pieces” and “peace” play on words.

These days it may be more likely to be one of the rising generation members becoming an “intrapreneur” and creating a start-up in a new industry but within the walls of the “mother house” company. Or it could be a family member pitching the “family bank” with an idea that needs funding, which could become the next key growth piece in the enterprising family’s wealth strategy.

It could be some family members looking at diversifying the family holdings into private equity or impact investing, or simply having those rising generation members who are so inclined, taking an active role in the family’s philanthropic initiatives, rather than remaining with other siblings or cousins in one of the businesses.

scrabble letters put together to form the world peace

Many Ways to Achieve Peace

Of course the bigger the enterprise the more places there are for people to assume roles that suit them, where they’re less likely to clash with other family members.

In cases where rival siblings feel “stuck” together in one place that’s beginning to feel “too small”, figuring out how to cut the entity into the right pieces can be a struggle.

But my bias will always be to work to find a way to get that done and keep the family harmony intact, even if the business has to “suffer” some consequences.

 

Thanksgiving and Christmas Dinners

It’s hard to put a value on family harmony, but I always like to think about important family gatherings and the fact that these are places and occasions where you need everyone to be comfortable coming together.

If working too closely together makes this impossible, please consider trying some of the ideas here.

 

Buildings and corporate offices

On Enterprising Families and Family Wealth

Today we’re going to look at a couple of subjects that have been brewing in my head for a while.

I’m going to combine some elements of vocabulary and evolution, which may sound a little more arcane than what I have in mind.  So let’s get going.

 

 

Family Business: Been Around Forever

We all recognize that family business has been around since the beginning of mankind.

Centuries ago, out of necessity, the family used to be even more of a “unit”.

As economies developed, they also became an “economic unit”, as it was natural for families and tribes to work together for their own advancement.

 

 

Business Families: More Recent

More recently, as society has evolved and as economies have advanced and matured, we’ve seen more and more “business families” emerge.

There often comes a time when the people leading a family business actually make a shift to thinking of themselves as more of a “business family” than simply a family business.

There are a couple of elements at play here:

  • Prioritizing the family over the business
  • Working ON the family, instead of IN the business

This shift usually comes only after certain success has been attained in the business that allows its leaders the luxury of time to make this shift.  (Many never make it this far.)

Lots of family businesses remain a family business forever, and of course still serve a great purpose for their members and for society.

See my 2014 book: SHIFT your Family Business: Stop working IN your Family Business, Start working ON your Business Family

 

 

Enter the Family Enterprise

Once a family achieves a certain amount of success with their business, all sorts of possibilities open up.

From growing the original business into more geographic locations, to vertical or horizontal integration, to developing completely new lines of business, the combinations and permutations are literally infinite.

The common thread is often a family, for whom all this wealth is being created.

When a family is involved in more than just its original business, the term “family enterprise” is often the one that describes them best.

This can also be the result of a liquidity event, where a major business is sold, and the proceeds are reinvested into other ventures.

It can be very important for a family to get to a point where they can view any of their businesses as simply another asset that the family owns.

 

Cartoon showing people standing on coins

Enterprising Families

We’re getting into vocabulary and semantics a bit, but there’s a good reason.

Finding the right label for something is often a key to getting members of a group to develop a common understanding of who they are, what they are doing, and where they are going.

I mentioned off the top that we’d be looking at evolution as well.  Let me expand on that now.

Just as a family can go from concentrating on one business during it’s family business stage, and then “evolve” into more of a business family, there can be a similar evolution to the enterprising stage.

These “stages” of evolution often take decades, and can coincide with generational transitions as well.

A recent edition of the FFI Practitioner highlighted a couple of case examples you may be interested in.

 

 

Family Firm Institute – Business or Wealth Focus?

In the same way that any family may evolve from one stage to the next, the organizations of professionals who serve enterprising families have also evolved.

The Family Firm Institute began over 30 years ago, and in the beginning their target was essentially family businesses.

In the intervening decades, they have also concerned themselves much more with family enterprises as a whole, including the world simply defined as “family wealth”.

 

 

Designations and Certifications

FFI now offers certifications in Family Business Advising and in Family Wealth Advising.

In Canada, FEX, through its FEA program, offers the designation “Family Enterprise Advisor”.  Thanks to their “later mover advantage”, they were able to use the more holistic term “family enterprise”, which became more current in this century.

The common thread through all of these is the existence of a family with enough wealth and complexity to worry about.

 

Different Labels, Similar Issues

Families evolve from one decade and generation to the next, and the industry that serves continues to get more sophisticated.

Working together, we are trying to get better results for families everywhere.

And those who can figure out the family dynamics usually make out best.

 

 

 

family business champion

The Unsung Role of Family Champions

This week I’m introducing a subject I first heard about a few years ago, but that has recently been put back on my “front burner”.

I first heard about the concept of a “Family Champion” about five years ago, which would’ve been right around the time that Joshua Nacht was completing his PhD on the subject.

Nacht’s supervisor was Dennis Jaffe, who is quite well known in the circles of the Family Firm Institute (FFI) and the Purposeful Planning Institute (PPI), both of which I was then just discovering.

 

Like a “Product Champion”?

Decades ago I recall coming across the idea of a “product champion”, while reading some business books.

As I recall, the concept was that you needed to have one really interested and motivated person who really cared about the development of a new product within a company, if it was to have any hope of succeeding.

Later in my career, when our family’s business had successfully licensed one of our patented products to a large company to manufacture and sell in the US, we learned about the importance of a champion, the hard way.

 

Champ Doesn’t Work Here Anymore

The company we licensed was acquired within the first year of our agreement, and both the VP and product manager we had been dealing with soon left for greener pastures.

Our agreement “survived” the acquisition, but without a “product champion” around anymore, the product we were expecting them to make and sell (and pay us a royalty on) soon became their 99th priority.

We ended up cancelling the agreement shortly thereafter.

From that point on, the idea of a “champion”, as someone who cares about something and who will assume a leadership role in making sure things happen, became seared in my memory.

Family Circle Issues and Governance

When we think about a family business, we can safely assume that in the business “circle”, there are a number of champions around, whether they be for a product or a project.

The role is actually most often actually part of someone’s job, and something that someone is specifically paid for.  In fact, if they do it well, they may even get a nice bonus.

But every family business has another key circle, the family circle, where things are often much less clear.

Anyone who reads my blog regularly, knows that I always bring things back to the family and how tricky it can be to make sense of things there.

 

Trophys

 

Momentum and Making Things Happen

Because it isn’t normally part of anyone’s “job”, making sure that things get taken care of in the family circle requires someone to be an instigator and a leader, and this person is often referred to as a “Family Champion”.

Joshua Nacht, who now works with the Family Business Consulting Group, has recently updated some of his PhD work and released a book entitled Family Champions and Champion Families.

In the book, he gives some great examples of who these champions are and the roles that they play.

 

 

The 100-Year Family Businesses Project

I asked Nacht how he came up with the idea for his PhD and he explained that Jaffe was his PhD supervisor.

Because Jaffe had recently launched a years-long project of finding and interviewing 100 family businesses that had each lasted a minimum of 100 years, he employed some of his students to conduct many of the interviews for him.

It was after doing a number of these in-depth interviews that Nacht and Jaffe realized that one of the keys to family business survival was to have someone who is interested, motivated, and capable of making sure that the family circle was never neglected in favour of the business circle.

 

 

Advisors Supporting the Family Champion

As an advisor who typically works with families who are beginning to work on family alignment and family governance, I am always on the lookout for those family members who are most open to the ideas that I bring.

The family champion role is often a lonely one, because many family members are preoccupied with their own lives and those of their nuclear family, rather than that of the extended family.

Outside advisors who learn to team with family champions, the ones with whom their messages resonate the most, are best positioned to create a lasting impact for the family, by supporting one another’s efforts.

 

 

Ikigai: A “Four-Circle Model” of Human Capital

This week we’re going to look at an interesting model that I came across last year, and talk about how it might apply to enterprising families.

When I first saw it, I mistakenly thought that it was already quite well known, but it doesn’t seem to be.

At the FFI conference last fall in London, one of the presenters had it on a Powerpoint slide and asked how many people were familiar with it.  With dozens of people in the room, I was one of less than a handful of people to raise my hand.

The model comes from Japan and is called Ikigai, and the sub-title of the graphic I found calls it “A Japanese concept meaning ‘A reason for being’”.

Ikigai: A “Four-Circle Model” of Human Capital

Pretty Heady Stuff

I guess that makes it seem like pretty heady (and potentially “heavy”) stuff, but I promise not to go too far afield here.

As usual, I want to look at how things affect families, whether they run a business, have a family office or are simply part of the “ultra-high-net-worth” set, and are concerned with raising their offspring to have meaningful lives.

For most parents, few things are more important than raising our children, with the long-term goal of having them turn out to be well adjusted and happy.

Some adopt a pretty laissez-faire attitude towards their offspring’s career goals, while others are quite directive.

 

What You Love, What You’re Good At

The old standards of “do what you love” and “find something that you’re good at” are still as pertinent as ever when we try to guide our children as they make choices while they’re coming of age.

Of course there are a number of other considerations that also come into play, and the Ikigai brings up a couple of them.

Some people will look at the other dimensions and quickly agree that they are also important, but my point here today is that they don’t necessarily apply equally to everyone.

 

Show Me The Money

In addition to loving what you do and being good at it, for most people it’s also important to get paid for their work, so finding something that you can be well paid for is often very important as well.

Notice that I said “often”, and not always, because I’m not talking about “most people”.

Families that have already succeeded at accumulating significant wealth can prove to be important exceptions here.

 

What the World Needs

Personally, I’ve seen other models that noted the three aspects we’ve already covered, but the one “new” or added dimension is the one where you also consider “what the world needs” in the mix.

This seems to fit quite nicely with the way many Millennials are typically portrayed.

More than ever, it seems that many in the younger generation truly care more about the collective than they do about increasing their own riches.

So in some cases, people may find it more compelling to look for careers where they feel like they are making a positive impact on the world, as a higher priority than making a lot of money.

 

Different Generation, Different Drivers

Trying to find something that checks all four boxes may seem like a low-percentage game.

That doesn’t mean that it can’t be done or that it isn’t worth trying though.

Plenty of people have done well and lived very rewarding lives while only really “succeeding” in a couple of the four areas, thank you very much.

Many parents have sacrificed a lot and worked at jobs that they never loved but needed to do to provide for their families, with the hope that someday, their kids could have a better life.

 

The Resource Generation Set

I recently came across an organization that’s attracting many young people from financially wealthy families who want to make a difference in the world.

They call themselves Resource Generation, and appear to want to help create a world with more equitable social justice.

I’m sure that those who are involved must have some very interesting dinner conversations with their families.

It appears that there are indeed some people who are more concerned with the way the world works and less concerned with making money, because they already have plenty.

And I think that the Ikigai model can go a long way in helping families discuss these important subjects together.

Questions Don’t Always Require Answers | Family Business Guidance

Questions Don’t Always Require Answers

I sometimes use this blog to talk about abstract ideas that seem only tangentially related to the fields of family business and family legacy.  This will likely be one of those posts.

The genesis of the idea for this piece came back in October in London, at the FFI conference, when I was speaking with a friend and co-presenter about the role she plays on a family business’ board of directors.

During that conversation she related some feedback she got from the family patriarch, who told her that he liked the fact that she “asks great questions”, and, here is the good part, she “often doesn’t even care what the answers are”.

Of course I quickly thanked her for a great blog idea!

Reasons for Asking Questions

This of course got me to thinking about why people ask questions in the first place.

There are plenty of different reasons that people ask questions, depending on lots of different elements, and the context in which said questions are being asked.

But simple logic would seem to dictate that when someone asks a question, they are interested in the answer!

Indifference Versus “Not Caring”

This brings us to an important nuance in what I’ve written above.  First of all, I’m not sure that my quote from the patriarch is verbatim.Questions Don’t Always Require Answers | Family Business Guidance

But more importantly, I want to make it clear that neither he, nor she, nor I, believe that she truly doesn’t “care” what the answers are.  It’s more about the fact that she is indifferent to the answer.

And that of course makes me think about how often people ask questions where they have a predetermined expected answer that you will either get “right” or “wrong”.

Coaching Questions

When you ask someone a question, there are literally an unlimited number of ways you can phrase it.  And we won’t even get into the tone of voice and other non-verbal aspects, because that could be a whole other blog, or even a book.

Those who have taken coaching courses have learned that there are certain types of questions that typically yield better results, and I’m pretty sure that these are the kinds that my colleague uses in her role on the board of that family business.

Most people have heard about the idea of avoiding questions that can be answered with Yes or No, i.e. open ended questions.  That’s a great start, and it also requires that you then listen to the answer, which will then be longer than a single word.

Don’t Ask Why

Another “rule” that I try to hold myself to is not to ask questions that start with “Why”.

Even though it’s not always the case, very often the person hearing a question that starts with “Why” will feel put on the defensive, and feel the need to “explain themselves”.

When people answer questions from a defensive stance, it doesn’t necessarily add to a productive discussion.

If you truly want to understand what someone was thinking, because you are curious, and not simply judging them, there are better ways to ask these types of questions.

What and How

Simply abolishing the word “why” and replacing it with a much softer “what” or “how” can make a surpringly big difference.

“How did you come to the decision to do that?” or “What was going on at the time that lead to that decision” are not that much different in terms of the insights that the asker of the question wants to know.

But these last two questions will likely land much more softly, and in turn yield a more useful answer, that can then send the conversation into a more positive direction.

Past Versus Future

A board of directors will normally spend much of their time looking to the future rather than dwelling on the past, and this is where some really interesting opportunities for questions can arise.

Some of the best will start with “What if…” and they bring up many possibilities that make people think about what could be.

Whatever the circumstance or context, the best questions are usually driven by real curiosity, and not with any judgement.

This is sometimes easier said than done, but like most things, practice makes you better at it.

The curious attitude of the questioner usually comes through loud and clear.