Posts

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.

 

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.

 

 

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.

Counterintuitive Thoughts

I can’t recall when it happened exactly, but sometime last century I first heard the word “counterintuitive” and I was instantly smitten.

What a great word.

It’s a word you don’t hear every day, that sometimes elicits a quizzical look from people.  A “fifty cent” word.

So today I wanted to blog about some of my favourite counterintuitive ideas.

 

Traffic Problems

Let’s begin with something that people who live in cities can all relate to, traffic.

When you expect that there will be lots of traffic, your first inclination might be to leave early to get where you’re going.

It may seem counterintuitive to leave late, but once the traffic has let up, you’ll have a less stressful drive and arrive in a better mental state.

 

Reliable Internet Service

I don’t know if it’s just me, or my choice of Internet service providers, but sometimes my hard-wired cable is pretty unreliable and inconsistent.

We couldn’t get cable at the cottage, so we had to “settle” for satellite instead.  I worried about reliability because I need to be able to work from there too.

I do plenty of meetings over Skype and Zoom and was worried that there would be glitches.

Counterintuitively, I cannot recall a single glitch in any call I’ve had with anyone from there, while my cable calls from both my home and office are often sub-optimal (another favourite word!).

 

 

Strong Steel, Weak Glass

Many years ago there were some home break-ins in our neighbourhood that concerned me.

I called in a security expert to see what we could do to fortify our home. I was told that one of our patio doors was a risk.  It’s a steel door containing a large window.

I assumed that the glass was the weak point.

Nope. It was the steel.

The steel is so thin that anyone with a sledgehammer could smash it, but the window is apparently virtually indestructible.

 

 

Family Wealth Transition Examples

Of course I now need to share a few examples from my professional world too.

There are many times when I suggest that people Zig when everyone else is suggesting that they Zag.

And one of my new favourite expressions is “Don’t just do something, stand there!”

 

 

A Bigger Pie Won’t Solve Everything

There is a propensity for people to think that more money is always better than less, and that therefore, making the proverbial pie bigger should always be the goal.

But for a family, there are other forms of wealth besides financial.

Families who concentrate solely on making more money, under the assumption that everything else will work itself out, are fooling themselves.

It may seem counterintuitive, but it’s true.

There comes a time in every family’s life cycle when the focus should switch from how to make the pie bigger, to how the pie will be shared and maintained in the future.

 

A Looser Grip is Safer

On a related note, many of those who create a lot of monetary wealth also like to control everything (and everyone) they can.

When it comes to family members, I will always maintain that holding on with a very tight grip is not a recipe for success.

You probably know people who are guilty of this, even if you have not thought about it in the same terms as my metaphor.

When anyone tries to exert complete control over others, it will eventually backfire.

It always does.

Kudos to those who recognize this and choose a looser grip.

 

Slow Down, Go Far

As I wrote in Going Far? Go Together, I believe that family business and family wealth are much more about “going together” than they are about “going fast”.

If you are concerned with doing things quickly, then going alone, or doing things by yourself, can make perfect sense.

But family wealth eventually reaches a stage where it becomes more about how those who will be on the receiving end of the transition are able to function together as a group.

This ability to work together is rarely something that they’re all born with, and as such, it takes time for it all to come together.

 

 

No Rush, Except…

You really shouldn’t rush the process.

In fact, there is only one thing you should rush here.

Hurry up and get started, so that you can then slow down and take your time getting it right.

 

 

People standing as a group watching sunset

Improving Together in a FamBiz

Writing these blogs each week for six years, my weekly habits continue to evolve.

I still get questions from colleagues about the source of ideas to write about, and my answer remains consistent: I write one blog a week, but I usually get at least two new ideas.

Sometimes the ideas come from somewhere unexpected, and sometimes they morph from one thing to another along the way.

Such is the case this week.

Better Investors

I’m guilty of spending more time than most people on social media.

I like to know what’s going on in the world and Twitter and LinkedIn allow me to follow the people and sources that I like and trust, on a variety of subjects that interest me.

A few weeks ago I saw a post on Twitter from Carl Richards (@BehaviorGap)

“It turns out our job is
not to find
great investments,
but to help
create great investors”

A Blog Idea Is Conceived

My first “A-Ha” came right then and there.

An “Investment” is a product or a piece of content, and it is the thing that many professionals in the investing space specialize in selling.

But as Richards points out, that focus is misplaced.

An “Investor” is a person, and such persons are better served by those who will help them with the entire process of the whole scope of being investors.

 

Teach Them How to Fish

It comes down to the old Bible story about not simply giving a person a fish, but instead teaching them how to fish for themselves.

Do you want to feed them for a day, or for a lifetime?

That’s supposed to be a rhetorical question, but unfortunately many of the business models still followed by many professionals, seem to prefer feeding on a day-to-day business, and being paid for it over and over as well.

Process Over Content

So the thing that grabbed me, as far as this idea being good fodder for a blog post, was the whole Process Over Content question.

It’s certainly not a new idea for me to discuss, but it was from a different angle.

The content pieces that I often deal with are things like legal or accounting structures or trust vehicles, or contracts such as shareholder or partnership agreements.

Strategy of Tactics?

The process part of putting all of these tactical pieces together into a strategy will often be given short shrift.

Too often the concept of making sure that all these pieces will fit together properly is either completely ignored or simply assumed to be sufficient.

In reality, though, this is where many plans fall apart.

 

Blogging Brings Clarity

So here is where this post took a bit of a turn.

I was set to write about the “process” part, but then realized that there was a “people” component that I simply couldn’t ignore.

My blog title was still a big question mark too, and then it came time to search for an image to accompany the post, with a surprise of its own.

A-Ha # 2 – Improving Together

I’ve been using Shutterstock for a while and am usually quite satisfied with the results I get when I search for the right image to go with each post.

This time my search actually kicked things up a notch, as it created another A-Ha moment for me.

I was looking for something using “process” and “people” and there it was…Improving Together.

Holy crap, that’s even better than anything I had come up with so far.

Families Learning Together

When Richards was talking about investors, I imagine that he was referring to singular people, or perhaps to a couple.

My work is always about families, whether I’m actually working with all family members directly, or working with one person, helping them organize and coordinate their family.

The key to finding success for most families, is for them to find reasons, ways, and opportunities to work together and learn together, so that they can eventually get really good at deciding things together.

Co-Creating the Family Strategy

The families who are most successful at transitioning their wealth to the next generation are those who have mastered the practice of involving as many family members as possible in the process.

The co-creation of the strategy is what ensures the buy in, so that the plans actually work.

The time and effort required are always worth it.

Dog Holding leash in-front of the door

Ready to Lead > Ready to Leave

Certain topics come up over and over again in the world of family business.

Today we’ll be looking at two of them, although when you get right down to it, maybe it’s really just one, because they’re often wound pretty tightly together.

As you may’ve already gathered from the title, I’m talking about a changing of the guard at the top.

Some Batons Are Sticky

As I wrote in my Quick Start Guide on this subject, Sticky Baton Syndrome(Ask Prince Charles) there are plenty of cases where the person at the top of a family business is just not ready to leave.

There are all sorts of excuses that are typically mentioned as to why they must remain in place.

Some of them are even true, and some of them are actually good reasons. Many, however, are just excuses, given by people who are simply scared to face certain realities.

bird leading other birds

The Father of the Three Circle Model

In September I was in Niagara-on-the-Lake for the annual Family Enterprise eXchange (FEX) symposium, featuring John A. Davis as one of the keynote speakers.

If you don’t know who Davis is, he’s one of the co-creators of the Three Circle Model, of which I am a big fan.

See: Three Circles + Seven Sectors = One A-Ha Moment

He regaled the crowd with a presentation about the “Future of Leadership” and then led a discussion with Philippe DeSerres that was also very well received.

But my take-home message from his talk was something he only mentioned briefly in passing, right near the end, which was the inspiration for this post.

The Money Quote

He was talking about getting the timing right when it comes to transitioning the leadership of a family business.

He noted that more and more these days, and from his decades of experience as a leader in consulting to this field, there is one factor that trumps the other.

According to Davis, it makes more sense to make the leadership transition of a family business when the rising generation is

Ready To Lead,

than to wait until the current generation is

Ready To Leave.

Notably, he took the time to spell it out, i.e. “lead, l-e-a-d” and “leave, l-e-a-v-e”, just to be sure we all understood him.

I understood. I hope you do too. But just in case, I will continue…

A man leading other people

Too Soon or Too Late

At the outset of this blog, I noted that these two topics are often connected.

The biggest way this happens is that the current leaders will sometimes subconsciously hold back on giving the rising generation the opportunities to show what they can do.

And one of the major reasons that they do this is because of their own desire to remain important.

What Else Is There?

So many business leaders attach so much of their identity to their role as the leader of their business.

I like to think that this might just be too narrow a viewpoint.
Let me explain. The key to this lies in the Three Circle Model.

Note that the Business circle is only one of the three systems that intersect, and that the “big picture” also includes Family, and Ownership.

Step Back to See the Whole Picture

If the leader of the “business” steps back and looks at the whole picture, including the Family and Ownership systems as well as the Business system with which they are already intimately familiar, they will see many other, greater, opportunities.

If the business is a huge success, yet the family falls apart and the owners end up in a dispute that has various family members “lawyering up” against each other, then just how important will the business success have been in retrospect?

Three Circle = Three Systems = Three Leaders?

If you’re trying to create a true multi-generational family business, you cannot neglect any of the circles.

Each circle ultimately needs its own governance structure, and likely its own leader, or leaders. Someone needs to foresee all of this and line up and prepare those future leaders.

There comes a point in the life cycle of any business leader when their focus should shift from running a successful business to overseeing a complete enterprising family (i.e. all 3 circles)

So you built a great business, congratulations.

If you want it to continue to survive as a family enterprise for generations, you’ve still got more important work to do.

Stop working IN your family business,
Start working ON your business family.

Family Office: “WHAT” vs. “HOW”

Family Office: “WHAT” vs. “HOW”

A few weeks ago, in From Family Business to Family Office, I mentioned that I’d start writing more about the family office world. Being a man of my word, here we are again.

I had a bit of an issue choosing my blog title, though.

I began by thinking about the idea of “Strategy” versus “Tactics” in the family office space.

But my bias is to try to stay away from “jargon” terms and use the simplest possible words, at least most of the time.

 


A Thousand Words

Of course when it came time to select a photo to go with this post, terms like “strategy” and “tactics” garnered more interesting search results from Shutterstock than “what” and “how”.

At the end of the proverbial day, though, whether we use the simple questions or the business jargon terms, we’re talking about the same issues.

Ten Years Flew By

The most important idea here is this:

You need to recognize the difference
between the strategy (the “what”)
and the tactics used to accomplish
that strategy’s goals (the “how”).

If you get nothing else out of reading this, my Dad would’ve been pleased. What does he have to do with this, you ask?

It has now been 10 years since he lost his final battle with cancer, and I cannot count the number of times his wise words have been summoned to the front burner of my brain.

“Let’s figure out what we’re trying to do first, and then we can figure out the best way to do it.”

 

Family business office

 

The Family Office (The “Who”)

A family office is typically composed of people, from one to a handful, or sometimes even dozens. (Key variables include the size of the family, the amount of wealth they control, and the level of complexity involved)

The employees of the family office should be working for the benefit of the family, and so they should be concentrating on the tactics, the “how”, and be less involved in the strategy.

Ideally, the strategy will have been worked out by the family, before the family office people get too far down the road of implementing the best tactics.

 

It’s Complicated

I used the term “ideally” because I know that this is often not the way it works in the real world.

But that typically isn’t the fault of those who work for the family office.

Much like the ideas I wrote about in FamBiz: Management vs. Governance, different groups of people have different roles that they should be playing.

When the people who are supposed to play those roles don’t play them, then others will invariably step in and assume those roles.

 

Benefits Come with Responsibilities

Families that have a family office (FO), or who are clients of a multi-family office (MFO), have set up this relationship so that the FO or MFO can serve the needs of the family.

The decision to go this route may have occurred last year or last century, and it may have been decided by this generation of family leaders or by their parents or grandparents.

The fact remains that it was done for the benefit of the family members.

And as we all know, with benefits come responsibilities.

Family business Work

Where Are We Going?

I’m going to take a guess and say that most readers are fine with what I’m saying here, but that they may be wondering what my point is.

So here’s where I’m going.

I think that relationships between families and their family offices tend to be out of balance, or off-kilter.

My anecdotal evidence suggests that family office employees often control not just the tactics, but much of the strategy too.

This can be mitigated when the FO includes family employees, but that can also make things worse.

 

Family Alignment: The Missing Link

As I stated above, this is not typically the “fault” of the family office, but usually that of the family.

They need to intentionally work at getting the entire family aligned together, in order to make the decisions that the family office should then be executing.

 

The WHAT, the HOW, and the WHO!

Getting a family aligned so that they can effectively drive the strategy of their family office does not just “happen”, all of a sudden, or all by itself.

It begins with the recognition that it is necessary for the long term good of the family and its legacy.

Recognize anyone?

See also: The Exponential Magic of Family Collaboration

 

The Importance of Family Vision

The Importance of Family Vision

It’s been over a year since I wrote about Family Vision specifically, so I think I’m due.

(5 Things You Need to Know: Family Vision)

 There are of course more than five things that anyone could say about every subject, and family vision is one that I think should be discussed more broadly, more deeply and more frequently.

But first I’d like to go back to the first keyword in the title that I decided to put on this post, i.e. “Importance”.

Questions Around Importance

A natural place to begin would be to ask “why” family vision is important.

But since this is my blog and I make the rules here, I’m going to “zag” instead of “zigging” and answer a few different questions instead.

I hope that no one thinks I’m acting like a politician when I answer a different question than the one that was asked.

My Dad used to say “You can do whatever you want, but don’t become a politician, because then even your friends will think you’re an a**hole”.

(My son recently reminded me of this, so yes, I have passed it down!)

 

– For Whom is Family Vision Important?

Making sure there’s a clear family vision isn’t an important consideration for every family.

In fact, I’d bet that most families have never even thought about this at all, and that’s OK.

But I don’t write these blogs for most families. I’m reminded of something my Aunt said to my Mom after she read my book, SHIFT your Family Business. “Oh, that’s a book for rich people”.

Well that isn’t the word that I would’ve used, but she isn’t wrong either. Most of what I write is geared towards “the 1%”.

I like to think that my ideas are just as valid, generally, for all families, but realistically, the higher up the wealth spectrum the family is, the more likely my thoughts will resonate with them.

 

– When Is Family Vision Important?

Just as family vision is not necessarily important for every family, neither is it important at all times.

Years and even decades can pass during which it never becomes salient. So when is it likely to become important?

Essentially, as soon as more than one generation of adults is involved, I believe that it is high time to think about working on a family vision.

As soon as the wealth that has been created goes from being the wealth of its creator to the wealth of the creator’s family, having a family vision becomes important.

When the wealth creator goes from thinking about “my wealth”, to “our wealth”, the paradigm has shifted.

 

2 kids walking down a road

– Where is Family Vision Important?

So assuming that a family is actually one for whom family vision is important, and that they are now at a point where the wealth is considered to be “family wealth”, where does the vision actually fit into things?

Discussions about family vision usually begin in the context of a family meeting.

If a family fits the profile based on the first two questions (“for whom” and “when”) but still hasn’t begun to have regularly scheduled family meetings, then that’s the most logical place to begin.

When starting out, I always suggest that families identify the smallest logical group of people to convene, usually the parents and their adult children. In-laws and children can be added later.

When I say, “regularly scheduled”, that doesn’t necessarily mean frequent.

Having a regular annual meeting will often suffice, and that’s preferable to having a few ad-hoc meetings over a few months and then not getting together again for three years.

– What is Family Vision Anyway?

Just what goes into a family vision will vary from one family to the next. No two families will go about figuring theirs out the same way, either.

The actual “content” or result of the vision is less important than the process the family goes through to define it.

If the family can answer the question “Where are we all hoping to go together?” I think that they’re well on their way.

Is it a family credo or motto? Yes, possibly. Is it a mission statement? Yeah, maybe that too.

Is it carved in stone? Well, maybe, eventually, but I’d suggest writing it down in pencil first, just in case.

So when’s the next family meeting?

Video version of (5 Things you Need to Know: Family Vision)

Hikers climbing a mountain full of snow

Wanted: Purpose, Passion and Community

Wanted: Purpose, Passion and Community

 

When I was in Denver a few weeks ago for the annual Rendez-Vous of the Purposeful Planning Institute, I met a bunch of interesting people, as usual.

Having been there the past five years, I’m starting to see many familiar faces each time I return, which is great, of course.

And I always meet interesting new people every year as well.

Attendees come from a whole bunch of different backgrounds and professions, and occasionally I meet folks from areas where I’ve had no contact or experience.

Such was the case with the young women I met from Koplin Consulting.

Addiction TreatmentCommunity in family business

Koplin offers in-home counselling, treatment and recovery services for those working through addictions.

I’m fortunate to not have ever been in the market for those services for my family or for client families – yet (?).

I ended up at the same table over meals with all three of their representatives at the conference and I found them very refreshing.

During one of these discussions, it was mentioned that the key to successful recovery usually involves people finding strength in three places: Purpose, Passion and Community.

The “Trifecta”

When I hear about something that works in one area of life, I’m compelled to see if it could also apply elsewhere.

So today I want to look at those three elements from the perspective of families who are hoping to transition their wealth down through the generations.

I just searched each of those words on my website to confirm that I have actually addressed them all in this space over the years, several times, but not yet in the same post.

Family Purpose

For a family to be successful in passing down their wealth to the rising generation, it’s really helpful if they have some sort of shared purpose.

When a family undertakes the work necessary to figure this stuff out, they often start by trying to analyze everyone’s values first.

From individual values, they typically try to identify a handful of common values that everyone in the family can agree on.

Finding a common purpose becomes easier once you’ve decided on those shared values.

Individual Passions

Just like everyone has their own set of values, each individual will have their own passions.

But unlike the values, where we hope to find a few in common, to help lay out a clear family purpose, the individual passions should be looked at for each person separately.

Everyone has different things that make them tick, talents that they exhibit that set them apart, and activities that they do so well that when they’re doing them, it doesn’t ever feel like work.

Human Capital

The special talents, skills and passions that each person possesses are part of the family’s “human capital”, and ways should be found to leverage each person’s individual strengths.

Families that are able to harness the best from every member of the family will have a much easier time keeping their family wealth together for coming generations.

Part of a Community

When it comes to the “community” aspect of a family, I think the most common element is how much time

family members actually spend together.

Time with the family

And while that isn’t something that you’d measure with a stopwatch, there really is no substitute for “face time” in the old sense of the word.

Technology has made it much easier for people who are physically separated to be in regular contact, and that’s great, but to be successful at keeping their wealth in the family over generations, some regular contact is a prerequisite.

Wanting to Spend Time with Family

As I work with various families, it’s pretty easy to see which ones have got the community aspect figured out and which ones never will.

In many ways, it has more to do with wanting to spend time together, and looking forward to lots of interaction than it does with the amount of time they actually spend as a group.

Putting it All Together

Families wanting to benefit from the Purpose-Passion-Community idea can do so by spending time together working on their common values to drive a shared purpose.

They should allow each member to work their own passions within that, though, and not try to make everyone the same.

There’s no substitute to spending time together, with everyone bringing their best self. Good luck.

Bulb light

Family Governance: From Filaments to LED’s

Family Governance: From Filaments to LED’s

When it comes to “Family Governance”, there aren’t many bigger fans than me.

I’ve written several blog posts specifically on the subject on this site, and there’s even a chapter in my book, Shift your Family Business, titled “Governance, Ugh!”

That exclamation –ugh- makes it seem like I don’t like governance, but in the book’s context, it’s clear that I do.

For any family to have a realistic chance of their wealth surviving over generations, they’ll absolutely require some form of governance.

 

Family Constitution? Yes, but…

The form and structure of that governance, as well as how it evolves over time, is where all the many important questions and decisions come into play, of course.

My advice is to always start small and take it slowly.

You’re looking for a durable “solution” to last generations, so there should be no reason to rush something through in weeks or even months.

One place that I would almost never choose to

begin is with the writing of a family constitution.

And that’s especially true if it’s one dictated by the wealth creator and patriarch, by himself, without consulting any other family members.

 

Misguided Ideas

One of the peer groups in which I participate with other family business and wealth advisors recently tackled such a case.

Here’s a bit of the background provided by a colleague I’ll call Nelly.

A family patriarch, “Jack”, who was also the wealth creator, was approaching his 80th birthday, and one of his financial advisors had spoken to him about succession and transition planning.

Somehow the idea of a “family constitution” came up and Jack loved it. He then sat down and began to draft it by himself.

 

How’s That Working Out For You?

As Jack shared his progress with family members, he began to become concerned with their lack of enthusiasm.

The financial advisor who initially mentioned the idea of the constitution was way out of his league to be of use to Jack now, but thankfully, he called in Nelly’s firm for help.

As Nelly shared with our peer group, she was slowly encouraging him to involve other family members in the creation of their constitution.

After several repeated suggestions, he actually started to warm up to the idea.

As Nelly shared with us, there was a light bulb going off from time to time, maybe with only “one or two filaments flashing”, but she was starting to get through to him.

 

Input from the Rising Generations

Of course, a couple of filaments do provide some light, which is better than complete darkness.

But it’s 2018, and those bulbs harken back to Thomas Edison and aren’t exactly “current” anymore.

I pointed out that perhaps what they needed here was some LED lighting, not more filaments.

Jack was preparing to leave his wealth to his children and grandchildren, but he was missing out on the opportunity to have them involved at this key stage of planning.

 

For the Family, By the Family

I’m not sure what became of Nelly’s work with Jack and his family, although I suspect it’s ongoing.

I’m not saying that involving the family is simple or easy, because it’s not.

But I am saying that it’s more than

worth the effort when done right.

Jack created the wealth, so he can technically do what he wants with it, and even give it all away to charity.

But he has expressed a desire to pass it on to his family. So what he’s actually trying to do is transform his personal wealth into family wealth.

The best way to do that, is to create some form of governance, for the family, by the family.

 

And What IF He Does It “His” Way?

If Jack rejects Nelly’s ideas and simply ploughs ahead with authoring the constitution himself, I predict one of two results will occur after Jack dies.

If the family gets along and the wealth is structured rather flexibly, the family will make whatever changes they see fit, using his constitution as a mere guideline, which will fade away over time.

Or, more likely, if the family does not get along well, or if the structures are very rigid, the family squabbles will begin right after Jack’s funeral.

Jack has a choice, but I sure hope he listens to Nelly.

Grandpa’s filaments won’t be quite as useful in his grandkids’ world of LED’s.