Institute for Family Entrepreneurship Header

Excerpt from FAMILY ENTREPRENEURSHIP: INSIGHTS FROM LEADING EXPERTS ON SUCCESSFUL MULTI-GENERATIONAL ENTREPRENEURIAL FAMILIES

Family Entrepreneurship Book Cover

Edited by William B. Gartner, Bertarelli Foundation Distinguished Professor of Family Entrepreneurship and Director of Research, and Matt Allen, Associate Professor, Founder of the Family Entrepreneurship Amplifier program FAMILY ENTREPRENEURSHIP: INSIGHTS FROM LEADING EXPERTS ON SUCCESSFUL MULTI-GENERATIONAL ENTREPRENEURIAL FAMILIES is the first edited book that focuses on family entrepreneurship from both academic and practitioner perspectives. You can read an excerpt of the book in the section below.

Managing Legacy, Achievement and Identity in Entrepreneurial Families (Excerpt)

by Eliana Crosina and William B. Gartner

In discussions with entrepreneurial families about their futures, we often suggest that each family member should consider four aspects of their lives—achievement, happiness, significance and legacy—as a broad framework to explore their goals and values and to reflect on “who they are” and ultimately “who they want to be.” This framework comes from Just Enough, a book written by Laura Nash and Howard Stevenson that focuses on the meaning of “success” for highly accomplished individuals and families. In this chapter, just as in our conversations with the members of entrepreneurial families, we first describe and contextualize the framework. We then focus on two specific elements of the framework—legacy and achievement—because they tend to be a primary source of conflict and misunderstanding among the members of entrepreneurial families. Finally, building on insights from our own ethnographic research with entrepreneurial families, and from scholarship on identity, we reflect on what it might take to create an environment in which certain family members’ aspirations for legacy and others’ need for achievement coexist in unison. We believe that by fostering this alignment, the family’s entrepreneurial activities might have a greater chance at lasting success.

A Framework for Success in Family Firms

“Success” for both individuals and families is composed of a multitude of goals and values, which, following Nash and Stevenson (2004), may be broadly categorized in terms of achievement, happiness, significance and legacy. Consider achievement to be goals that one desires to accomplish. Each person may have various goals that are more or less important to them: for instance, one family member might want to be an artist exhibiting paintings at Art Basel in Miami Beach, while another might want to develop a new product line as part of the family business. Happiness encompasses various positive emotions, but at its core are contentment and satisfaction.

Contentment and satisfaction span several aspects of our lives—ranging from our relationships to community, as well as our own selves. Significance is about having a positive impact on others: we all want to be of value, whether by raising our children, providing a product or service that others use or solving issues in our communities. Finally, legacy is enabling one’s accomplishments and values to benefit others in the future. Achievement, happiness, significance and legacy are all dynamic: the priorities of each might change over time, as well as how they might relate to each other. In other words, what brings us happiness, achievement, significance or legacy today is likely to vary as circumstances in our lives evolve.

Conflict arises when we fail to recognize that our own success criteria change. However, given how quickly our environments evolve, it is especially challenging to stop and pay attention to ourselves and to our situation. We emphasize the pay in “pay attention” because there is a cost associated to taking the time to be present, and reflect. The framework (achievement, happiness, significance and legacy), then, provides a way to focus on ourselves, consider where we are now, where we might want to be in the future, and perhaps most importantly, why.

Although all aspects of the framework invite critical self-reflection, when focusing on family entrepreneurship we zero in on issues related to legacy and achievement. These issues tend to be closely coupled, and are both consequential and problematic in family firms. Indeed, evidence from research and practice suggests that the legacy that senior family members may want to pass on to their offspring often does not align with what the next generation desires, leading to a mismatch between senior generation’s legacy ambitions and next generation’s achievement goals (Barbera, Stamm, & DeWitt, 2018; Jaskiewicz, Combs, & Rau, 2015). For example, our conversations with the senior members of a family that owns and operates a successful multi-generation business in oil well services suggest that the junior generation is not interested in joining a firm that deals with oil. Rather, junior members have ambitions to pursue more “environmentally friendly” endeavors, despite the success and resiliency that the family oil business has demonstrated over the years. Put differently, the senior generation sees the business as the legacy to be transferred, while the junior generation holds different achievement goals.

Faced with such discrepancies, how might entrepreneurial families go about fostering environments that would enable greater alignment between legacy and achievement? The answer is not simple, as it requires effort from both seniors and juniors. To start, seniors need to become aware of what they can transfer, take stock of what they must and could transfer and become actively involved in a purposeful transferring process. In our prior example of the oil business, beyond a focus on oil per se, seniors might start by recognizing that the business thrived over the years because of how it addressed client problems in harsh and unpredictable environments. In other words, the business fostered unique ways of operating in a volatile industry that may be applicable to other sectors or raw materials, well beyond oil. This type of knowledge/understanding is generally tacit—not codified or made explicit in “how to” manuals of any sorts (Von Krogh, Ichijo, & Nonaka, 2000). In addition, with the passing of time, tacit knowledge tends to become “taken for granted,” or implied in how one/an organization acts and relates to others (Wenger, 1998).

As such, tacit knowledge is not easily surfaced or transferred. However, because tacit knowledge informs behaviors and relationships, it is critically important for the very functioning of the business. As we will elaborate, tacit knowledge is often the most vital legacy that seniors can provide to the next generation.