The world of business is evolving at an exponential rate, new multi-billion dollar industries emerging rapidly and old, established industries becoming obsolete. In this fast-changing environment, operating with agility and a purpose-driven, innovative mindset is key to the sustained success of modern enterprises. For this reason, family firms need to look beyond the obvious priority of inter-generational wealth preservation and genuinely embrace the value that a fully immersed and invested next-generation can bring to a business.
The reality, however, is that the majority of family businesses do not succeed into the next generation because they are not motivated and inspired to take the reins. At some stage, a generation holding decades of knowledge and experience must be replaced by a new talent pipeline — a pipeline dominated by millennials whose loyalties are driven by a very different set of principles and priorities. The next-generation of leaders in family offices need the support of the current leadership team to craft a space for them in the organization while building the necessary knowledge and experience to establish their own vision and legacy for the business. Here are three key areas of focus to achieve this:
Understand The Importance Of Purpose And Impact
One of the key findings of the Deloitte 2018 Millennial Survey report was that “Millennials want leaders to more aggressively commit to making a tangible impact on the world.” This sentiment is consistent with the findings of both experts at the London Business School and PwC’s recent Workforce of the Future survey, highlighting the importance of aligned values and purpose to attract and retain the millennial workforce. It is clear that, if family businesses and family offices want to be successful in attracting and retaining next-generation talent, they must become authentically purpose-driven and consistently reflect on that purpose both internally and externally.
According to the UBS Campden Wealth Global Family Office Report, 54% of family offices have indicated an intent to increase their allocation to impact investing over the next 12 months. It is therefore not surprising that impact investing is high on the agenda for the next generation. But, also one of the points of conflict in family enterprises due to the older generation not being fully aligned or able to embed this mindset quickly enough in the business.
Without the right tools and arguments, the principals may find the next generation’s ideas or arguments for impact investments a bit naive, however, with the proper guidance solid investment cases can emerge that align well with the family.