The future of family enterprise: what options are available

Listen to Dr. Ivan Lansberg who teaches family business at the Kellogg School of Management explain the importance of discussing options available to owners of a family business as they consider their next steps. Family owners gain in discussing multiple options before making a decision regarding the future of the business. When a family feels they have independently made the right decision, their commitment and work toward implementing the decision increases.

What about the owners? If a family enterprise is going to be sustainable, it has to work obviously for the enterprise, you know, it has to be a viable business but it also has to work for the owners. What do the owners want and do they know what they want? And how do we educate them to choose what they want? So we brought together families that had chosen different alternatives. So one family signed up fully loaded to the continuity scenario with operating businesses, and they talked about their governance system, they talked about their career track system. They talked about how to educate owners to serve in governance, how do you make selections and choices around family members who work in the enterprise and they talked all about that. Then we had a family that chose to sell their operating companies but stayed together as an investment family in the context of a family office. They went through all of the mechanics of what that transition was like. They describe what a family office is like, they describe the investment dilemmas that they faced. They describe the dilemmas they have trying to get their children to take the family office every bit as seriously and as passionately as they used to take the operating business that they had before. And then we had a third family that had a huge enterprise, sold it and then divided the assets among the various branches. So you now had each branch recycle themselves into a new entrepreneurial unit. And then having to wrestle with the same issues their grandfathers were dealing with now in the context of redeployed wealth but no interdependence across the branches. And did so with absolute conviction that, that was best for them. This is important because sometimes our work when we are with families requires us to legitimize that all of these options are in fact viable and we like to again, hit pause and make sure families reflect on that choice and not just take it for granted. But we do it very deliberately because we believe that if people make a free choice to the scenario they are trying to implement, their capacity to do the hard work of governance, their capacity to commit to a destination and to assume the full responsibility for the choice they have made goes up.