Research consistently shows that many family businesses struggle to survive past the third generation, and the reasons are diverse: Ineffective or nonexistent succession planning, the desire of younger generations to forge their own path, and disagreement or dysfunction among family members are all common stories.
One aspect that doesn’t get enough attention — and could lead to greater family business success — is the importance of family stories themselves.
Family stories help develop a sense of what can be called the “multigenerational self” as well as the strength and moral guidance that come along with it. Children who know a lot about their families tend to have higher levels of self-esteem, more self-control, less anxiety, fewer behavioral problems and better chances for good outcomes when faced with challenges.
Why is this? One of the reasons is that family stories help children frame their questions differently. When faced with a difficult decision, they’re more apt to draw on a context of family values and to call on their expanded sense of self to find the right solution.
Of course, the benefits of family stories on children are strong indicators of professional and personal success that every business — family owned or not — would want in its workforce and leadership. But there’s much more.
Family businesses are already full of stories. Most family members will know the history of how the business started, significant milestones of its success and tales of when times were tough. Those stories, however, are often more about the facts of the business than the different facets of the family.
As complex as business is, families are more so. And when you put business and family together, the stories really begin to unfold. The story of the founder handing the reins of leadership to one child may be better understood when the story of the sibling who felt overlooked becomes part of it. The deal that propelled the company to a new stage of growth gains nuance when the family tells the stories of the options it considered when faced with the opportunity. The survivor story of pulling through adversity offers lessons not only of courage and sacrifice, but also of why and how decisions were made and who made them.
Family stories are powerful tools for the business. They help earlier generations of family business leadership share the underlying values that formed the foundations of the companies they worked so hard to build. They help younger family members step into the business — and into leadership roles — better equipped to succeed and with a more robust understanding of how the business truly operates. And, because the truth is that some family members will decide to forge their own paths outside the family business, they provide a framework both older and younger generations can use to communicate and to appreciate the reasons why.
Stories are also powerful tools for the family. Business is only one part of a multigenerational family business’s identity. While it provides for the family’s livelihood through revenue and wages, it also creates wealth over generations and often defines how a family invests in its future, engages in its community and organizes its philanthropic endeavors. As families grow and evolve over time, family stories create consistency amid change and complexity — consistency that helps keep a family focused on its long-term goals.
Family stories are important. Stories of specific successes and struggles are good. Those of decisions, disagreement and dysfunction add depth. Stories of both short- and long-term results show that some things take time. And those of comedy and tragedy — in both the business and the family — infuse much-needed humility and humanity. Overall, developing a deep understanding of values through family stories is a critical component of longevity and legacy.
Robert Moser is president and CEO of Laird Norton Wealth Management in Seattle. Reach him at email@example.com.
Marshall Duke, Ph.D., is the Charles Howard Candler Professor of Psychology at Emory University in Atlanta. Reach him at firstname.lastname@example.org. Share your opinion. To suggest a guest column, contact email@example.com.