Cross generational thinking: Embracing the next generation’s view of value
IN a family business, cross- generational thinking refers to the ability to consider and integrate the perspectives and contributions of different generations involved in the family business, whether as future owners or current beneficiaries.
This goes beyond simply having family members from different generations working together; it necessitates actively valuing and utilising their diverse experiences, viewpoints, and skills. It recognises the unique dynamics and challenges that arise when family businesses involve members from different generations.
In our observation, nextgeners ( the next generation), who are part of the key players in the cross- generational dynamics, are thinking differently and many of them are happy to forge a different path, sometimes way different from the expectations of the founders of the family business.
The difference in thinking between these two generations- the founders and the nextgeners- has continued to remain a source of conflict and sometimes a threat to the continued success of the family business. Many founders are uncomfortable with the thinking and sometimes, disposition of the nextgeners.
Some have taken drastic decisions that have made it difficult to hold the family intact and retain the family business in the hands of family members. Does this always have to be the case? Not necessarily.
We will be drawing out tenvaluable insights from the cross- generational thinking approach that successful families have employed to reach key milestones where they have successfully transitioned the family business and wealth to a competent next generation, with minimal conflict and mutual respect for everyone involved.
Mutual Respect and Inclusion: Recognising that each generation has its own unique strengths, weaknesses, and perspectives shaped by their life experiences and societal context. This includes acknowledging differences in technological fluency, risk tolerance, business philosophies, and communication styles. The older generation should actively involve andengage the next generation in decision- making processes, allowing them to contribute their perspectives and ideas to the business.
Fostering Communication and Collaboration: Creating channels for open and honest communication between generations and encouraging mutual learning. This could involve regular family meetings, cross- generational project teams, or facilitated discussions on key business decisions. There should be implementation of mentorship programs and knowledge transfer initiatives to pass down expertise, industry insights, and the values of the business from older to younger generations.
Leveraging Strengths: Identifying and maximising the unique contributions of each generation. For example, the nextgeners might bring technological expertise and fresh ideas, while older generations offer experience, business wisdom, and industry connections.
Succession and Continuity Planning: Ensuring a smooth transition of leadership and ownership across generations. This involves developing clear succession plans, training programmes for younger family members, and establishing fair and transparent governance structures.
Embracing Innovation and Change: Recognising that staying competitive requires adaptability and openness to new ideas. Embracing adaptability and innovation to ensure that the family business remains agile and responsive to changing market dynamics and industry trends. Whilst also striking a balance between preserving the traditions and values that have defined the family business. The next generation can often be the catalysts for innovation and help the family business adapt to changing markets and customer preferences.
Governance Structures: Developing family governance structures that provide a framework for decision- making, conflict resolution, and the fair representation of different generations in key family business matters.
Financial Planning: Aligning financial planning strategies with the long- term goals and aspirations of the family, considering the financial well- being of multiple generations. Being deliberate about encouraging financial accountability, rewarding entrepreneurship, and fostering discipline.
Cultural Heritage and Legacy: Preserving and passing down the cultural heritage and legacy of the family business, ensuring that it continues to be a source of pride and identity for future generations.
Education and Development: Investing in the education and professional development of family members, with a focus on preparing them for future leadership roles within the business and starting this early enough.
Conflict Resolution Mechanisms: Establishing effective conflict resolution mechanisms that consider the diverse perspectives and potential conflicts that may arise between different generations.
As much as we recognise that the transition of leadership from one generation to the next can be a delicate and complex process, we are certain that there are many success stories of how founders and patriarchs have embraced these ten insights of cross- generational thinking. We are also aware that there is no certain future where there is no cross- generational handshake in thinking and idea sharing.
How these successful founders have remained agile, long- term focused in decision making, weighing the impact of their decisions, in the long run, especially with regards to generational continuity have directly translated into how well their business dynasties and families thrive after them.
These founders have learned not to make their interest alone, the measure of all things valuable to the business and, have embraced compromise to achieve significant success.
The world today is digital and increasingly AI- driven, family businesses need fresh perspectives and new ways of thinking if they are to rise to tomorrow’s challenges. Cross- generational idea and experience sharing is vital in helping families fully prepare for whatever the future may bring. Successful cross- generational family businesses know that the nextgeners can bring deep value in the form of fresh ideas to the family wealth and legacy, irrespective of whether they function in or outside the business.
They have identified that value does not have to always sit in the traditional buckets. They have identified how the nextgeners can be positioned as either professional owners, responsible shareholders, beneficiaries of business earnings or as competent board members of the business. These have helped them record some of the highlighted benefits below.
Enhanced decision- making: By considering diverse perspectives, the family business can make more informed and well- rounded decisions.
Increased innovation and agility: Combining the experience of older generations with the fresh ideas of younger generations can lead to greater innovation and a more adaptable business model.
Stronger family relationships and Cohesion: Open communication and collaboration can strengthen family bonds and prevent conflicts around inheritance and business decisions.
Long- term sustainability: Effective cross- generational planning ensures the smooth transition of ownership and leadership, contributing to the long- term stability and success of the family business.
It is not uncommon for some families to encounter challenges whilst implementing a cross- generational thinking approach. To overcome these challenges, here are some lessons that are worth noting.
Overcoming generational stereotypes: It’s important to avoid making assumptions about any generation based on age alone. Individual experiences and skills matter more than labels.
Managing power dynamics: Balancing the influence and decisionmaking power of different generations can be challenging. It’s important to create a structure that fosters fairness and inclusivity. Navigating Communication Barriers: Communication styles and preferences can differ across generations. Active listening, empathy, and clear communication are crucial for bridging these gaps. Undoubtedly, each family and family business is unique, hence, we recommend using a tailored approach that takes the dynamics and specifics of each family business into perspective, when planning cross- generationally. We recommend that families who want to create value through cross generational thinking should engage a family wealth advisor for professional guidance.