Transgenerational continuity in a family business requires systematic development of entrepreneurial orientation within the family, since that is their unique contribution to the business. The business family is a powerful amniotic crucible for entrepreneurship. Family culture, values, and family role models can activate enterprise, innovativeness, achievement motivation, risk taking and persistence.
Opportunities to nurture an entrepreneurial climate in the family abound-family capital and resourcefulness, social networks, access to financial markets, emotional commitment, trusting relationships and a supportive safety net. This "socio-economic wealth" has tremendous power.
The deterrent to unleashing this power is the "silver spoon syndrome". Successive generations are born into affluence and grow up in comfort - not having to earn anything, spoilt for luxury, rarely having to postpone immediate gratification. The urge to achieve and fashion a professional identity is minimal. The curiosity and internal autonomy that is so essential is absent. An attitude of 'entitlement' sets in and personal enterprise takes a back seat.
If this affluent ambience persists during the formative years, the task of igniting entrepreneurial zest later will be hard, long and frustrating. Perhaps never. The more the next gen are protected from the environment, the lower are the chances of developing enterprise.
Formative years supportive of enterprise, enable the younger generation to provoke change and be more innovative and opportunity driven.
The development process needs to start around the age of twelve to fifteen. Business family parents need to decide if they want to make the child ready for the road or the road ready for the child.
Entrepreneurial motivation comprises:
- Risk taking
- Competitive assertion
Igniting these attitudes in the next gen is the bedrock of the "entrepreneurial pipeline".
Beyond inspirational parenting, there are a few initiatives the family can take:
- Getting an entrepreneurial life coach.
- A family venture fund can trigger a start -up mentality and provide an effective engine of opportunity and development.
- Promoting a "venture capitalist mind set" in the older generation
- An "entrepreneurial champion" within the family.
Allow me to elaborate the idea of an entrepreneurial champion
This role can help:
- Inspire, stimulate, new ideas.
- Influence other decision makers of the potential of new ideas.
- Promote the idea through informal networks
- Shield it from opposition
- Commit resources and generate support.
- Accept risk of failure
The characteristics of such a "champion" might be:
- Good knowledge of business and markets
- Credibility with ability to persuade and influence
- Risk appetite
- Strong commitment to build people
- Incubating and a mentoring mission
- Venture capitalist mind set
- Strong belief in continuity and perpetuity of the family identity
The patriarch of the family firm is best positioned to be the champion of the younger generation. They have the power to commit resources, nurture and protect entrepreneurial activities, ability to influence the family and make bold decisions.
As in everything else from family culture to succession, the patriarch can be a bottleneck or a lifeline.
Institutionalizing and building a tradition of enterprise is a key factor in perpetuity of the family firm.
From my ringside view of business families, very few family firms focus on this important dimension - most leave it to chance and heredity.
Prasad Kumar specialises in family business advisory