Over the course of the last 11 years, Courage has discussed with business families from around the globe. Many of these discussions went well beyond the mere operationalization of single topics, into directions that touched the essence of “who are we as family, why are we in business, how do we want to work, and what does long-term, multigenerational entrepreneurship actually mean”.
Through the “Courage Center Thoughts” series, the Center shares small summaries of these multi-year discussions to help families trigger debates that go to the essence of deeper topics. While it is obvious that these thoughts cannot share names, locations, and business details of all the families we met, we want to explicitly thank everybody that we spoke to, worked with, and got support from – you all know who you are.
Courage Center Thought No. 1: Legacies & Values – What Do These Words Actually Mean to Business Families, and Why Are They Relevant?
Values are the foundation of success. An enduring legacy begins with a business family reflecting, and then defining and knowing what it wants to stand for, and which difference a business family wants to make in the world. Long lasting business families are very conscious not to fall into the trap of feeling “successful and therefore important”, knowing that success might be temporary, markets go up and down, luck appears and fades, and family union, hard work and dedication, not arrogance and individuality, lead to repeat success. Further, keeping an open mind, and never stopping to listen, observing and exploring the changes in one’s environment are essential skills to protect family prosperity and wealth against sudden negative surprises.
The cultivation of humility keeps a business family grounded. Wealth creation alone never fully satisfies long-lasting business families, and is not be the primary purpose in their lives. One understands that the life cycle as a business family might begin with a rather transactional perspective (“we needed to cut some good deals first”), but over time, develops into a desire for transformation and self-actualization as a family (“we want to make an impact beyond business alone”). Strong values can sustain business performance and create long-term impact, which can then be cultivated across generations. It is critical to understand the values that were inherited from previous generations of a family, and how each generation can instill them into the next generation of employees and family members. By modelling consistent values, such as hard work, thrift, humility, and gratitude. Hence, over time, success can be bred. In turn, by nurturing a sense of entitlement in the next generation, and potentially “giving too much”, such values can be destroyed quickly, as the next generation will not learn and appreciate the value of hard earned success and financial prosperity, thus not appreciating what they are given to steward forward over time.
Building a legacy therefore includes more than building wealth for the next generation. It spans beyond wealth into the domain of creating a legacy of values.
The following five thoughts could provide a good starting point to reflect on, and start building a strong business family legacy:
- A clear understanding of the values embodied by the family, and what the family business shall stand for as an expression of these values
- An appreciation of family elders as role models, and as a living expression of the values that nurtured success in their generation
- A sense of gratitude by each successive generation for all that they have inherited, together with a deep sense of responsibility to pass it on better to those who will follow
- A healthy detachment from wealth (e.g., through generosity and philanthropy)
- A deep routed sense of humility and awareness of family members regarding the impact of their thoughts and action on others, and the joy that can come with it if done in a positive way
How Legacies Endure and Capital Perseveres
An enduring legacy is built on values and a compelling purpose that transcends the initial goal of wealth creation.
A legacy of clear values and strong, bold ideas can become a springboard and stepping stone for every succeeding generation, and might even be more valuable than wealth alone as business families that have reached certain success once will rarely lack money, but rather ideas. Over time, “money flows to the right ideas!”
Further, legacies that include an understanding of the joy of serving others are additionally powerful as those families who are already wealthy don’t need more wealth. Rather they strive to preserve their wealth, with a reasonable extent of growth, and focus on staying united through shared values, for the benefit of present and future generations. The larger the business family becomes from one generation to the next, the more work will be required to shape clear values and a sense of togetherness.
Family offices can serve an important role as guardians of unity, and by institutionalizing a legacy of unity and values beyond wealth alone, can be stable platforms for long-term togetherness and patient investment approaches, which in turn assures wealth protection and prosperity of a family beyond one generation.
In such approaches that are based on family unity and a long-term view, great investment ideas often contain a simple elegance where there is a clear catalyst or value driver that is easily understood by the layperson.
Preservation of capital is prioritized over its multiplication, and strict discipline is applied to avoid the temptation of jumping on the latest investment fad.
By nurturing all of the above, great stewardship of a legacy of values and capital can be successful – which is a privilege, not an entitlement. Each successive generation must then earn the right and actively choose to be the steward of both, values and capital, for another generation.
Hence, lifecycles of business families become a journey beyond success only. They becomes a journey of significance.