Family Leadership Strategies

24 How then do families successfully navigate these waters? Most often, in two important ways. First, they place constraints upon consumption as the family grows in size through a dividend policy or capital distribution/inheritance plan. This entails clearly laying out expectations to children and heirs as to what they can or cannot expect in the way of financial support. The second approach (our focus) is they embrace the need for further wealth creation. In essence, they utilize their existing resources to embark upon entrepreneurial ventures, transform existing business, undertake growth strategies, and develop institutional quality investment practices. What are the implications for developing, selecting, and supporting new family leaders? The new family leader or enterprise leader must demonstrate strong personal characteristics as well as functional abilities. He or she must be creative, embrace risk-taking, and possess good judgment, qualities often found in successful wealth creators. In addition, he or she needs the ability, experience, and inclination to create wealth by embarking upon entirely new entrepreneurial ventures, investing in others, or building upon an existing business. Interestingly, not every family leader possesses this range of unique attributes and abilities, yet others in the family may. As such, the leader needs to create the potential for next generation family members who may have novel business ideas, or a talent for investing to be able to pursue those opportunities for the benefit of the family. In the context of succession, the preparation and selection of family leaders must place the need for further wealth creation at the top of the list. Simply being ‘as good as mom or dad’ is not a strategy for future success. Neither is embracing the means and methods that created the wealth in the first instance. The family leader or enterprise leader must understand that he or she needs to strive for and achieve ever better results than before. This responsibility places an enormous burden on the successor. Therefore, the burden must be acknowledged both during the succession process, and well after the transition.