A slim volume packed with wisdom on family enterprises at all stages
Wise Wealth
By Joachim Schwass, Hakan Hillerström, Holger Kück and Colleen Lief
Palgrave Macmillan, 2011
157 pp., $90
Though Wise Wealth is slim (less than 200 pages) and trim (5 x 8 inches), the book is chock full of sage advice on managing a family enterprise and sustaining wealth over -generations.
Written by Joachim Schwass, a professor of family business at IMD in Switzerland, along with advisers Hakan Hillerström and Holger Kück and IMD research associate Colleen Lief, this volume suggests productive approaches to wealth at all stages of family and business evolution. As Wise Wealth’s subtitle notes, the book addresses “creating it (the entrepreneur), managing it (the family business), preserving it (the family office).”
The book cites numerous real-world examples of families around the globe who have successfully addressed these issues. Another plus: It’s timely. Wealth management is discussed in the context of the 2008 financial crisis. “Having a better understanding of the logic of the wealth creation process raises awareness of the potential risks,” the authors write. “Our approach is systems-based and thus leads to a fuller understanding of the process, as well as an enhanced ability to manage and influence it.”
The quartet of authors states that, based on their research and conversations with business owners, “the key factors that enable family firms to succeed” are family and business culture, governance and a deep connection to purpose. “These concepts,” the book notes, “are all interwoven.”
The book begins and ends with chapters on “the cycle of entrepreneurship”: from start-up venture to family-run operating company to family office and then back to entrepreneurship, as next-generation family members receive encouragement and, in many cases, funding from the family for new business ventures. Chapters 2, 3 and 4 discuss, respectively, the first-generation entrepreneur, the family business and planning for generational transitions. Then follow three chapters on the family office. Each chapter ends with a list of take-home lessons or, as the authors call them, “rules of the road.”
Though the volume contains many profiles of successful families (as well as a few who could not overcome their difficulties), one case study recurs throughout the text: that of the Owens family of Australia, whose patriarch founded grocer Richard Owens Pty. Ltd. The Owenses endured family strife in the second and third generations and, to resolve these issues, split the enterprise into three separate holdings divided among three family branches. Today, the family of third-generation member Richard Owens, the founder’s namesake, runs RO Investments, which manages the family’s wealth and real estate holdings. Richard’s son David has succeeded him as RO Investments’ managing director; one of David’s sisters chairs the family council.
IMD has used the Owens family case study as a basis for class discussions. Details of their family and business are provided in a series of appendices at the end of the book. Another appendix lists services performed in large single-family offices. Also presented in the appendix section is an analysis of Harvard and Yale universities’ endowment investment. (“Yale and Harvard,” the authors lament, “built large endowments through investments that donors would probably never have envisioned for their gifts” and in the recent recession suffered great losses in endowment value.)
“[T]hroughout generations,” write Schwass, Hillerström, Kück and Lief, “many successful multi-generational family businesses seem to follow a logical strategic evolution, which derives from a strong sense of identity. It is this identity that provides roots, reference points and benchmarks, as well as the ability to adapt to changing markets and environments.” Family enterprise stakeholders who pick up this book will increase their awareness of the opportunities and pitfalls that await them at each stage of the entrepreneurship cycle.
One point of information for the reader: Though Wise Wealth is short, it contains so much valuable information that you’ll want to stop reading periodically to jot down notes or reflect on the ideas presented. You likely won’t plow through it in one sitting—but you probably will refer to it often.
Best practices for family businesses presented in a variety of formats
The Keys to Family Business Success
By Leslie Dashew, Sam Lane, Joe Paul, Darrell Beck and William Roberts
Aspen Family Business Group, 2010
298 pp., $29
The Aspen Family Business Group partners have been helping family business owners to confront and resolve dilemmas for 20 years. The Keys to Family Business Success is a distillation of their wisdom. Tragically, an Aspen partner and coauthor, San Lane—a leader in the field of family business consulting—passed away suddenly on Feb. 26, as the book was being prepared for release. The Aspen group vows to continue Lane’s legacy and, with the publication of this volume, family business stakeholders have one last written compilation of his sage advice, along with that of his colleagues.
The authors present their concepts in a variety of formats—in an effort, they explain, to “accommodate individuals’ different learning styles and comfort zones.” Part One is a case study of a pseudonymous family working through its issues with the help of an adviser. Part Two explains family business dynamics via the classic three-circle model and other theoretical analyses.
Each of Part Three’s four chapters opens with a discussion of common problems facing business families and then offers suggested solutions. Part Four lists “principles of success” and best practices, and concludes with a case study that illustrates them. An appendix suggests an education program for family owners—three categories of “competencies that owners should acquire to become effective stewards of their assets.”
For readers who prefer an artistic approach, there’s even a poem (“The Goose and the Golden Eggs,” by Sherry North, in a chapter focusing on communication and trust building) and a picture of a hamburger (an analogy explaining next-generation development projects).
Among the book’s highlights are a list of questions that should be asked as part of the succession-planning process (Chapter 12) and advice related to financial management (in various places in the text). A helpful analogy likens a company’s board to the owner of a house under construction, the president or CEO to the architect, and the senior managers to the contractors who build the house.
The reader will discover some gems that are worth highlighting for easy reference when times get rough. (Examples: “Typically in a family business one knows what the right thing to do is. The challenge is having the will to do it”; “Successors who assume leadership often become the lightning rod for unfinished business others have with their father or mother”; “Understand each person as an individual, rather than the person we think they should be.”)
“Remember: Hope is not a plan,” the authors assert. Those preparing to move from hope to planning should consider taking the time to do the exercises suggested in the Aspen group’s book.