Evolution of a 100-Year Family Enterprise Presentation by Dennis T. Jaffe, PhD Wise Counsel Research djaffe@dennisjaffe.com

1. “Borrowed From My Grandchildren”
Evolution of a 100-Year Family Enterprise
Presentation by Dennis T. Jaffe, PhD
Wise Counsel Research
djaffe@dennisjaffe.com

2. Family businesses are different than
other businesses…
• The owners have a personal relationship and
care about more than financial returns
• Young people grow up expecting to become
owners and wanting to make a contribution

3. Opposing Views of Family Enterprise
Wealth Creating
Generative
Destructive
Self-Defeating

4. Uncovering the Reality:
Research into 100-Year Families
• Study the best
• Success in family
and business/
wealth creating
• They are evolving
• Hear their stories
Research supported by Merrill Lynch & US Trust

5. Generative Families
CONTINUALLY ADD
VALUE TO FAMILY
WEALTH IN ALL
DIMENSIONS
• Successful into or beyond 3rd
generation
• Large thriving business or
enterprises
• Sustain family connection and
commitment across
generations

6. Correcting Myths about Family Enterprise
 Family businesses inevitably decline.
 Wealth creation is achievement of lone entrepreneur.
 Business sale marks the end of the family enterprise.
 Family business is successful when family moves
away from involvement.

7. Family is the Focus, not Business:
“Tribal” Family Enterprise
• Tied together by legacy values,
assets & agreements
• Shared identity combining
history & destiny
• Develops its own institutions,
activities, rituals
• In the shadow of dispersion: free
choice to leave
• Need to be resilient, renew itself
every generation
Community of Active Citizens,
Stewards in Rising Generations

9. Family Enterprise Enterprising Family
From Family Enterprise to Enterprising Family

10. “Pillars” Separating Family & Business
• Special trust as family
• Engage each other
• Explicit values
• Celebrate rich history
• Extensive organization
• Develop human capital
• Shared philanthropy
• Long-term commitment
• Patient capital
• Professional management
cadre
• Non-family CEO option
• Exit policy for shareholders
• Independent directors
• Family Employment policy
“TRIBAL” FAMILY
Family Council
PROFESSIONAL
BUSINESS
Board & Owner’s Council

11. • Commit to developing great family
• Engage and educate whole family
• Become active owners
• Separate family from business concerns
Getting on the GENERATIVE Path

12. Choice Points: Transform or Fade?

13. Harvesting
Sale or New Investment
IDENTITY:
• We are not the business
• Finding new pathways
INCOME:
• Retirement, tax, estate income
• Lower risk
CHANGE:
• Space for new opportunities
• Allowing individual pathways

14. Pruning
Family of Affinity
• Recognizes divergent goals,
values
• Free choice to be a partner
• Renews commitment
• Separates family into
individual paths

15. Diversifying
Multiple sources of new
wealth
• Renew wealth
• New focus for investment
• Allows different paths by
different people, groups
• New opportunities

16. Grounding
Alignment and Identity
• Sustain, renew identity after
business sale
• Shift focus to family from
business
• Develop human capital
• Share values, purpose

17. Cycle of Adaptation

18. Generative Alliance:
Balancing Contributors for Change
• Many elements allow graceful
transformation
• All stakeholders valued, able to define
meaningful role
• Interaction allows creative development
• Involves the whole family/business system
• Anticipates and allows major change

19. • Foundation principles before
adapting to change
• Collective wisdom of elders
• More than money
• How, why do we do what we
do?
• Inspire family to continue
• What’s important as a family?

21. Business First--
Professionalizing
Collaboration
with Non-
family Advisors
& Executives

22. Professionalizing
of Family
Leadership
Entrepreneurial
mindset in Rising
Generation

23. The Generative Alliance

24. The Generative Alliance
Core
Values
Definition Stakeholders
LEGACY
Foundational Culture
Tradition
Trust,
Fairness,
Respect,
Stewardship,
Integrity
Enduring business
values, policies and
traditions of prior
generations
Elders, founding
generation
CRAFTSMEN
Business Discipline
Excellence
Quality,
Continuous
improvement
Creating a great
business by doing
something better
than everybody
else
Family business
operators,
non-family
executives
OPPORTUNISTS
Entrepreneurship
Innovation
Creativity,
Discovery,
Pioneering
Anticipating change
and seeking new,
innovative
opportunities
New generation
family members,
with education and
experience in new
areas

25. Elements of a
Family Culture

26. Listen to Voices of the Family
• Build a community
• Share the legacy
• Invite participation
• Open to new ideas
• Define fairness
• Develop social capital
• Find many paths
• Become engaged
owners

27. Core Elements of Governance
Councils
Agreements
Roles; Boundaries Feedback; Accountability
Transparency

28. Evolution of Board as
Family Enterprise Resource

30. Dennis T. Jaffe, Ph.D.
• Wise Counsel Research
• Contributor, Forbes Leadership Channel
http://www.forbes.com/sites/dennisjaffe
• Author, Cross Cultures; Stewardship in
Your Family Enterprise; Rekindling
Commitment; Working With the Ones
You Love; Take This Job and Love It
• Beckhard Award, Family Firm Inst.
• BA, MA, PhD, Yale University
• Professor Emeritus, Saybrook U, SF
djaffe@dennisjaffe.com www.dennisjaffe.com