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. (Location 757)
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. (Location 792)
“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. (Location 799)
These rising generation family members decide to give up freedom to gain freedom. (Location 866)
Family businesses are among the world's most enduring and ubiquitous economic and social institutions. (Location 885)
“You don't own a family business; you borrow it from your grandchildren.” (Location 917)
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. (Location 919)
It catches the most important difference between family and nonfamily business: the awareness that current family members make decisions looking generations ahead. (Location 920)
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. (Location 946)
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. (Location 956)
Study the best, not the average or most troubled. (Location 959)
Family is the foundational unit of study, and businesses are vehicles to support family goals and values. (Location 987)
Success takes place over time and must be viewed as an evolutionary process, a journey of resilience and reinvention. (Location 995)
To understand families, research must look at its evolution, how the enterprise solves successive problems and overcomes challenges at different stages of development. Family enterprise is dynamic and evolutionary. Their stories are movies, not snapshots. (Location 998)
Long-lasting family enterprises are a predictable development of any society. (Location 1065)
Family enterprise are complex and difficult to describe. (Location 1066)
How did they begin with so much and end up with so little? Despite the existence of some troubled families, many of the best families sustain themselves as families over multiple generations and raise successful children who both enjoy their wealth and pursue philanthropic and socially responsible ventures. (Location 1084)
Networks of business families, many of them having grown over several generations, form the economic, social, and political infrastructure of every nation. (Location 1088)
In developing countries, a majority of the large businesses are owned by families. (Location 1090)
Many of these families learn from the envy and admiration of their communities; they strive to live up to their reputations. They also want to learn from successful families, how to express their values and succeed across generations. (Location 1096)
Every culture has a proverb akin to “shirtsleeves to shirtsleeves in three generations.” (Location 1099)
While every new family of wealth would like to outlast this prophecy, only a few succeed. If they do, they enter largely uncharted waters. (Location 1102)
In smaller family businesses, family members work together across generations as owners and operators. (Location 1109)
Over time, many family businesses turn operations over to nonfamily leaders. (Location 1111)
The first defining quality of a family business is that they are a business where the majority owners share a personal relationship, which usually includes shared values and nonfinancial goals that are as important as making a profit. (Location 1113)
A second defining quality of family business is that young family members who are not yet owners are preparing to become owners. (Location 1116)
Owners are concerned not with today but with the future; their self-interest is to pass a “gift” to their children, and prepare them to receive it. (Location 1119)
Over time a family may sell its initial legacy business and then choose to remain together to become a financial family entity. Or it may acquire and share ownership of multiple businesses. It may add property and a philanthropic foundation out of profits. (Location 1121)
In this book, I look not just at family businesses but at the multiple family-owned ventures that evolve from a single family household owning a single business to shared ownership of a growing, diversified, expanding extended family enterprise. (Location 1123)
Stock in a public company may be held by a family trust or a family holding company. The family might own several business entities, each with their own boards but with family owners making the major decisions. (Location 1132)
A family enterprise is characterized by shared, collective leadership by a related family that wants to continue into the next generation. Along with its ownership, the family exercises discretion and control over the use and development of a variety of assets. (Location 1134)
Family enterprises form the majority of businesses large and small in every country in the world. (Location 1136)
The impact of the enterprise on the family can be positive or negative. The family enterprise can offer a lifetime livelihood for generations or can be fought over and cause permanent family rifts. (Location 1140)
The study of long-lived families and their business and financial ventures is important because this is the goal of many families who have not reached that milestone. (Location 1161)
A family reaching this milestone faces a choice point: Should we continue together as a financial or business entity or just distribute what we have and let each household move forward in its own way? (Location 1165)
I call such families generative because of their creative achievement in sustaining a sense of family connection and a profitable, vital family business or group of family operations. (Location 1205)
Generative families are a special and unique family/business hybrid. They are a small subset of the huge number of family businesses, but they are incredibly significant in their social and economic impact. (Location 1215)
As I will show, these families share features of ancient structures that have been with us since the dawn of civilization. (Location 1217)
Given that so few families survive with both financial fortunes and family relationships intact, I wanted to learn how this wonderful achievement occurs. While these families began with a legacy business, I view them here as evolving families, not just businesses, sharing a changing portfolio of assets and business ventures. (Location 1220)
They are generative because rather than depleting or consuming resources, they add to and amplify the various forms of family wealth. (Location 1224)
The experience of one-hundred-year families, however, is quite different. These family businesses are not single businesses owned by a family so much as ever-changing business partnerships. (Location 1237)
A single successful business may provide the initial thrust, but sustaining and growing family wealth demands skills exercised over many lifetimes. (Location 1239)
The ability to adapt, renew, and reinvent in response to challenge and adversity while sustaining a consistent culture and set of values is the essence of generativity. (Location 1243)
These books highlight inspiring origin stories. A founding patriarch rises from humble roots and sees an opportunity. Powerful matriarchs help build the businesses and are teachers and role models for family values with their children. (Location 1248)
A great extended family contains many households organized into several branches that are aligned to steward a portfolio of shared assets such as a family business, family office, or family foundation. (Location 1254)
The families in this study range from the third to the fourteenth generation of shared family enterprises. (Location 1328)
These legacy businesses form the foundation for developing the family enterprise, in which the family develops or diversifies into other ventures, like a foundation, a family office, property, or other investments. (Location 1333)
Many families own more than one business or a business that has expanded into several areas. The families also have family real estate, investments of all kinds, family banks, venture capital funds, family offices, and charitable foundations. (Location 1346)
generative families across the world. However, it should be noted that there are some interesting differences when comparing the 58 families from North America with the 37 families from other parts of the world. (Location 1372)
Families outside North America are larger and older, with more family members. Of the world families, 82 percent have a value of more than $1 billion, compared to 37 percent in North America; 88 percent of North American legacy businesses are private while only 69 percent of the others are; 77 percent of the global families have family offices compared with 54 percent from North America. Global families are older, but fewer of them have family councils or boards with independent directors. (Location 1375)
The generative family is a unique institution. It represents the successful interconnection of two different social systems—a family and a business. (Location 1460)
This study probes the nature of their success. That success consists of developing the ability to take the positive aspects of family—personal relationships looking to their long-term future—and melding them to create effective business and family wealth. (Location 1467)
Generative families are masters at blending the best features of business and family. The family nature of generative families exerts a beneficial influence on their business and financial realms. (Location 1473)
Wealth alone does not ensure success. It stems from how the family views its wealth and uses that wealth to develop its family enterprise. (Location 1482)
The research made a central discovery about generative families: after a family creates great wealth and prepares to enter the third generation, the focus shifts from creating wealth to considering how the wealth will be used. (Location 1487)
These families invested some of their wealth to create a strong, supportive, creative, “generative” family. (Location 1488)
Becoming a great family is greatly different from managing a family enterprise. It is a personal process, growing out of positive, trusting relationships among family members reestablished in each generation. (Location 1492)
Our generative families are a very different type of family. They are in some ways a throwback to earlier times, and in other ways a new type of family, born out of the new possibilities offered by their affluence and business and financial interconnection. (Location 1501)
The family business is the tool and creation of an extended family of owners who share a family heritage. (Location 1514)
These family members frequently accept a buyout and sell their shares in the family enterprise. They are now family members but no longer owners. They have exited the family enterprise. (Location 1520)
Generative families see ownership not just as an entitlement but also as an opportunity to serve their successors and society. This long-term and service perspective is called stewardship, a particular philosophy of ownership. (Location 1523)
These family members move from being a family of inheritance to a family of affinity that shares a vision, a set of values, and a commitment to actively build something together. (Location 1589)
To develop a purposeful community, the generative family must design meaningful and impactful activities that concretely advance their shared purpose. (Location 1670)
Legacy capital. Legacy (sometimes called “spiritual”) capital arises when the family celebrates and renews the values and inspiration that created its family wealth and allows the family to inspire new activities. (Location 1684)
Generative families have done something special in creating their wealth, and those in charge of family governance gather materials, artifacts, pictures, and stories about the family's history and legacy. (Location 1688)
Family governance often begins by defining the family legacy and then having the successors ask how they can further this. Inspired by their grandparents, they ask, What will we do to fulfill our responsibility for wise and thoughtful use of what they have given us? (Location 1693)
Financial capital. The second form of capital concerns nurturing and caring for the financial and business resources of the family—financial stewardship. (Location 1695)
Relationship capital. The family also invests in itself through the development of active, caring, fair, and harmonious family relationships. Because family members are not just related by blood and because they have chosen to continue to meet and work together to build their family, family governance activities include ways to develop positive and caring family bonds. (Location 1703)
Human capital. Family members develop their individual capabilities in each generation. The family is a community designed to develop the skills and character of every family member. (Location 1708)
Social capital. Finally, social capital refers to how the family's mission is expressed in the wider community. Family governance creates policies and goals for family innovation in ways that encourage family members to help the family enterprise enter new types of business and wealth creation. (Location 1713)
As part of its governance, a family can create a “family bank,” where family members can apply for funds and support for new ventures. (Location 1716)
Innovation and entrepreneurship do not end with the initial wealth creator; instead, each generation takes different paths to reach new milestones. (Location 1754)
By the third generation, most generative families shift from having a single legacy family business—one in which family needs and dynamics are primary—to becoming a family enterprise that stewards strong professional business and financial ventures that run on clear, firm, and effective business principles. (Location 1756)
As a family enters the third generation, its future is problematic. Family members and their advisors must help the family look at what is ahead and what is possible and forge a plan and alliance to make it happen. (Location 1762)
The family enterprise divides into two “pillars”: a family organization and a business/financial one. (Location 1765)
It is conservative, in that it is designed to preserve legacy values and culture, but also generative, in that it creates and develops what are only possibilities as the family grows. (Location 1779)
Generative families choose to reinvest profits in their businesses and invest in social ventures by creating family foundations and philanthropic initiatives. (Location 1784)
Family governance is how the family organizes its resources to best achieve its values and invest in human, social, and family “capital.” (Location 1786)
Family governance is more than a defensive measure. It is aspirational, reaching toward a vision of great things that are possible for such a privileged family. The extended family realizes that its wealth offers infinite possibilities for the next generation. (Location 1789)
But if the collective family wishes to remain together, each individual must give up some personal power and autonomy to the family confederation. (Location 1793)
In the third or fourth generation, the shared wealth and number of household shareholders may be immense. What was done informally, often by a single family leader, is now done by many. Members of this “confederation” must learn, or invent, systems for working with the thicket of investments, businesses, real estate holdings, and family foundations. (Location 1798)
Heirs in a family enterprise discover that they are not only partnering with parents, siblings, and cousins, but that they must also understand their role in working with professional advisors. (Location 1813)