“When the winds of change blow, some people build walls and others build windmills” said an old Chinese proverb.
In this day and age, change seems inevitable; the way we work, study, communicate and even celebrate milestones with our family and friends has changed suddenly and considerably. And while the easing of lockdown measures around the world may bring some relief and ‘normality’ back to our lives, we, as individuals, businesses and families, should be ready to embrace a changed world.
So, how can families make sure that they are prepared to navigate a new world? Empirical evidence shows that two seemingly contrasting factors, tradition, through culture and values, and innovation, are often behind the success and longevity of many families.
A research project on families with over 100 years of history, carried out by Dr Dennis T. Jaffe, one of the leading architects of family enterprise consulting, shows that other than creating successful businesses, these families also focused on ensuring that, generation after generation, family cohesion would stand the test of time. These families have invested in sharing their values and nurturing a legacy that prompts younger members to become effective stewards for the generations to come. As described by our Founder, Alex Scott, “if you are inheritors of capital then you have more of a responsibility to those who came before you and those that will come after you to act as a responsible steward”.
Passing on values and creating a cohesive culture, however, may not be as simple as it sounds. Having a family charter and establishing governance mechanisms are probably useful steps in ensuring that the family tradition is kept alive, but often are not enough in isolation. Actions, as the saying goes, speak louder than words. Take philanthropic values, which are often part of the core pillars of a multi-generational family; preaching kindness and altruism may not be as impactful as getting family members involved in discussing what is important to them and allowing each of them to be responsible for their charitable programmes, for example. The same rationale applies to entrepreneurialism, stewardship, sustainability and other family values.
While values and culture set the foundations for a successful multi-generational family, tradition should not be a synonym for conformity. Rather, tradition should be seen as a stable base upon which new ideas can be developed and debated. And as it turns out, innovation is not only one of the driving forces behind commercial success; it is also one of the key factors helping families thrive.
As with businesses, families’ decision-making processes tend to be driven by the older generations, who often prefer to maintain things ‘as they are’, especially if they have been successful in the past. However, being responsible stewards also means being flexible and adaptable, as well as bringing change when change is necessary or, even better, pre-empting change.
An article in the Harvard Business Review mentions that many companies struggle with two challenges that are seemingly unrelated: disengaged younger workers and a weak response to changing market conditions. This is often true for families, too. The article goes on to suggest that many companies have addressed both issues with one solution: adopting “shadow boards”, a group of younger non-executive employees that work alongside managing executives on strategic initiatives. Including younger employees in the decision-making process allowed these companies to stay at the forefront of innovation, including in areas such as environmental impact and governance.
In tandem, shadow boards can work favourably for families, too. Bringing younger members of the family to the decision-making process not only creates more engagement and cohesion (reinforcing tradition), but, more importantly, helps families become more flexible, adaptable and better prepared to navigate changes that lie ahead. This can also be achieved without a formal board structure in place. If done on a regular basis, taking time to proactively listen and encouraging debate can be equally effective.
If nothing else, the pandemic has allowed many families to re-connect and dedicate time to what really matters. Once ‘normality’ returns, and old habits perhaps start to resurface, families should not forget the value of sharing time together and communicating, as without this active exchange innovation cannot flourish.
Tradition and innovation don’t need to collide: both are necessary to ensure that families have a strong foundation and are prepared to grow. Tradition without innovation can lead to obsolescence, but growth without foundations can lead to instability.
At Sandaire we understand that families’ success often requires a time of reflection, reassessment and engagement. For this reason, we aim to give families their time back so that they can focus on what really matters. Sandaire supports families in achieving milestones by helping them with, among other things, wealth structuring, legacy and succession planning, and family governance. Please get in touch with our Family Office Services Team if you are interested in knowing more.
 Succeeding Against All Odds – Lessons learned from 100-year business families by Dr. Dennis T. Jaffe (https://dennisjaffe.com/download/succeeding-against-all-odds-lessons-learned-from-100-year-business-families/?wpdmdl=12531)
 Why You Should Create a “Shadow Board” of Younger Employees by Jennifer Jordan and Michael Sorell, published on the Harvard Business Review website on 4th June 2019 (https://hbr.org/2019/06/why-you-should-create-a-shadow-board-of-younger-employees)