Most family fortunes were forged thanks to a founding entrepreneur and their successors who managed to uphold their legacy over the generations. The entrepreneurial tale of the founder is often passed down proudly from generation to generation.
However, it is also common to see the successor generations concentrate so much on the core business that they sometimes lose the very entrepreneurial drive that gave rise to their family business in the first place.
The key for promoting entrepreneurship comes from the family dynamic and communication itself.
Over the course of a decade working as a consultant helping family businesses, both in terms of the structure of their governing bodies and the professional development of the upcoming generations, I have had the opportunity to observe dynamics that block entrepreneurial drive in new generations. These include relatives from the same side of the family, or from another disputing side, questioning the young members’ entrepreneurial capacity, the older members worrying that the younger members’ entrepreneurial project is a shift away from the company’s or family’s project, or an excessive focus on short-term profitability.
On occasions, it seems that the family running a business is the main hurdle that the entrepreneur has to overcome in order to drive their project forward.
In my opinion, promoting the entrepreneurial initiative of the new generations is essential both for the business and for the family and the person in question. The continuity of the business depends on the capacity to regenerate it and adapt it to the changing needs of the market. Moreover, the family that owns the company can expand its business range by investing in the entrepreneurial projects of the younger members, while also letting them express their new ways of seeing the world.
To achieve this, the family business has to create platforms for dialogue between the generations, where younger members can communicate new ideas without fear of being censored or punished, giving entrepreneurs the opportunity to present their projects, express their doubts, discuss possible strategies and define the steps to follow to drive their creations forward.
Take Amat Immobiliaris, for instance, a company with around 100 employees that started out 75 years ago with a small property administration office in Barcelona. The company’s family council recently launched a Next GEN Committee, which focuses on developing the entrepreneurial drive of the new generations, among other projects. Formed by the third generation of the proprietors, the Next GEN Committee worked for a year on a future proposal that included an entrepreneurial venture.
Through the family council, the members of the second and third generation of the Amat family discussed in depth whether the new entrepreneurial venture should be a startup or a spin-off. This discussion touched on the Achilles’ heel of family companies: “If I no longer work in the family business, will I still be part of the family?”
The board eventually decided to set up the entrepreneurial venture as a spin-off. However, the important point about this decision was the process of dialogue, in which it was mutually underlined that belonging to the family is unconditional and that, to grow as a family business, it is equally important to maintain the profitability of the core business and to expand the potential range of new business opportunities through entrepreneurship.
To sum up, fostering entrepreneurship depends on the family’scapacity to generate a context of dialogue, recognition and appreciation between generations, in which innovation is allowed to question tradition. To shore up this context of trust, it is also important that the family pragmatically supports the entrepreneurial venture through personalised mentoring and a family fund that invests in the younger generations’ business ideas, after having discussed the details in depth in the appropriate family forum.
Communication, recognition and pragmatic support are family dynamics that boost entrepreneurial drive within family businesses.