What do you do when your family has created a business that produces more wealth than your family expected or needs for a full and vital life?
The generative family makes the choice to use some of their wealth to create a great family as an investment in the future.
They shift their attention inward after achieving wealth and business success because they want to invest in the nurturing and inner development of their family as an entity. If they cannot do that, it may place the purpose of having such wealth into question.
What does it mean to create a great family? By the second generation (G2), the family is no longer a single household. Instead, they refer to their expanding family as the extended family — the new families created by each member of G2 who is tied together not just by blood, but by shared ownership of significant assets.
By the third generation (G3), the extended family becomes a tribe that shares a business and wealth. But the meaningful relationships that make up a family do not just emerge; they must be developed. That is the task they set for themselves.
Cultivating New Generations
Extended family tribes are more than traditional nuclear families. Each generation increases geometrically and passes their culture, values, traditions, and skills to each new generation. Their many related households are united by shared values, mutual aid, and focus on future generations. Unlike a land-based community, they are dispersed, often globally, but they retain their personal relationships and tribal identity and culture by frequent contact and organization.
Building family connection carries many benefits for future generations, the community, and their business and financial ventures. Investing in family development creates a virtuous circle with the continual success of the family enterprises.
The purpose of a family is to protect and care for each other and to raise a new generation of adults capable of surviving in a challenging world. The family is an emotional entity that uses its financial resources toward these nonfinancial goals. Additionally, the family has relationships, goals, obligations, and concerns that go far beyond business. They want their values and concerns to be addressed by the business, even as they want to maintain their family wealth for their own livelihood and that of generations to come. A family needs to create an organized group to deal with family activities, like meetings and education, that are not related to its business and financial activities.
By G2, the family focus expands to a caring, capable, connected, responsible and impact-generating family that actively plans to benefit generations to come. Their attention shifts from outward to inward as they build their growing family over successive generations not only to sustain their financial goals but also to support their relatives and the community with nonfinancial goals.
Family enterprises cannot sustain their connection without personal relationships among the widespread family members. If the relationships do not exist, enterprises may operate as a business, but not necessarily a family. It’s especially critical that these relationships span generations. This enables the family to pass a set of legacy values and mission on to the next generation, but also to be open to new ways and ventures. Generative families realize that the family has to invest in knowing and caring about each other to remain vital. They often live in different places, and therefore, they have to actively create opportunities to spend time with and learn about each other. Together, they build a family culture and set of values as they take the time to do things together as a family.
Learnings from Global Business Families
When it comes to creating a great family, it’s all about balancing the past and the present with the future.
Deep Personal Relationships
Too many families think that all they need to do to ensure their future is to conduct short annual business meetings and name a business successor. But generative families realize that as the emerging households of their extended family disperse and move in different directions, they need to build deep, personal bonds with each other.
These bonds are accomplished by having regular family gatherings, or family assemblies, where family members get together for a combined vacation, business meeting, education session, and team-building experience. There are often camps and meetings divided into generational cohorts so that each generation gets to know each other. Relatives create relationships within their generation and also across generations. Older family members mentor and teach younger ones.
Unless the members of each young generation come to know, enjoy and respect each other, or feel some commonality, it’s difficult to find a reason to continue the family as a vital entity. That’s why many families report that the meetings of the new generation — where the latter defines their own contribution to the values and vision — were an important milestone in the family’s development. These shared gatherings allow the new generation, who often have no formal ownership or roles in the business, to learn and share their ideas. This empowers them, allowing them to feel they are being invited to become leaders or participants in some aspect of the family enterprise.
A family elder notes that while not every family member attends whole-family retreats, a majority of the family attends — and not because they must, but because they wish to:
What encourages everyone to come to our annual retreat is our children making relationships with their cousins. So, by the time they get into the boardroom or family council, they have relationships with each other. When my daughter and her husband, who are fourth-generation, hosted our annual gathering for the teenagers, they had 15 teenagers show up — and they’re instantly friends.
Celebrating and Sharing the Legacy
The family shares a special legacy and set of possibilities that are rare to experience with others. Through shared family gatherings, where the younger family members bond and learn about history and culture, the family transmits its heritage and an invitation to the new generation to become involved. If this engagement opportunity did not exist, the family would struggle to become a vital entity in its next generation.
As founders grow older, they need to tell the story of the family to their children and grandchildren. They have a common legacy and stories that define who they are. That legacy includes many successes. Families perpetuate themselves by sharing their history, celebrating their milestones, and remembering past achievements.
Efforts that Add Value
A family needs something to look forward to — a vision and project that engages and inspires new generations to be a part of it. Each family member has his or her own individual path, and they can make investments without being involved with each other. But a generative family decides that their work is never done and that, with their shared resources, they can do things together that they could not do individually. These projects can be financial, but more often than not they are nonfinancial — having to do with a unique location or philanthropic effort. This effort is new and not yet completed — giving the younger generation an opportunity to make a difference.
This article is part of an ongoing series highlighting Dennis Jaffe’s findings from successful family enterprises. The introduction can be found here.
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