Generative families discover that having family wealth is only the beginning of a long and complex journey. Each successive generation must answer the question: What do we want to do with the family wealth? Each generation develops its own shared purpose that motivates family members to become more than passive, disinterested consumers of the family wealth. The members of each generation find ways to become engaged and committed to planning, making decisions about, and sustaining the resources of the family. They get together to consider and plan for how they will use their wealth to develop the next generation, to provide for each other and the community, and to have a positive impact on the family, the community, and often the world. This special family-building task is not for everyone. The generative family differentiates itself from the blood family by allowing family members in each generation to freely choose to be part of the family enterprise or remove their portion of the family wealth.
Each emerging generation of owners has to affirm that they want to continue. They may be constrained by trusts and entities that make it difficult or impossible for them to leave. But each family has to reaffirm and redefine its purpose for being together and the values and policies by which it will make decisions about its business and wealth. These are not just business decisions. They also involve the family and what the family members want to achieve together. The possibilities and opportunities of shared wealth are often more extensive and exciting than what each person can achieve on his or her own, so each generation can discover a reason to stay together. But to do something important and difficult together, the family needs policies and agreements about how it will work together. Each family enterprise must define its purpose and practices, its mission, values, and governance. To achieve this goal, family members create a parallel process and a structure that sits alongside their business. Just as the family owners need governance for their legacy company and other investments, so, too, they create a governance system to organize and manage family activities. As the family expands into an extended family "tribe," family governance becomes more and more visible and important.
Because these families recognize their true wealth in the human and social capital they accumulate, they have taken active steps to cultivate and grow that capital through communication, education, and clear decision-making or governance. With ever greater insistence across generations, they consistently elevate their focus away from amassing more financial capital. Their attention is almost wholly qualitative rather than quantitative.
Generative families offer lessons to others, lessons that have been tested in the crucible of experience:
All of the families created a great business first and subsequently decided to become a great family. The latter accomplishment took longer with much more collective effort.
These families are always aware of and working toward a shared core purpose, based on a commitment renewed by each new generation.
These families respect their legacy and core values, but they continually adapt, innovate, and change as they face new realities inside the family and in the business environment.
After starting as hands-on owner/ operators, the families have adopted an owners' mindset, in which the family enterprise may offer special opportunities to family members but in which the family is united as responsible owners who operate the business professionally to create family wealth within the parameters of its values.
These families value the development of their human capital, which includes the lives, experiences, skills, and knowledge of generations to come. Human capital also includes the legacy of positive impact these families have had on employees, customers, and communities.
These families act as values-based, socially responsible entities, using their vast resources to make a positive difference in their communities. Their philanthropic commitments grow out of and in turn deepen their focus on human capital.
SIX QUALITIES OF GENERATIVE FAMILY ENTERPRISE
Despite the diversity of families and their enterprises, six common factors emerged, arranged in order their stated importance to the families.
1. Shared values and core purpose.
The most common factor was the family's shared values, which applied to the family's business, its conduct as a family, and its conduct toward its community. The family's legacy from earlier generations came from a framework of values that were taught, shared, and used in all of the family's dealings. These values were about the use of the family's wealth.
2. Cross-generational engagement and support.
The extended families talked about building closeness, respect, trust, and connection across the generations. They spent time and listened to the members of each succeeding generation. Since the individual households were often dispersed, these families were active in setting up a community that convened regularly and engaged all generations in shared learning.
3. Long-term business resiliency, growth, and development.
These families held a long-term view of their businesses and saw their enter as a foundation for their other activities. With a long-term of their businesses, these families were continually redefining and renewing every one of their ventures. Because their business success made them special and offered unique opportunities, their attention to a strong, growing portfolio of enter. prises was shared by everyone in the family.
4. Governance policies and structures to guide development and decisions as a family and business.
In order to achieve their values and sustain their success with emerging generations, the families developed clear, explicit, and often complex structures to regulate family and business activities. Many family members were active in governance, and they shared information throughout the family. They developed the following tools: family councils to manage family alignment, education, and development; boards to oversee their business and financial enterprises; and family agreements (in the form of constitutions, protocols, and shareholder agreements) to organize their engagement, interactions, and decisions with clear roles and boundaries.
5. Education of the rising generation about responsibility, stewardship, and values.
These families saw their new generations as the human capital to continue and build upon their success. The next generation was a resource and their goal, and they had to live and breathe the goals and commitment to the family enterprise. From the time the members of the next generation were children, these families invested in the education and development of each new generation of their extended family.
6. Commitment to community beyond family.
The wealth of these families was a gift shared with nonfamily employees, suppliers, and customers and with their community. Each family applied its values to develop philanthropy and social policies supporting long-term commitment to its employees and community, and development of environmental sustainability.
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