Entrepreneurship is often associated with starting new ventures from the ground up. But, especially in the context of multigenerational family businesses, the concept also applies to developing new revenue drivers and even new ways of working within an existing organization.
The common threads through the various definitions of entrepreneurship are an appetite for risk and perseverance through adversity. But in family businesses, where there’s a heavy emphasis on continuity and legacy preservation, it’s easy to become risk-averse — and that mentality can hinder innovation and evolution.
A fear of failure “prevents this creative thinking.” says Alisa Jno-Charles, an assistant professor at Babson College in Massachusetts, who studies entrepreneurship.
Jno-Charles says younger generations in a family enterprise often have a healthy sense of stewardship, “but there’s a flipside to that, which can make stewardship a burden.”
“The parents can do harm to the sense of entrepreneurship by putting a lot of pressure on the child to carry on the family business, to continue this particular legacy. And that can be very stifling because the child will be so afraid to fail.”
So, how do family enterprises imbue NextGens with the entrepreneurial mindset?
Failure without fear
Jno-Charles says that while’s there’s a “constellation” of traits that entrepreneurial families tend to exhibit, the key component is “a very trusting and open familial culture, where children feel like they can come to their parents with anything.”
“And what we found is that the culture that’s built inside the family is oftentimes very similar to the culture that’s built in the company,” she adds. “So, a family that is very open and transparent and says [to their kids], ‘You can come to me with anything. I won’t judge you for mistakes that you’ve made’ … that actually has a translation to an entrepreneurial culture in the workplace.”
And that’s important because, as Jno-Charles’s colleague at Babson, Associate Professor Angela Randolph, notes, research has shown a connection between minor rule-breaking as an adolescent and entrepreneurship as an adult. The right family dynamic can help harness that tendency to test boundaries and apply it to innovation within the business.
Ideally, Randolph explains, that family dynamic would include “authoritative parenting,” a term widely used by researchers to describe a parenting style that combines warmth, love and support with structure and firm boundaries.
According to Randolph, the key for parents hoping to foster entrepreneurship is turning NextGens’ mistakes into teachable moments. After all, entrepreneurs must be able not only to accept failure, but also to take lessons from it.
“It’s really setting them up to have a learning mindset,” she explains.
Entrepreneurship itself can also be learned, Randolph notes.
“We know that children of entrepreneurial parents are more likely to be entrepreneurs themselves — it’s this idea of occupational inheritance,” she says.
According to Randolph, entrepreneurial parents typically pass down that mindset in two ways: 1) they actively share their goals, values and aspirations with their children and 2) they lead by example.
“You only really think about entrepreneurship if you see it in action,” she explains.
Experience and experimentation
Similarly, young people in the family enterprise can be truly entrepreneurial only if they’re given the opportunity to translate that mindset into action.
For example, the current gen might give a NextGen or a group of NextGens ownership over a project within the company that has a high upside but low potential to harm the business if unsuccessful.
“The goal is to build a sense of empowerment,” Jno-Charles explains.
Meganne Wecker knows the power of this approach.
Not long after graduating graduated from Purdue University in 2001, she joined Chicago-based Skyline Furniture Mfg., the company her grandfather had started and her father, Ted, was leading at the time.
Ted had started an import division at the company and it was thriving. Meganne spent her first few years at Skyline traveling the world to visit suppliers, but eventually found her true calling on the manufacturing side.
As Meganne began learning more about fabrics, textiles and design, she began to gravitate toward that aspect of the business.
Ted, recognizing a kindred entrepreneurial spirit in his daughter, put Meganne in charge of the manufacturing division. It was opportunity for her to flex her creativity and learn leadership skills in what, at the time, was a relatively low-risk environment.
“It was such a small [aspect of the] business that my dad was like, ‘Go ahead, plan it, do whatever you want to do,’” Wecker says. “And so, I took on the idea of designing furniture that I would want to put in my first apartment.”
The experience helped prepare her to take on increasingly high-profile — high-stakes — roles within the company.
Today, Meganne is the third-generation president and chief creative officer of Skyline. And in October 2016, she launched Skyline’s sister brand, Cloth & Company, which uses in-house digital printing to design and create custom home decor that can be delivered directly to customers within three weeks, eliminating the need to import fabrics or to order more than is actually needed.
Meganne says her father has tried to make entrepreneurship part of Skyline’s DNA.
“It was always that mentality, not just with me as his daughter, but really with anybody who works for us,” she says, explaining that Ted’s philosophy has always been to empower employees in the company to be creative and enterprising, regardless of their educational background or lack of formal training.
“If they felt like they could do something, they were given opportunity to do it and prove it out,” Meganne explains. “And so, for me, it was sort of a natural environment to come into where they said, ‘Here, go try it.’”