Most successful business families operate in more than one cultural environment. Modern companies may have headquarters
in London, factories in China, warehouses in Brazil, and markets on four continents. Family owners may have multiple residences
and educate their children in far-away schools.
The challenges facing a second generation business heir seem to lie in several areas—coming to terms with dad, gaining real competence in a world that tends to defer to you, developing legitimacy in your own right, and developing a sense of stewardship over the family’s assets. The second generation heir is a leader, but not of the entrepreneurial sort that most founders are. Heirs come from a different world—they did not have to make it on their own, and they have to navigate an internal family and business world that is already populated with a diverse and colorful cast. They fail if they don’t develop skills, sensitivity and identity to balance the existing demands with their own contribution.
All parents want to protect their children, sometimes from themselves. Even parents who trust their children may still worry that they need to protect them from unscrupulous operators outside (or even inside) the family. And many parents fear that if they give their children free rein with their gifts, each child will go his or her own way, losing any sense of togetherness or family legacy.
In the 80’s I published two studies, which introduced themes that had similar conclusions. In the first, I looked at the literature on trauma— abuse, war, serious illness, job loss, loss and other deep tragedies and noted that a small group of survivors used the trauma as an opportunity to derive important life lessons, leading to a new focus and even development of new positive skills that led them in new directions in their lives.
Philanthropy is changing, and for the better. With billionaires setting a new standard in how their wealth can positively impact other, the world is set to become a better place. Sam Davis III and Dennis Jaffe discuss the thinking behind strategic philanthropy.
I have just finished teaching a course in family business in Dubai, a business oasis of 3 million people, a city-state with daringly designed high rises and bustling commerce on the Arabian Gulf. For four days, this open and eager group of 75 mostly middle-eastern young men and women, an even balance gender wise, engaged in vigorous exchange. Each of them wrote a personal account of their family businesses, and their stories gave me a window into the challenges of a poor and tradition-bound culture struggling forward to enter a global, technical commercial world. In a single generation the world of the Middle East has been transformed, even as it grapples with unrest and violence.
A family business can grow much faster than the family talent pool of executives needed to lead it. At some point in time, a family must begin to recruit talent outside the family. But working for a family business can present special challenges for non-family executives, and for the family. Not all families are clear about the benefits they can derive from engaging non-family executives, and not all executives are interested in working in family businesses.
Trust is a name for the glue that makes people want to invest in a relationship. We feel a shared purpose and are willing to depend on each other. If the other participant of the relationship is an organization, we feel ready to do what the organization needs, and do it willingly. We are willing not just to offer our presence but also to share our inner thoughts about how the relationship or group is working.
A family may fear that their children will use up their inheritance. The best insurance that the money is used wisely is to take steps to make sure that each heir develops passion, values and responsibility so they can lead a fulfilled adulthood and continue the wealth into future generations.
The US is facing a generational crossroads as trillions of dollars in new wealth generated at the end of the century is being passed down to the next generation. The elders who have created this wealth are beginning to confront the question of legacy: what will be the impact of all this wealth on society, and on their families?