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Lessons in social responsibility from the C-suites of family-owned enterprises
Episodes of bad behavior and suspicions around nepotism seem to dominate media coverage and perceptions of next generation members of family enterprises – making it easy to assume that many of these rising members are undeserving of their positions of influence and unfairly use their wealth and privilege. However, there is a new generation of rising leaders of family enterprises that are connected not by salacious headlines, but by their responsible leadership and global commitment to social impact.
The focus on social responsibility is a defining element of the honorees on the 2017 List of 17 Next Generation Family Enterprise Leaders to Watch. The result of a year-long, worldwide search by the Cambridge Institute for Family Enterprise, the List not only identifies high-performing, next generation inheritors who are outstanding leaders and entrepreneurs, but also reveals a new playbook in global leadership.
For each of the seventeen finalists, social impact is a foundational, non-negotiable tenet of their leadership philosophies. When Adriana Cisneros de Griffin was asked about social responsibility, this List finalist and third generation CEO of the Cisneros Group of Companies said, “It’s not a separate chapter in our reports, it’s not a separate division, it’s not a separate team of people. For us,” she said, “it’s part of who we are as a family, as individuals, and as a company.”
At the Cambridge Institute, we see the effect of responsible leadership play out daily. Any organization is more likely to succeed when it is purpose-driven, long-term focused and built on widely-shared values. These, of course, are inherent traits of multigenerational family enterprises. By their very nature, they think ahead at least one generation (and often more), are rooted in their communities and are generally more sensitive to their stakeholders and employees. The next generation leaders on the List are elevating these deeply rooted and laudable characteristics to a new level and developing leadership philosophies of benefit not only to other family enterprises, but to anyone running a business today, and tomorrow.
Next generation family enterprise leaders may seem to be an unlikely cohort to turn to for leadership inspiration, as a global survey by PR firm Edelman found that only four in ten people trust those who have inherited their wealth, and next generation leaders are significantly less trusted than entrepreneurs and business founders. Yet despite such hardened prejudices against next generation heirs—due to outlier examples of socialites, family feuds, and relatives in undeserved positions—most next generation leaders of family enterprises defy these stereotypes, and are in fact highly responsible, professional and innovative. A new study shows that family companies run by later-generation family successors are more innovative than other companies, including family companies run by founders.
Take, for example, Dr. Simone Bagel-Trah, fifth generation Chairwoman of Henkel AG. Though a microbiologist by training, she takes a decidedly macro approach to weaving social responsibility into her firm’s operations. “We don’t just have a corporate strategy with financial goals,” she says, “but also a sustainability strategy with measurable and ambitious goals.”
Or look to Suphachai Chearavanont, the third generation CEO of Thailand’s True Corporation, who has spearheaded his communication firm’s support to the nation’s underprivileged schools, providing free internet connections and both teacher and student materials to more than 6,000 schools. Calling his company a “sustainable value-based enterprise,” his goal is to reach as many as 10,000 schools throughout the Kingdom.
Because this generation of leaders is well educated, mobile and broadly aware of both the opportunities and the world’s challenges, they see themselves as global citizens and apply themselves to solving both global and local problems. And in so doing, each makes a unique contribution, using their own, their companies’ and their families’ distinctive skills and resources. At a time when our world needs long-term, sustainable solutions to its complex challenges, family enterprise leaders are a natural fit. They have the backing of their families for the long-term, and the multigenerational time horizons to plant seeds today that will bear fruit for generations to come.
By taking this responsible approach to leadership and management, this next generation of leaders is showing that organizations can do well (financially and otherwise) while simultaneously doing good for others – proving that each can bolster and improve the other for the long-term.
John A. Davis is a globally recognized pioneer and authority on family enterprise, family wealth, and the family office. He is a researcher, educator, author, architect of the field’s most impactful conceptual frameworks, and advisor to leading families around the world. He leads the family enterprise programs at MIT Sloan. To follow his writing and speaking, visit johndavis.com and twitter @ProfJohnDavis.