Elizabeth Florent-Treacy is research project manager, INSEAD Initiative for Family Enterprise, Fontainebleau France and Singapore. (The contribution of Michael Carlander and the Next Generation Working Group is gratefully acknowledged.)
The field of family business studies has begun to address the need for new approaches to preparing the next generation of qualified leaders and capable owners. It has become apparent that one of the most important dilemmas that successor generations face is the conflict between their role as trustee for their family and entrepreneur in their own right – and their need to explore their own, best career options, inside or outside the family firm.
In the trustee role, the successors oversee the business for the family; their primary role is to protect assets and maintain the status quo. This more conservative position limits the successor generation's involvement in strategic planning, and may limit their ability to express their own entrepreneurial talents and values. The entrepreneurial role in the family business requires a different focus and set of actions. It creates a much more stimulating opportunity and experience for the successor generation as they run the business, build the assets, and regenerate strategy. In addition to these two roles, there are often interesting career opportunities available outside the family company. The alternatives can appear overwhelming to younger family members.
However, experience shows that business families as a rule do not adequately anticipate the challenges that the next generation faces in balancing responsibility to the family with their own career aspirations. For highly motivated individuals, expressing themselves through their own career accomplishments is most important. Because of a lack of planning or poor communication, younger members of business families may become frustrated and leave the family company without fully exploring all their options. The consequences can be serious; conflict between generations in a business family can, and often does, threaten the survival of the family's company.
But there is good news: the Next Generation Conference, part of the Family Business Network's World Conference, is growing in size and popularity. The conference presents the younger members of business families with the latest family business academic theory and practice, and lets participants learn from each other. The Next Generation Conference is in its fifth year, and younger FBN family members are making it their own.
The FBN's 14th international meeting took place in Lausanne last September. The Next Generation sessions focused on the challenge of exercising and supporting leadership faced by younger members of business families. Joseph Despature, President of FBN International, opened the conference and welcomed the Next Generation participants, underlining the importance of having a conference in which this particular group could get to know each other.
In the working session that followed, Dr Denise Kenyon-Rouvinez and INSEAD Professor Randel S Carlock, Berghmans Lhoist Chaired Professor in Entrepreneurial Leadership, set the group at ease with a Joe Cocker song that rang true: "N'oubliez jamais [never forget], I heard my father say, every generation has its way, a need to disobey". Dr Kenyon-Rouvinez told the group that it is perfectly normal for next generation family business members to have doubts and concerns about their career, inside or outside the family company. She encouraged them to think about their own family's situation and to take every opportunity to talk about their concerns with the other participants. "The Next Generation Conference is about networking, across cultures and across borders," she said.
In his introductory lecture, Prof Carlock assured participants that most younger generation family members face similar issues. Family elders often feel that time is passing quickly, and consequently they pressure their offspring to commit themselves to the family business, or contribute in some way. At the same time, in early adulthood, the younger generation has to work through their own set of philosophical questions about the meaning of their life. They may be struggling with marriage and family decisions. They also need to develop a sense of competence before they can be satisfied with their career and life choices. Prof Carlock told the group that they should not be afraid to explore their "fit" with their family company. He challenged them to ask themselves: why should I join the family firm? What can I contribute? Is there a long-term fit with my own goals?
Field studies: learning in context
To stimulate discussion and learning centred on these issues, the Next Generation participants then headed off to Geneva to share a unique experience – two "live case-study" visits to family-owned Swiss companies. The visits would provide real-world experience, and allow the group to explore the challenges and opportunities for next generation family members in these two successful companies. Half of the group visited Chopard, the jewellery maker, and the rest went to retailer Maus Frères. Both groups were asked to look for reasons for the success of the two businesses; to identify the key challenges these well-known business families face; and to analyse the role played by the next generation members of these families.
The group learned that the Scheufele family, who own Chopard, face unique challenges as one of the few family-controlled companies in the Swiss jewellery and watch industry, but also counts the close working relationships among the family members as an asset more valuable than gold.
The Maus Frères visitors toured the biggest department store in Geneva, founded in 1967. Maus Frères is Switzerland's leading privately owned distribution group with fourth-generation family members active in management. The group of FBN visitors met four members of the Maus family to discuss how the company has been able to compete and differentiate successfully in a highly competitive industry with thin margins. As in Chopard, it was evident that family members respect each other but are not afraid to speak frankly.
Later that afternoon, the Chopard and Maus visitors regrouped at the conference hotel to share their impressions. With the participation of Maus and Scheufele family members, they presented their findings and discussed the implications. The message was clear: next generation family members have unique concerns, but they also share many similarities and the foundation for a successful company is laid within the business family. These visits proved to be events that broke the ice among the culturally diverse participants, and the ensuing discussions continued in small groups late into the evening. Michael Carlander, a group member said: "We had a buffet dinner together, and the whole restaurant was as loud as a roaring engine – not because people were arguing with each other, but because everybody was excited about sharing their own problems and ideas."
The Next Generation Working Group
To confirm that the next generation is eager to be a driving force in determining their own fate, the next day Mika Mustakallio of the FBN Next Generation Working Group took the stage to present their history, purpose and future programme.
This group was created after the 2002 FBN World Conference in Helsinki in a bid to create programmes and agendas to support the development of next generation leaders. Its first initiative, Building the Future Programme (BTFP), is designed to place next generation FBN members as trainees in other FBN member-owned companies, as a way for young people to gain business experience outside the family firm. Frank Grozel of Positive Investments unveiled a micro-finance programme for trainees to work with micro-bank investors and entrepreneurs in developing countries.
Summarising his experience at the conference, Michael Carlander, said: "All too soon, our conference was over and we found ourselves sitting next to our parents at the FBN main conference. But we next generation members couldn't stop getting together during breaks and dinners. The one thing that most of us will remember is the ambiance during the unofficial discussions and, of course, the fun we had on the dance floor during the closing Gala dinner".
Carlander went on to say: "Why do we really need a special forum for the next generation? The mix of academic theory and real life experiences gave us the context, but the networking was the most valuable part of the conference. It turned out we all had similar life situations; we told the same stories about deciding whether or not to join the family business. We discovered that we, 'the children', need to be able to discuss and share our ideas, thoughts and experiences of being family business members, without having our parents present. While respecting our 'gentlemen's agreement' of discretion and confidentiality regarding our family's affairs, we had some very open and interesting discussions".
He added a bit of advice for all the parents of next generation family members:
"In 2004 the Next Generation Conference will a part of the 15th FBN World Conference in Copenhagen. Are you asking yourself if you should let your children attend the next conference? The answer is simple: it is a great forum for the next generation to share ideas, thoughts and experiences. Who knows, maybe you will profit from it as a family."