Reflection on Dennis Jaffe’s Tapping the Wisdom of 100 Yr Old Family Enterprise

Generative Families

Jaffe called them “generative families” for they have continued cross-generational value creation. The value that a first generation builds is used to create more value by the younger generation. These values they create are both financial and non-financial. Non-financial values include strengthening their family relationships and building their community.

Some of these generative families in business have sold their legacy family business and reinvented themselves to growth. Many have diverse businesses across several industries and geographic locations. They have established family offices and investment offices. And yet they continue to voluntarily commit to stay together and own together.

Generative families provide family members a free choice to leave. They have a mechanism for pruning the family in order to ensure that every generation wants to be together and have no ambivalent feelings towards staying in the family business.

This phenomenon is validated by Premier Business Family Consultant’s practice of helping family businesses create explicit policy on family business ownership exit. This allows family member owners to be aware of the option to leave and its resulting outcome. This is also an opportunity for the family members to renew their commitment as family owners.

Consequently, the family owners who choose to remain in the business do not have to co-govern with unhappy and unwilling family owners. This paves the way to becoming a multi-generational family that are cohesively tied together by legacy, values, assets, agreements and shared identity.

The Rising Generation is the Future.

In interviewing these families, Jaffe tapped into the wisdom of these 100-year old families in business. A key insight gathered from the interviews of these global generative families is that the rising generation is the future.

This insight of developing the next generation is echoed in the identity of Premier Business’ network of clients whose main motivation for organizing is to prepare the next generation of leaders.

One important theme with the generative families is to develop, excite and inspire the next generation. They are concerned with developing the shared values and building the younger generation.

Generative families utilize the following mechanisms and philosophy in developing the next generation.

Millennials are The Family Resource for New Ways

To Jaffe, the rising generation are mostly the millenials and they are the family’s rich human resource for innovation. Millennials are digital natives and global citizens. They are very well educated, even more educated than their elders. They grew up with wealth and yet wealth does not define them. Rather, they are looking for a worthy life. They have a longing to make an impact in the world, in their communities and in their families.

Generative families understand that millennials have a lot to teach them. As such, these families are working with the younger generation to create an environment where there is shared energy, creativity, innovation and building something new.

Indeed, among the close to a hundred families that Premier Business has served, the majority of the family members who champion changes and innovation to the family business are the millennials in the family.

A Family Culture of Collaboration

Jaffe differentiated a culture of paternalism versus a culture of collaboration.

A culture of paternalism is when the elder generation controls and makes decisions for the younger generation. This includes the insistence of doing things the way they were done because they worked in the past and made them successful, and just let the younger generation just sit back and follow. This creates a “samaritan’s dilemma” where the younger generation becomes passive, withdrawn and uninterested. This happens not because this is innately their nature but because of the way they have been brought up in paternalistic culture.

Generative families allow the paternalistic culture of control, secrecy, non-transparency, and suspiciousness that might have worked perfectly before to be challenged by the rising generation into the creation of a culture of collaboration. This collaborative culture includes working together and in order to do so they share information, they develop trust with each other, they depend on each other, they see the value of being more professional, they want to create explicit rules, create teams, and think of new ideas.

In Premier Business’ family business practice, we have seen that a game-changer in attracting the next generation is when the elder generation provides the rising generations the opportunity to co-lead and co-create with them. Moreover, a family culture of collaboration is essential to preparing the family owners to become functional and attractive for the rising generation to lead.

Preparing The Next Generation Stewards

Generative families invest in their younger generation to be productive, innovative, energized and inspired to be stewards of the family enterprise. Jaffe shared the four factors that generative families employed to achieve this. (See figure 1.1)

Figure 1.1 (Indicate Reference? Source? Creator)

Foremost, generative families strengthen their family connections with each other. Different generations in the family spend time together by learning and doing things together. They have cross-generational family gatherings so that they remain connected. This allows them to talk, create shared values and have fun.

In line with this spirit of nurturing family connections, the key service of Premier Business is to create family workshops that allow family members of different branches and ages to interact and engage with each other. This allows family members to deepen their relationship while learning about family communication and revisiting the family shared values, mission and vision.

Generative families foster transparency about the investments, family property, about family business and a lot of dialogue not just of what we have done to be successful and what we need to do to remain successful. This mentors the next generation of being a good steward of the family wealth.

In preparing the next generation of stewards, generative families invest in workshops, seminars, conferences and education. The younger generation’s learning and experience from these they can bring back to the family and engage them to make an impact with their learnings.

Finally, generative families create an environment where young people are invited into the family business in the different roles they can take. They have a free choice that ushers commitment. Involvement in the family business is not limited to employment. They may be on the board, in the family governance or in the family philanthropy or investment committee. As such, they can be actively involved but not necessarily working full time with the family. This is aligned with a key belief of Premieri that diverse opportunities allow the younger generation to use and maximize their strengths in the family and in the business.

Preparing for wealth
An interesting commonality among generative families is that they talk about money. There is a common mindset among parents where they do not talk about money so that their children will not know they have substantial wealth or they will not spend the money or they will develop a sense of entitlement.

However, for generative families they understand the importance of talking about their wealth and its purpose, which is its emotional meaning and how they can be good stewards. Discussions on wealth clarifies what they can expect, resolve different perspectives of fairness and understand generational concerns and experiences of wealth. Generative families talk about the responsibility that goes along with having wealth. This inculcates among younger generations the responsibility to pass it on to the succeeding generations and to be good role models to other people.

Junior Board for getting informed and engaged
Another practice these generative families do to develop their rising generation is to institute a junior board. They have a board of directors but they also have a junior board composed of young people in the family, some are in college or just out of college working elsewhere. Its serves as a learning group about the business and its needs. Through the junior board, it allows the younger generation to be informed and engaged in the family and its endeavors.

An example of a task of a junior board in one of the family clients of Premier Business is that they are responsible for business incubation ideas. They study and plan for new emerging business ideas and present them to the board.

Endowing the “Family University”

The purpose of a Family University in generative families is to develop financial and team skills that otherwise they can not learn in school. Jaffe presented a diagram of sample set of learning activities which include mentoring, learning and internships that are intended to develop the younger generation.

Generative families see the importance of developing their rich resource of future leaders.

This is analogous to Premier’s Training the Next Generation program which is a structured learning process customized to the needs of the family and business. This allows the rising generation to develop entrepreneurship skills, nurture leadership qualities, foster family shared values, character and emotional intelligence.

This shows that a generative alliance of elders, trusted advisors and the next generation is a powerful resource which generative families have maximized for their long-lived success. The rising generation along with the wisdom and expertise of their advisors can become family champions who will push for innovation and growth of the family enterprise.

These are ways that 100-year-old family enterprises are developing their next generation. Family businesses can learn from these insights into attracting their younger generation towards sustainability and longevity based on long-lived success.