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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Families share how they have maintained and grown their wealth from generation to generation.
While creating wealth is a wonderful achievement, business families are also concerned with how their wealth is used to support their values, the lives of their children and the well-being of the community. Over several generations, families who are successful in growing their wealth have been able to reinvent themselves and their business in the face of significant environmental transformations and internal differences cause by family dynamics. Borrowed from my Grandchildren is a fascinating look at how large, long-lasting business families succeed across generations.
Author Dennis T. Jaffe, one of the leading architects of the field of family enterprise consulting, has interviewed members of successful, well known, 100-year family enterprises from 20 countries, who serve as role models for those wishing to see their wealth positively impact their children, employees, and communities. Half continue to own their legacy business and others have gone on to become family offices with a portfolio of shared assets, but all these families have sustained their values and identity as a family over more than three generations.
Offering the collected wisdom of nearly 100 global business families, this insightful book shares the real-life stories of partners in business and wealth management over three of more generations. Families that generate rather than reduce their wealth across generations, known as Generative Families, focus on engaging across generations and develop collaborative governance for both family and business to ensure responsible stewardship from one generation to the next.
This unique resource:
- Presents real-life stories of families sustaining wealth over generations
- Explores both the successes and failures of retaining family wealth
- Includes rare private insights from members of prominent wealthy families
- Examines the nature of global family enterprises and their evolution over generations
- Discusses the financial, human, and social dimensions of wealth
Borrowed from my Grandchildren: The Evolution of Stewardship in 100-Year Families is an essential read for family members, non-family executives, family offices, estate planning lawyers, family business consultants, trust officers, philanthropic and foundation advisors, financial advisors, financial planners, CPAs, and other finance professionals.
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Seitenzahl: 965
Veröffentlichungsjahr: 2020
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Table of Contents
Cover
Foreword: Rice Paddy to Rice Paddy
Preface
Long-Lived Business Families
My Journey
The Research Perspective
Overview of the Book
To the Reader
Notes
PART ONE: The Wisdom of Generative Families
CHAPTER 1: Learning from the Best
What Is a Family Enterprise?
Beyond the Fourth Generation
Generative Families: Continual Cross-Generational Value Creation
What My Research Team and I Did
Describing the Families in This Study
Notes
CHAPTER 2: Creating a Great Family
A Great Family Is the Core of Family Enterprise
The Hybrid Family/Business Social System
Sustaining and Renewing Shared Purpose and Values
Family Capital: Fulfilling the Promise of Family Wealth
Two Parallel Organizations of Generative Family Enterprise
Taking Action in Your Own Family Enterprise
Notes
CHAPTER 3: The Social History of Family Dynasties
Prehistory of Extended Family Formation
Asian Origins of Thousand-Year Family Enterprises
Traders and Financiers: Accumulating and Sustaining Vast Family Fortunes
Paternalistic Industrialization: The Company Town
The Gilded Age in the New World
Managerial Capitalism: The Rise of the Modern Corporation and the Eclipse of Family Business
Hidden Champions: Family Business Quietly Enters the Modern Era
“Refamiliazation”: Family Advantages Reemerge in a Wired but Short-Term World
Notes
PART TWO: The Evolution of the Resilient Family Enterprise
CHAPTER 4: The First Four Generations
G1: Legacy of the Wealth Creator
G2: Collaborating Siblings
G3: A Community of Related Households
G4: Business Renewal and Family Reengagement
Large Legacy Companies
Taking Action in Your Own Family Enterprise
Notes
CHAPTER 5: Business Resiliency
Surviving a Crisis
Continual Reinvention
Turning Points: Four Major Transformations of Generative Families
“Diversifying” from Single Business to Portfolio
“Grounding”: Family Offices as Centers for Governance and Family Identity
Taking Action in Your Own Family Enterprise
Notes
CHAPTER 6: The Generative Alliance
Craftsmen and Opportunists: Two Business Success Strategies
The Generative Alliance of Stakeholder Groups and Interconnected Paths
How the Generative Alliance Creates a Distinctive Family Enterprise Culture
Legacy Elements: Long-Term Commitment and Extension of Family Values into the Business
Craftsman Elements: A Disciplined, Professional Business and a Deepening of the Talent Pool
Opportunistic Elements: Professional Family Leaders and Entrepreneurial Focus for Each Generation
Taking Action in Your Own Family Enterprise
Notes
CHAPTER 7: Corporate Social Responsibility
Corporate Mission and Social Values
CSR: Building Block for Sustainable Success and Long-Term Growth
Impact Investing
Impact Investing as a Tool of Next-Generation Engagement
Corporate Foundations
Enriching the Community
Taking Action in Your Own Family Enterprise
Defining Family Impact Vision and Values
Notes
CHAPTER 8: Owners' Mindset
Beyond Self-Interest: Becoming Stewards
Transparency and the Voice of the Family
Designing a Professional Board of Directors
Taking Action in Your Own Family Enterprise
Note
PART THREE: Inside the Family: Family Governance to Create a Great Family
CHAPTER 9: The Family Tribe
Building a Great Family Tribe
Sustaining Legacy Identity
The Family Assembly
Cross-Generational Engagement: Role of Older and Younger Generations
Taking Action in Your Own Family Enterprise
Notes
CHAPTER 10: Governance
The Purpose of Family Governance
What Ignites Shared Family Governance?
Building Blocks of Family Governance
Linking Family and Business/Ownership Governance
Weaving Family and Business Governance
Taking Action in Your Own Family Enterprise
Best Practices for Multigenerational Family Enterprise
Notes
CHAPTER 11: The Family Council: Conducting the Work of the Family
Emergence of the Family Council
Building a Family Council
Organizing the Council
Taking Action in Your Own Family Enterprise
CHAPTER 12: The Family Constitution: Governing Document of the Generative Family
The Constitution Defines Business and Family Culture and Organization
Moral Agreements: Elaborating on Legal Documents
What Does a Constitution Do for a Family?
Elements of the Constitution
Writing the Constitution
Mission and Values: A Call to Action
Code of Conduct: Encouraging Respectful Communication and Behavior
Taking Action in Your Own Family Enterprise
Legacy Letters (or Videos)
Finding the Meaning and Practical Relevance of Legal Documents
Convening a Family “Constitutional Convention”
Notes
PART FOUR: The Rising Generation: Sustaining the Future
CHAPTER 13: Releasing the Potential of the Rising Generation
The Developmental Path of the Young Family Member
Learning About Business and Work
Skills for the Rising Generation
Developing a Positive Work Ethic
Educational Programs
Taking Action in Your Own Family Enterprise
Notes
CHAPTER 14: Family as a Cross-Generational Learning Community
Next Generation Activities
The Rising Generation Is Called to Service to the Family
Taking Action in Your Own Family Enterprise
CHAPTER 15: Family Philanthropy
Service to the Community
The Moral Imperative of Philanthropy
Old Versus New Philanthropy: A More Strategic and Collaborative Approach
Engaging the Next Generation Around Shared Purpose with Moral, Reputational, and Educational Goals
Giving Circles and the Search for Individual Identity Through Philanthropy
Philanthropy as a Shared Family Activity
Taking Action in Your Own Family Enterprise
Notes
CHAPTER 16: Reflections on the Economic and Social Future of Family Enterprise
Global Context for the Future
Family Enterprise as a Safe Refuge from Global Instability and an Opportunity to Make a Difference
Will There Be a Next Generation for Generative Families?
Who Can Learn from This Research?
Taking Action in Your Own Family Enterprise
Note
APPENDIX Tools for Families (and Advisors)
Defining Personal, Family, and Business Values:
Family Enterprise Assessment Tool (FEAT®)
Family Balance Sheet: Measuring Capital of the Family Enterprise
About the Author
Publications and Tools
Current Activities
Previous Activities
Pioneering Work in Values-Based Organizations and Holistic Health
About the Research Team
About Wise Counsel Research Associates
Acknowledgments
Index
End User License Agreement
List of Tables
Chapter 2
Table 2.1 Five types of Family Capital.
Chapter 4
Table 4.1 Generational characteristics in family enterprises.
Chapter 6
Table 6.1 The Generative Alliance.
Chapter 10
Table 10.1 Family practices by generation.
Table 10.2 Comparing family assembly, owners' council, and family council.
List of Illustrations
Chapter 1
Figure 1.1 Global representation of families.
Figure 1.2 Business ownership.
Figure 1.3 Nonbusiness entities in family enterprises.
Figure 1.4 About the family.
Chapter 2
Figure 2.1 Six qualities of generative families.
Figure 2.2 Types of family capital.
Chapter 4
Figure 4.1 Paternalism versus partnership.
Chapter 5
Figure 5.1 An S-curve.
Figure 5.2 Addition of a new S-curve.
Figure 5.3 Timeline of key events in the family journey.
Figure 5.4 Evolution of the family enterprise.
Figure 5.5 Percentage of generative families with family offices.
Figure 5.6 Increasing percentages of family offices over generations.
Figure 5.7 Cycle of adaptation and resilience.
Chapter 6
Figure 6.1 The Generative Alliance.
Figure 6.2 Elements of family culture supporting family enterprise.
Chapter 7
Figure 7.1 United Nations' Brundtland Commission: Sustainable development goal...
Chapter 8
Figure 8.1 Prevalence of independent board directors.
Figure 8.2 The stages of board development.
Chapter 9
Figure 9.1 Activities of elders and the younger generation.
Chapter 10
Figure 10.1 Three “triggers” for family governance.
Figure 10.2 “Tribal” family versus professional business governance....
Figure 10.3 Elements of family governance.
Figure 10.4 Evolving family governance practices over generations.
Figure 10.5 Family governance structure.
Chapter 11
Figure 11.1 Prevalence of family councils and when they develop.
Figure 11.2 Frequency of family council meetings.
Chapter 12
Figure 12.1 Movement toward a family constitution.
Chapter 13
Figure 13.1 Developmental journey of heirs.
Chapter 14
Figure 14.1 A roadmap for family development.
Appendix
Figure A.1 Sample Personal Values Pyramid.
Figure A.2 The full array.
Figure A.3 Sample of FEAT® in action.
Guide
Cover
Table of Contents
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Additional Praise for Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises
Advance Praise from business families
Once again, Dennis Jaffe reveals a treasure trove of stories for families and advisors that demonstrates how generations can benefit from teaching and learning from one another. Dennis shares practical examples and best practices used by family enterprises, including family councils, family offices, and family foundations, strategically designed to move the family, its business and its wealth forward–generation to generation. Whether you are just beginning your journey or have multiple generations in play, this book is filled with insights, ideas and actionable next steps to turn a family enterprise into a family legacy.
—Dirk Junge
Retired Chairman, Pitcairn
Owners of family businesses with a desire for multi-generational endurance face a complex and never-ending task to pursue both commercial and familial success. Dennis Jaffe and his team have scoured the world for successful exemplars whose practices have allowed them to surpass normal experience and expectations. This is an exceptionally valuable source of inspiration and guidance for family business owners and advisers who wish to pursue and refine effective multi-generational stewardship.
—Alexander Scott
4th generation family business owner and director, FBN-International
When I want authoritative, wise, and knowledgeable insight on family businesses, Professor Jaffe is my one-stop shopping center. The range of both knowledge and wisdom that Jaffe possesses makes him a national treasure. Borrowed from Your Grandchildren is a synthesis of this knowledge and wisdom.
—Mitzi Perdue(Mrs. Frank Perdue)
speaker, business owner, author of How to Make Your Family Business Last
We all need to give Dennis recognition and gratitude for his tremendous research and wisdom around how we can all lead our companies in a way that will leave the world a better place. I believe family business is the foundation of society around the world and is the best way to bring social change for the good due to its multi-generational nature. We all thank you for the work that will be recognized for generations to come and we are forever grateful.
—Charlie Luck
President/CEO Luck Companies
A wealth of practical insights for families and their advisors based on success factors distilled from 4th generation and older family businesses. Unique concept of the “generative family” to explain how families re-invent and adapt themselves and their businesses. Over 100 relatable and honest family stories to illustrate and reinforce the various concepts.
—Yuelin Yang
Deputy Group MD of IMC Industrial Group (and nephew of the founder)
No one but Dennis and his team have ever interviewed so many successful 100-year family enterprises from all over the world, and distilled their recipe for success in such an engaging and easy to read book! The real-life stories from major business families around the world, combined with the insights and best practices that Dennis brings in this well-structured book, make Borrowed from Your Grandchildren an invaluable resource for every family business in the world, be it small or large, 1st gen or 5th gen! I can't wait to get all my future grandchildren a copy of the book for their 18th birthday!
—Edouard Thijssen
CEO of Trusted Family, leading online governance platform for family businesses, 5thgeneration family member
Dennis focuses on “generative family enterprises” around the world with common attributes. Borrowed from Your Grandchildren is an inspiring book for our Tan family, now with four generations. It is our dream and our goal to evolve into a 100-year “generative” family enterprise. This book gives us great inspiration and references in developing legacy and stewardship of our family and business.
—Sunny Tan
EVP, Accessories Group, Luen Thai Holdings Ltd.
I have been a great follower of Dennis Jaffe's work over the past 20 years. As a 4th generation family member of a 100+-year-old business, his work has been indispensable to helping our family and many others to navigate the opportunities and challenges of surviving and thriving through five generations of ownership and beyond. Borrowed from Your Grandchildren is no different. Dennis clearly defines how other families have survived and thrived in a way that makes it possible for others to follow in their footsteps. I have always believed that to have a successful family business, one must have a good sense of humor and short-term memory, or as in Dennis's words, resilience. It is easy, in a family business, to focus on the business and neglect the family. Still, Dennis's research proves that one must focus on the family returns: Legacy, Social, Human, Financial, Capital. Without success in these areas, the business will not have the solid foundation it needs in the family to attract and retain the top talent required for the business to succeed for the second 100 years. Encouraged by Dennis's work, our family has evolved our thinking, cultivating and caring for the family far more than we ever have before.
So much of the family business research provides insights into 1st, 2nd, and 3rd generations; however, not much research has been done for 4th generation businesses and beyond. To have survived and thrived for four generations is remarkable and difficult. It is a fairly isolating experience, as there are so few peers available to share successes and potential pitfalls. Dennis's work provides a clear path and connects those families out there who are on the lonely journey of being a 5th generation family business and can pave the way for those who want to get there.
—Meghan Juday
Non-Executive Vice Chair, Ideal Industries
Advance Praise from Family Advisors
As the world continues to become more interconnected and complex, generative families need to evolve and adapt together. Dennis Jaffe has written an informative book for the 21st century. While the core pillars of family values and family constitutions remain the same, this book highlights the importance of building a resilient culture while being able to anticipate unchartered waters and emerge even stronger.
—Peter K. Scaturro
former CEO of Citigroup Global Private Bank and former CEO of US Trust Company
In this tour de force, Dennis Jaffe debunks the myth that every business family is destined to suffer the fate of “shirtsleeves to shirtsleeves in three generations”. Filled with rich and engaging interviews with members of thriving multi-generational families, Jaffe and his research team expertly identify the practical secrets of success of the many families that beat the odds and create long-lasting legacies. This book is destined to become a classic for every family - and family advisors thereto - that aspires to be become a long-lived, flourishing, generative family.
—Tom McCullough
Chairman and CEO, Northwood Family Office, Co-Author, Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask
An amazing resource for multi-generational business families and professionals that advise them. I love the premise of the book. Rather than focusing on all the things that can go wrong, try to learn as much as you can from the families that have already succeeded for more than 100 years. And the stories – hearing them in the words of so many families from around the world – are inspiring. Each family is clearly unique. At the same time, seeing common practices and behaviors that have helped shape so many incredible family legacies is fascinating. I couldn't put the book down!
—J. Richard Joyner
President, Tolleson Wealth Management
Transgenerational success may be elusive but Borrowed from Your Grandchildren shines a light on the fact patterns behind those families who have achieved it. Jaffe's research-based story telling is an approachable and tangible guide for families looking to leverage the lessons learned by those who went before them.
—Jim Coutré
Family office and philanthropy professional
Discover a treasure trove of insights into what forms the essence of highly enduring and generative century-old family enterprises in yet another groundbreaking research by one of the most renowned and influential family enterprise advisors of our time.
—Aik-Ping Ng
Co-Head of Family Office Advisory, Family Governance and Family Enterprise Succession, Asia Pacific, HSBC Private Banking
Dennis Jaffe's in-depth, qualitative research on what makes family enterprises pass the test of time offers valuable and actionable insights for families and the advisors that serve them. This is a must read.
—Arne Boudewyn, PhD
Head of Institute for Family Culture, Abbot Downing
Through decades of experience and painstaking research Jaffe has created the definitive work on multi-generational wealth. In this very approachable book, both families and those who advise them will find insights and practical guidance on how to successfully manage the challenges associated with significant wealth. Borrowed from Your Grandchildren is an instant classic and a significant contribution for those of us who work with ultra-affluent families.
—John Zimmerman
President, Ascent Private Capital Management of U.S. Bank
Dennis Jaffe has outdone even himself. His latest book, Borrowed from Your Grandchildren, builds on the exhaustive interviews he has conducted during his ongoing research into what makes a successful “100 year” family-owned business. Now he turns to the families themselves: what makes a successful 100-year family? He lists and explains factors that distinguish these families. I especially liked his inclusive definition of “family”. These great families were not families in the sense of being a household; they can be seen as tribes, or clans, with members dispersing but sharing common values and purpose as business and financial partners. Their definition of family is inclusive and expansive, and often extends to include their employees, key advisors, and even their home community. For anyone curious about how great families succeed this collection of family stories is an invaluable resource.
—Barbara R Hauser
Editor-in-Chief, International Family Offices Journal
A tour de force in research and narrative sociology for any professional advisor wanting to understand the DNA of successful multigenerational business families. Jaffe's work provides a colorful mosaic about how these diverse multigeneration families think about their wealth, their values and responsibilities toward their communities. Documenting in technicolor the evolution and fabric of these successful families, as Jaffe has so well done, will arm any advisor with a unique framework with how to add more value to the families we serve. The chapter on family philanthropy is both simultaneously refreshing and fascinating to read and particularly relevant today as we grapple with affluence in America – Jaffe keenly paints a clear picture, without judgment, of their understanding and moral commitment to the responsibility of giving back to society.
No one has more appreciation and understanding of the complex brew that makes for a successful legacy family than Dennis Jaffe. Granted the privilege of interviewing multiple members of families that have prospered for over 100 years, Jaffe distills the fundamentals of their success. A strong sense of mission and values coupled with robust governance and concerted development of the next generation are the factors that characterize these families. Borrowed from Your Grandchildren is an exciting, studiously researched roadmap whether your business is just starting out or has been around for generations. An equally terrific read for those of us who work with these families. Researchers always look for patterns to help make predictions. The patterns Jaffe uncovers are worth revisiting as every generation transitions into leading the family, the business, or both.
—Madeline Levine, PhD
NYT bestselling author of Ready or Not, The Price of Privilege, and Teach Your Children Well
Excellent research and review of over 100 successful family businesses to determine what makes them successful over generations; in a nonjudgmental and nonevaluative manner. Terrific guide for families who wish to beat the “shirtsleeves to shirtsleeves” curse, and professionals who assist in their journey.
—Pat Soldano
President, Family Enterprise USA
Families and business have been the building blocks of successful societies around the world. They have their own cultural construction, attributes, and functionalities. Dennis and his colleagues present a wealth of experiential stories forming a treasure trove of practical examples of what denotes a generative family. The key component is stewardship. These families share with us the importance and skills necessary to be great stewards of family wealth.
Much has been written over the past 30 years about families, business, ownership, and wealth. This book enables the reader to learn through historical, organizational, and practical analysis the key components of successful families of wealth. Indeed, these families not only tell their own stories, but they highlight and underscore the relevance and importance of the research, its findings, and conclusions. A primer for all, a learning tool, a resource for reflection and wisdom.
—Laurent Roux
founder and CEO of Gallatin Wealth Management, and a partner in the Willow Street Group, a family office and independent regulated Wyoming trust company
A tour de force in research and narrative sociology for any professional advisor wanting to understand the DNA of successful multigenerational business families. Jaffe's work provides a colorful mosaic about how these diverse multigeneration families think about their wealth, their values and responsibilities towards their communities. Documenting in technicolor the evolution and fabric of these successful families, as Jaffe has so well done, will arm any advisor with a unique framework with how to add more value to the families we serve. The chapter on family philanthropy is both simultaneously refreshing and fascinating to read and particularly relevant today as we grapple with affluence in America – Jaffe keenly paints a clear picture, without judgment, of their understanding and moral commitment to the responsibility of giving back to society.
—Roy P. Kozupsky, Esq., Rimon Law
Advance Praise from Family Researchers:
The definition of opus is “a large-scale creative work”… which aptly describes Borrowed from Your Grandchildren. Dennis and his dedicated research team have captured a treasure trove of learnings from “the best of the best”. On every page, they have highlighted the resilience, the hardiness, and the entrepreneurial mindset characteristic of these generative business. Importantly, they have included ways that families can take action. This is not only a literary opus…it is a gift to the vast and significant global enterprising family community.
—Justin B. Craig
Visiting Professor of Family Enterprise, Kellogg School of Management, Northwestern University
A landmark and a long overdue “must book” which all those working and involved with family firms should read to understand what makes family business complex and at times challenging. Introducing an innovative concept “generative family”, he firmly establishes a conceptual framework for understanding the multigenerational growth and development of family companies.
—Toshio Goto
Research professor, Japan University of Economics
Dennis Jaffe has produced a classic work of great insight and relevance not only for managers and consultants of family firms but for all students interested in the breed as it progresses across the generations. In today's climate of opportunistic executives driven by quarterly returns, a long-term orientation of evolving business stewardship represents a far more promising way forward. Dr. Jaffe shows us the path with convincing arguments and superb examples. I cannot recommend this book more highly.
—Danny Miller
Research Professor, Co-author of Managing for the Long Run: Lessons in Competitive Advantage from Great Family Businesses
Dennis Jaffe has written a thoughtful book which is eye-opening, extremely interesting, and helpful. Using his background in sociology, he takes us into the lives of wealthy families and the challenges they face in managing succession. His real-life examples will help families build successful working relationships. Highly recommended!
—Annette Lareau
Professor of Sociology, University of Pennsylvania
From our earliest days in our own families, we learn from stories, which provide a link to our past and help us develop a vision for our future. In this book, Dennis Jaffe has curated an exceptional collection of stories to deepen knowledge of the complexities, challenges, and triumphs of multi-generational family enterprises.
—Patricia M. Angus, Esq.
CEO, Angus Advisory Group LLC; Adjunct Professor and founder, Family Business Program, Faculty Director, Enterprising Families Executive Education, Columbia Business School
Creating thriving multi-generational business families is no easy feat. This engaging book gives you practical know-how plus key insights on how to achieve this goal— backed by Dr. Dennis Jaffe interviews with business families globally in addition to his decades of advisory experience working in the field. This is a must read for anyone attempting to take on such a daunting, yet worthy goal.
—Florence Tsai
Author of Phoenix Rising—Leadership + Innovation in the New Economy and Founder of Centerprising
In Borrowed from Your Grandchildren Dennis Jaffe, one of the world's leading family business advisors, presents unique insights into how some families manage to combine family and business, typically seen as divergent social systems, into organizations that create long-term value for both the families in control and the stakeholders they engage with. The book represents an extremely rich source of original examples, reflections, and conceptual models that make the book fascinating to read. At the same time, the book represents a source of inspiration as you design your own path, one that will lead you toward creating your own long-lasting family enterprise.
—Thomas Zellweger
Professor of Management, University of St. Gallen, Switzerland
Corporate governance is different when there is a family business, because the owners are related and share certain values. Borrowed from Your Grandchildren offers an overview of family business governance, and the potential benefits that derive from the differences, in families that share long-term ownership of large enterprises. These business families use governance practices not only to create a strong and professional business, but also to serve their social and family agendas. The experience of these families shows that these two agendas can work in harmony.
—Professor Martin Hilb, PhD
Chairman of the Board Foundation and its International Center for Corporate Governance
Congratulations to Dr Dennis Jaffe for this wise reflection of his life-long experience advising and researching enduring, generative families. Dennis shows how these families successfully evolve and transition from family business to business family, by building in mechanisms for their family tribes to learn and govern together, and to build resilience amid different disruptions. Drawing on wisdom of global business family leaders, Dennis ends each chapter with practical tools families and their advisors can use to leap forward and achieve this multi-generational endeavor. Thoughts covered in this book are highly consistent with my experience and research, and I highly recommend this book to families who want to break the curse of “wealth doesn't go beyond three generations.”
—Professor Roger King
Founder, HKUST Tanoto Center for Asian Family Business and Entrepreneurship Studies
Borrowed from Your Grandchildren
THE EVOLUTION OF 100-YEAR FAMILY ENTERPRISES
Dennis T. Jaffe
© 2020 by John Wiley & Sons, Inc.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.
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To Cynthia, my life partner, my three sons and their life partners, and our growing third generation, who are the future
Foreword: Rice Paddy to Rice Paddy
Rice paddy to rice paddy, clogs to clogs, shirt sleeves to shirt sleeves—all in three generations. These proverbs are the ways, in various cultures, that the three-generation cycle of families' failures to prosper and their tendency to decay are described. There are many other such proverbs. Each culture I know of has one. In fact, this proverb is the only one I have ever discovered that is universal culturally. I have spent this lifetime, literally since I was four and first heard my mother state the shirtsleeves form of the proverb, asking myself two questions every day. Why should there be this sad outcome for a family? And what might a family do to avoid its dictate and flourish for at least three more generations? While I have worked hard to find answers to these conundrums, until now I had only my experiences, those of a few colleagues, and some thoughtful academic treatises to use to try to form answers.
Now with the advent of Dennis Jaffe's book, Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises, I have solid data to affirm that such long-term flourishing by a family is possible. Dennis's in-depth interviews provide the first solid evidence I know of that explains how families that stay together over one hundred years evolve to include their third, fourth, fifth, even in a very few cases their sixth generations, and continue to prosper. Dennis's willingness and that of his co-researchers to go deep into such families' evolutions is a major contribution to our field, a field of professional practice in which we seek to help families thrive, a field in which we seek to help those families, whose vision and mission, their highest intention, is to avoid the proverb's sad prediction. In practical terms, we seek to help them avoid being added to the list of families whose stories end with the outcome the proverb foretells. To say that our families and those we serve will be positively influenced by this book's findings and by the family stories it recounts is to understate the book's significance. In my opinion, this book will profoundly change a family's outcome provided the family members commit to avoiding the proverb as their highest mutual intention and utilize the practices of successful families the book describes to materialize that intention. Should a family do these two things—commit to avoiding the proverb and use the practices outlined in this book—it can substantively increase its odds of flourishing for at least another three generations. Yes, this book is that significant a contribution to a family knowing how to prosper.
This foreword is not a book review. It is rather a way for readers to connect with the salient points in the book they are about to read. It should seek to offer the reader some main points to consider that will carry him or her into its depth. Which among Dennis Jaffe's principal findings might I then bring to your attention? Which of them point toward your deeper appreciation of how your family and any family you advise might succeed in attaining its one hundredth birthday? A one hundredth birthday celebration with nearly all of its possible members still in relation with one another, still deeply committed to the family thriving, and renewing their commitment to one another to working toward helping the family achieve another one hundred years of success?
First, in my experience, a family that seeks to become a one-hundred-year flourishing family and, as Dennis's research suggests, become a generative family almost always intuits that becoming a family of affinity is its deepest spiritual purpose. While this concept has many elements, perhaps the most succinct way of describing this intuition and the ethic it engenders and enables is that its members are committed entirely to the enhancement of the individual journey of happiness of each family member over the entirety of each family member's lifetime toward the goal of the entire family prospering. This is the family's generative dream, and its practices reflect this way of knowing how to help the family system enable family flourishing. Or if you like, the family is committed to every family member's individual boat rising so that the whole family fleet becomes a powerful armada for its long-term flourishing. In this way, the family becomes a family system that can meet and endure all the storms it will face as it seeks to attain its one hundredth birthday and go on being generative by offering the same intuition for its members over the next one hundred years. Families of affinity are much too rare. But Dennis's book proves they exist and can be emulated.
A family of affinity, as Dennis describes, learns from its second generation on that to have future generations continue the family's journey to flourish, become generative, and avoid the proverb's dictate, the family must create family systems that are positively attractive. Why? Because the family knows this is the only path to assure that future generations will be attracted to join. Otherwise the family will disappear. The realization by the second-generation family members that they must create such a positively attracting family system and the actions these family members then take to make this realization actionable are the moments when Dennis's one-hundred-year families are born.
What intuition does a generative family discover and awaken in itself that in turn leads family members to dream of becoming and being a flourishing family? There are many, and the most important is the family's realization that the word “wealth,” in the context of the family, means the well-being of each family member and of the whole family, not exclusively the success of the family's financial means. In this one major awakening lies so much of the family's future prosperity, its generativity. With this awareness, the family gradually comes to know that it consists of multiple capitals, the most important of which are qualitative. The family discovers that growing its qualitative capitals, supported by its quantitative capital, never led by it, is the key to future family flourishing. It is with this awakening and the awareness that follows that the family becomes generative and truly begins its long-term journey toward its members' and its future-generation members' happiness. The family is now on the path to becoming a family of affinity with all of its rewards for human happiness.
These qualitative capitals include the following:
Human capital:
Are all family members thriving?
Intellectual capital:
Is the family a learning system that is constantly growing its individual and communal learning? Are its members sharing what they are learning so the capacity of the whole family to meet the challenges it will face is enhanced?
Social capital
(or to use Dennis's term,
relational capital
): Is the family capable of making extremely good strategic joint decisions, of governing itself? Is the family working toward cultivating a long-term ability to avoid the following:
Internal sequestration:
Death by poor social relations with one another and its insularity (often not leading to fission and death by heat but far more often death by inertia in the family members' relations with one another and death by cold).
External sequestration:
A failure to meet attacks on itself from the outside world. Are its social relationships creating fusion? That is, are family relationships leading energetically to positive growth so that 1+1=3? Are those same relationships leading to positive connections through philanthropy with nonfamily members?
Spiritual capital:
The family's ability to form a common generative vision that seeks to enable the long-term flourishing of each individual and of itself; to do together the seven-generation generative thinking that all successful families learn to do; and to offer a vision and set of practices that are positively attracting to future family members so they will join the family's long-term journey.
As I am sure you can feel and see, it's these four qualitative capitals and their constant positive development and evolution that lie at the core of a successful family journey. They are what Dennis's research found and describes—and what my life experience affirms. The growth of these capitals is the key to these families flourishing. These capitals and their evolution will determine whether a family becomes a family of affinity.
The awakening of the second generation to this deep awareness leads to its creating and evolving a system of joint decision-making, grounded in consistently growing each of these capitals, toward each and all family members' boats rising, that will become the system that is positively attracting to the next two generations of potential family members. This awakening will enable the family to become the thriving generative family Dennis discovers and defines.
Of course, such families continue to grow, develop, and evolve their quantitative capital, their ventures, whether as businesses and/or as financial enterprises. What these families know—and what families falling to the proverb don't seem to discover—is that their efforts to grow their quantitative capital must be designed to support their having the means to enable them to grow their far more important long-term capitals, their qualitative capitals. By understanding this relationship between their qualitative and quantitative capitals, these families achieve what I consider the great knowing that leads to, and that Dennis's research shows and affirms, their generativity and flourishing, their long-term success, their growth of agile, awake, and aware human beings able to participate in the great cooperative journey to grow a flourishing family while fully becoming whoever they are meant to be as individuals.
I now turn to what these historically successful families of affinity discover as important principles to be integrated into their shared vision. The learnings these principles engender then become practices the families utilize as their journeys unfold.
First, as Nassim Nicholas Talib writes in his book Antifragile: Things That Gain from Disorder, they become family systems that are ever more resilient, ever more agile, all toward meeting and overcoming the internal and external sequestration events that will attack their systems. They learn how to grow their systems beyond resilience to immense capacities for endurance against all the odds.
Second, they grow stewards, family champions, and family elder wisdom keepers/way showers who lead the work of growing a family of affinity. They discover among themselves family members who espouse seven-generation visioning and awareness and enable such family members to lead their process. They seek family leaders who understand that the wealth of the family lies in the well-being of each and all of its members, leaders who seek to keep every family member's boat rising.
Third, they construct conservative generative structures that are antifragile. These structures are then able to assist in the families' endurance as they enable joint decision-making systems to develop that permit very long-term strategic planning and the tactical execution of those plans over a long-time horizon. These joint decision-making systems encourage, as Cicero tells the story, old men to plant trees so their grandchildren will have shade. These systems encourage copper beech trees, which need 150 years to mature, to be planted today, as there is no time to waste to get them started growing. Yes, these are systems that encourage metaphors and stories like these two for how families think and encourage their members to consider the family's potential in the long term and generatively imagine future generations flourishing.
Fourth, and perhaps most importantly, these families understand that if their families are to stay the course and have third-, fourth-, fifth-, and sixth-generation members join in, they must enable these future-generation members to decide to join in. What do they know that so few families seem to know, and what does this knowing require? They know that in a lifetime each of us, likely only three or four times, makes an existential decision, a decision in which our lives and our happiness are at risk, to decide to join one group instead of another. These families—especially the elders of these families—know what wise elders of human communities have always known: human beings cannot live alone. We live in communities. We are not hermits. However, communities require that we give up personal freedom to help the other members of the community in the hope they will help us. This seems clear. But how often in a lifetime do we voluntarily give up freedom? It is the rarest of moments. We know the risks of doing so, and we almost never take the plunge. Families that flourish, that are generative, know that their futures depend on their future members making a positive decision to join in, and they know how difficult that decision will be for them. Thus, they seek to create systems that are positively attracting to future generations to join in. They know that their families' futures depend on at least some of their rising generation members taking the existential plunge to give up freedom to join in.
Why might rising generation members take this plunge in a particular family? Because they find the invitation to join the family journey an invitation in which they perceive that the family's generative vision, the family's spiritual self, its core beliefs and virtues are all working together to offer them more personal freedom to discover and become themselves, more opportunity to bring their unique selves to life than any other group competing for them to join. These rising generation family members decide to give up freedom to gain freedom. Only the most positively attracting family system, one devoted to the growth and development of rising generation members, can offer such invitations with any hope of such members signing on. This great knowing and the actions to make these critical invitations real are, I believe, at the heart of why such a family is generative and long-lived and why most families aren't. Such a family knows it has succeeded when its rising generation members form new horizontal social compacts committed to these principles and committed to offering a future rising generation the same invitation their wise elders offered them. The formation of each rising generation's new horizontal social compact, committed to each of the above principles and particularly to the family system being positively attracting to new members, with its promise that giving up freedom will enable the gaining of freedom, is the evidence that the family has the continuing capacity for endurance and the ability to continue to flourish and be generative for another two generations.
So we have Dennis to thank for providing us with the research that confirms our intuitions about why a family flourishes, why it is able to be generative for many generations, and how it does this. His gift of this book offers the proof we need that the proverb's dictate need not be predictive. The stories of the families he profiles assure us that if we learn from their stories, our family need not be another family where the proverb comes true. It is my hope that your family and those you guide as their advisors will take to heart Dennis's great findings, act on them accordingly, become a family of affinity, and flourish for many generations.
May your journeys be blessed. May you and each of your family members flourish and achieve happiness. May your family flourish and be generative.
Namaste
James (Jay) Elliott Hughes, Jr.
Tahoe, August 2019
Preface
Family businesses are among the world's most enduring and ubiquitous economic and social institutions. They are the foundation of social relations and communities; as humans evolved from hunting to agriculture, trading, and industrialization, family businesses evolved as well to make this possible. They take many forms. Our nature as human beings is expressed in how we act in our economic life, and family businesses are the most common manifestation of this. While the market view of commerce emphasizes economic behavior as individual choices and rational self-interest, this book takes the perspective that at the core of our economy are living families that seek and stand for so much more than financial profit.
This book presents the findings of a global multiyear project to understand the evolution and essence of large, global family enterprises that have succeeded over generations (a glossary of terms used in this book is at the end of Chapter 1). The research team interviewed family leaders from different generations of over one hundred large global families, each of which has thrived as a shared economic entity for more than three generations. These families are successful both as extended families and as businesses. By viewing the evolution and history of the largest and most successful global families, by looking back and looking forward, we can learn something about the nature of social evolution. We can also observe the human foundation of global commerce, which has largely been hidden from view. By hearing from families with great wealth and longevity, we can look beyond individual businesses to the positive foundations and use of economic wealth.
Long-Lived Business Families
My purpose is to learn from the best of the best family enterprises—extended families that have been in business for more than three generations—to uncover the internal secrets of their success. Their wisdom can help families just starting on this path—those moving into a second or third generation and facing significant challenges. Their stories can also be instructive to the millions of lawyers, accountants, bankers, coaches, consultants, board members, and other trusted advisors who offer resources to families to keep them on course. While the families my research team and I interviewed own complex businesses and other assets, I see them as families first because that is what the owners are. As family members, the owners have personal relationships, and these relationships are about far more than just running a profitable business. Such a family is more than a single business, or a business alone, because the family can start, buy, and sell many businesses as it adapts and grows across generations and because the family consists of many households related to and caring about one another and their future.
I am particularly interested in long-lived family businesses because, by their nature, a family business or family enterprise is fundamentally different from a public corporation. The owners of a public corporation have nothing in common, and no relationship, other than a desire for a profitable business. In a family business, the owners know and care for one another and share values as well as a desire for profit. This makes a huge difference to the enterprise.
The family has concerns beyond profit that go beyond the business. The family's business expresses a core aspect of the soul and identity of the family. Their values, reputation, role in the community, and impact are all considered in its oversight of the business. Because the business originates from a family, it also embodies and reflects the nature and personality of the owning family. All of this creates a different form of business, arguably one that is more complex and faces more agendas. When a family enterprise lasts for several generations, its family nature is a central feature of how it operates.
The book's title comes from the observation “You don't own a family business; you borrow it from your grandchildren.” When I first heard this expression, attributed to a fifth-generation family member of the Hermes family, I was blown away. Professionals spend a great deal of time helping older generations consider whom they want to “give” the business and their wealth to. This notion turns it around and views the family's enterprise and wealth as a gift from the future that current family members are able to use only with conditions. It catches the most important difference between family and nonfamily business: the awareness that current family members make decisions looking generations ahead. I have since learned that this worldview is adapted from Native American and other global indigenous cultures, who do not believe that land and natural resources can be owned by individuals; they are to be shared, valued, and preserved for the future. That mindset makes so much difference to the nature of families who have acquired large amounts of wealth, and how they see the role of their families as stewards of their family wealth.
My Journey
This project has been a dream of mine and a labor of love. After nearly forty years of teaching, research, and practice, since the dawn of family businesses as a field of study, I have wanted to do this project. A dozen years ago, after working only inside the United States, I began to wonder how families from other cultures were similar or different. I knew that family businesses emerged in every part of the world, and I wanted to see if the practices and tools professionals were suggesting to them were applicable in other cultures. Because my experience was only with US business families, I assumed that I had only a partial picture of the nature of these foundational social institutions. For six years I have traveled and met global families, many of whom became part of this study.
In many ways, my work today, after fifty years, was formed by my youthful passions. After graduating college in the late sixties, I was a founder of a project for runaway youth. We called it Number Nine, after a Beatles song. We helped runaway young “street people” call their parents and set up an intergenerational conversation, in a safe and neutral place, to talk about their differences. These conversations were my first experience of how values and behavior could be so deeply contentious and hurtful in a family. I also learned that parents had to allow their children to grow in their own way but also find some common ground with the values of their elders.
Later on, my career took me into the corporate world, where I worked with the effects of deep change in corporate cultures. This field of study looked at how each business developed its own culture, usually stemming from the values and vision of the founders. As businesses grew, the culture came under strain, and the businesses had to adapt but also retain important features of the founding culture. Many of these businesses were family businesses, though at the time that fact was not really known to me.
In the early 1980s, several groups—containing organization consultants, family therapists, lawyers, accountants, financial advisors, and family business leaders—began a seminal joint conversation. Talking across professional boundaries was unusual, and it led each profession to begin to view their work differently, through the eyes of others. Across the disciplinary boundaries, these groups found a common interest in family businesses. We realized that their nature, presence, and influence were largely ignored in professional business literature and practice. Right under our noses was a deeply important field of study that we had ignored. I attended some of these meetings, and two formerly disconnected strands of my life coming together. I saw that the nature and relationships of the family were at the root of family business and that the resolution of family issues was necessary for businesses to succeed over generations.
To undertake this study, I assembled a team of talented researchers and advisors, each of whom contributed time and ideas as well as conducted interviews and gathered the data. Their biographies are included in the appendix. To launch the study, we had the support of two global family enterprise organizations: Family Office Exchange and Family Business Network. They enabled us to develop our research model and contact families that thrived over multiple generations. After publishing our first working paper, we were fortunate to gain the support of Bank of America's Merrill Center for Family Wealth, which sponsored the working papers we produced each year.
The Research Perspective
The perspective that led to this project is somewhat different than the perspective of other family business research. It stems from practices called action research, research based not on discovering causal connections between family and business but upon asking how to help families in business be more successful and avoid difficulty. This research is not just for other researchers but offered to the families and their advisors to help them do a better job. The project is premised on several basic assumptions as follows.
Study the best, not the average or most troubled.
Management psychologist Abraham Maslow, one of my mentors, noted that you would never learn very much about healthy people if you only studied those with mental illness. Similarly, there is a limited amount one can learn from studying family businesses that have failed, collapsing amid conflict and poor business practices. That doesn't necessarily help to see how to create a climate for success. If you avoid failure, you don't necessarily achieve success. There's more to it.
You don't have to look too far to find an article about how to destroy a family business. Using business relationships to redress past family wrongs or to serve endless family financial needs can undermine even the strongest business. Natural forces of business maturing and innovation take down many more. It is much harder to sustain thriving family enterprises across generations. How can a family increase its chances of long-term success?
The field of management has benefited greatly from studies of the most successful businesses. There are many books by business leaders; these books are inspiring but also a little suspect as they share only one side of their story and do so in retrospect. Personal success stories are a staple of business and family business literature. They are inspiring, but a more dispassionate view is also needed.
A number of research and theory-based books have also tried to distill the wisdom of long-term business success: Thomas J. Peters and Robert H. Waterman, Jr.'s 1982 breakthrough book, In Search of Excellence;1 James C. Collins and Jerry I. Porras's Built to Last2
