Research after research indicate that there seems to be a constant decline in the enterprising spirit in family businesses, as these pass from one generation to the next (if they ever make it that far). One common explanation for this decrease stems from the idea that next generation members are coddled to the point that they don’t understand or aren’t willing to face the difficulties and being committed to doing the hard work. Additional research also suggests that when family businesses grow beyond a certain size, the desire to protect was has been achieved leads to a more cautious and less enterprising approach. Regardless of the underlying reason, the common baseline is that successive generations become less motivated and less capable of leading the family business. How can we avoid this?

Research indicates that one of the core reasons as to why this happens is the result of a misalignment between senior and junior generations. While both generations desire the same thing i.e. a heightened enterprising spirit in the family business — senior and junior generations are inable to truly connect to get things going – which leads to frustration on both sides. Below are some pointers as how to avoid this:

Communicate, Communicate, Communicate

When it comes to building an enterprising spirit, a primary source of misalignment is a lack of understanding about expectations and needs. Families tend to get in comfortable communication patterns, which often creates this misalignment. I often speak to family business leaders across generations and it is surprising that although I ask each the same set of questions there is little or no consistency in the replies I get. I ask about how strategic decisions are taken, about the succession plan….and the replies I get are so diverse. Many times the senior generation feels all is fine about these matters, while the next generation members tell me that they are either not satisfied with how things are being handled or that they are not informed or involved or that they are not aware they have certain policies. There is only one solution to this problem: TO COMMUNICATE! To speak about the elephant in the room! Share information and then share it again. The senior generation should focus on clearly communicating their desire for a self-directed enterprising activity from the next generation. On the other hand, the next generation is not immune from a need to over-communicate themselves. The next generation should stop being timid about asking questions and sharing their needs with the senior generation. Next generation members should focus on over-communicating both their desires about the family business and their need to better understand the values held and strategies used by the senior generation.

Educate and Give Opportunities

Communication alone is not enough to fully promote an enterprising spirit in the next generation. It is very common that the older generation point to a lack of motivation or drive in the next generation as the cause of a slump in enterprising spirit. Core research in organisational behaviour indicates that a sense of “getting things done” and an “enterprising spirit that pushes things forward against all odds” — is driven by three variables: 1) The ability of the individual to take the expected action; 2) the motivation of the individual to take the expected action; and 3) the opportunity provided to the individual to take the expected action. Despite the popular belief that an enterprising spirit is an innate capability (a skill you are born with), research indicates that entrepreneurship is learned. Hence the importance of education. There is on one hand formal education focused on entrepreneurship. Business families should take advantage of these formal educational opportunities to increase the ability of the next generation to act with the correct enterprising spirit. Coupled with that is the hands-on learning. To accomplish this, next generation family members would benefit from being involved in the family business at a young age, starting from the bottom levels. The learning power of shadowing leaders, sitting in on meetings or visiting customers should not be underestimated. Besides education (both formally and hands on) the next generation also needs to be given the opportunity to lead. Next generation members need a safe space to pursue and test new ideas — to try out their entrepreneurial thinking and experiment with different solutions. Some families provide this space by setting aside resources for next-generation entrepreneurial activity. The key ingredient here is that the next generation need to be given sufficient autonomy to have a space in which they can really act.

A decline in the enterprising spirit of a family business across generations is not inevitable. Rather than focus on significant issues between generations, families should focus on correcting misalignments and communicating significantly around expectations, whilst giving priority to building an entrepreneurial ability in the next generation combined with opportunities for the next generation to act out their enterprising spirit. All this should lead the next generation to be willing to do the hard work and be fully committed to the family business. There are many differences between each generation, but an enterprising spirit does not need to be one of them.