Most wealth is created through entrepreneurship: taking a risk to start a business, and growing that business. Some families with generationally “old” money (i.e. more than 3-4 generations removed from the wealth creator) may have their family wealth in passive assets, and the entrepreneurial spirit that created it is long gone from memory, sometimes irretrievably lost.
For families that hold (or acquire) operating assets, it’s important to maintain that entrepreneurial spirit in subsequent generations, but that has its challenges. Rising gen family members born with spoons in their mouths often don’t share the hunger (or need) of wealth creators.
To do this, families need to tell stories of the bad times as well as the good, and create space for rising gen family members to become entrepreneurs of their own, rather than being in the shadow of others (external mentors can often help). Operating assets, especially those held by the family for a long time, need the governance that can facilitate regular strategic renewal (which may need entrepreneurial thinking) to ensure their long-term survival.
Consider This: Do family members know the story of how the family wealth was created? When was the last time an operating business you own did some serious strategic planning? Has anyone assessed whether there is “stale thinking” in the family business leadership?
Original articles: https://hbr.org/2020/05/is-the-next-generation-of-your-family-business-entrepreneurial-enough, https://www.stamfordadvocate.com/business/article/5-Factors-for-Planning-Your-Entrepreneurial-Legacy-15204834.php, http://entrepreneurship.babson.edu/barber-family-entrepreneurship-journey/, http://entrepreneurship.babson.edu/the-power-of-the-entrepreneurial-family/
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