by Doug Gray | Dec 27, 2024 | Business, change, Consulting, family, Family Wealth, Leadership, strengths, Success
And why we should talk about it!
Yes, the pyramids and Great Wall are significant structures.
However, if I were to list the greatest wonders of the world, Tribalism would be #1. Think about it.
You and I do whatever we can to protect our loved ones. Their safety is critical. We may mortgage the house to protect our children who require healthcare. Our social groups reinforce whatever world views we think are accurate. Algorithms are as ancient as the walls in Jerusalem that separated tribesmen. Why assume that tribalism is always a bad thing?
Tribalism describes the social fabric in every community. In every corner of the world. We have dress codes that reinforce local norms. We have countless languages, and jargon, to reinforce who is in the group. And we have endless examples of battles for property and social honor. Those tribal histories create identity and protect shared values.
My family roots include a Scottish clan that brutally fought for marginal farmland and sheep. My wife’s roots include a different Scottish clan that brutally fought against my antecedents. And today we embrace our shared Scottish roots. When I travel abroad and hear someone with an American accent I’m immediately drawn to them. Tribalism at work. We quickly identify those who “in group” and those who are “out group.”
Psychologists (like me) know that those judgements occur in a millisecond. Thankfully! They enabled my antecedents to survive. And they enable you and I to quickly discern threats from allies.
Tribalism in extended families permits all of us to protect and distribute assets (That’s the second wonder of the world, on my list of two wonders. For a different post). We save money and property so that we can distribute it to our loved ones.
When families protect assets, they can compound over time. The Vanderbilt assets were dissolved within one generation amid squalor. The Rockefeller assets are wisely distributed to this day because the family and their advisors subscribe to a shared belief: wealth requires responsible stewardship and service to others.
All philanthropy is the result of tribalism at work. Look around your city. Look at the names on the buildings such as that museum, university, church, synagogue, stadium…. Look at the beautiful shared spaces like parks, libraries, with anonymous donors who want to support their legacy.
Recently I video-recorded some comments about tribalism and compounding assets with a Family Office client. They serve 80 wealthy families with complex needs. At root, most of them share the same values of integrity, asset preservation, legacy leadership, stewardship, philanthropy.
We don’t talk about family business succession because we don’t understand wealthy people. All family enterprises are built on tribalism.
Fears prevent us from understanding the greatest wealth transfer in human history, which is quietly successful, and happening today.
I wonder what would happen if we discussed the power of tribalism and compounding assets more openly? I can think of 4-5 people I’d like to learn from. How about you?
Schedule a 1:1 session with me soon!
by Doug Gray | Dec 24, 2024 | Business, Consulting, faith, family, Family Wealth, Leadership, strengths, Success
What interest should go first?
Family Capital is defined as durable family harmony and governance.
Financial Capital is any investable asset – time, treasure, tithe or truths.
I’m not sure which form of capital goes first.
But I am sure that values drive behaviors. We love our children, and we would take a leave from work to care for our children. Right?
Recently one of my clients shared a story of a family that did just that. They rallied around a 2-year old fighting cancer. They re-designed work loads and scheduled care givers. They pooled money to support the healthcare costs. And last week they rang the bell- to celebrate! The nurses lined the hallway. The neighbors lined the street. The grandparents drove the car. The parents waved to neighbors and protected their immune-compromised child from any risks. Values drive our behaviors.
I am also sure that most families share the same values: integrity, asset preservation, legacy stewardship, philanthropy, responsible service to others.
When I directed a non-profit summer camp program at a Quaker School near Washington, DC, I saw those values every day. Parents invested as much as possible to provide more opportunities for their children. That program grew over 800% because of their shared values.
Many of those parents struggled to support their children. They wanted to support their family capital. And they had limited financial capital. Just like you and I.
My experience is that most families struggle with financial literacy because they don’t discuss financial capital enough. There is an endless need for family meetings to discuss cash flow and investing.
When our children were in Middle School and High School we had Sunday evening meetings after dinner to discuss the week, and financial matters. They were short meetings. The children led parts of them. They learned to live below their means. They learned that what their friends posted on social media was not always true. They learned to invest in compounding assets.
Now I facilitate family meetings for clients. On Tuesday night I facilitated another virtual 90-minute family meeting. The patriarch, matriarch and a sister represented the Elders. The Next Gens included 3 children aged 28-40 and one spouse. Three wealth advisors provided content on retirement and investing options. My role was to encourage the Next Gens to ask questions about Roths, IRAs, compounding, employee matching… everything needed for them to make more informed decisions.
That was their second educational session and we will have at least two more in the next 4 months. One breakthrough was when the daughter, newly divorced and single, realized more options from her employee match. Another breakthrough was when one of the sons realized that as an independent contractor doing work for the family business, he needed to contribute more to his pretax options.
As the children shared their takeaways the father was glowing with delight.
Every Elder wants their children to make smarter financial decisions.
Maybe Family Capital and Financial Capital go hand in hand.
Any thoughts?
by Doug Gray | Dec 20, 2024 | Business, Coaching, Consulting, Financial Professionals, Leadership, Managers, Meetings, money, organizational leadership, strengths, Success
… that ANYONE should avoid
A grey-haired patriarch recently told me, “I love my kids and grandkids. But I don’t trust their ability to manage my money when I’m gone. My lawyer tells me that I need to restrict their access. What do you recommend?”
This Family Business Chaos myth assumes:
- That fears motivate most human behaviors
- That Elders need to restrict access to financial assets
- That the Next Gen family members are unable to manage money
- That advisors can recommend effective solutions
How silly.
Tragically, I’ve met “Family Business Consultants” who boast about $100,000 annual retainers to “manage the process.” They presume that family business leaders are inherently unstable, dysfunctional, heading toward chaos. With a wink they say, “And who knows when you will need me?”
How tragic and silly.
I call it the Family Business Chaos myth. In future posts I’ll share some more related myths. In this post, let’s look at each of these 4 statements in turn.
- Fears do motivate most human behaviors. When we are hungry we eat. When we are threatened we fight. When we are confused or uninformed we create stories to “fill in the silence.” I recently heard about two Elders who anticipated a visit from their niece, whom they had not seen in 15 years. They created stories to explain the visit, from “she must have cancer” to “her husband may have abused her.”
In the same way, Elders often create stories to explain their kids and grandkids. It’s a delightful, ancient past time! When I visit Elders they may entertain me with stories, just as we drink lemonade on the porch. They often voice fears such as “she will never find a man who appreciates her” or “he couldn’t make money if we served it on a golden platter.” Those stories are entertaining. But they may be downright silly.
- That idea that Elders need to restrict access to financial assets is ancient, and often based on some local precedent. We all repeat stories that reinforce our biased beliefs. Have you heard about our neighbor named Bubba who received a trust fund when he turned 21, then became an opioid addict? Confirmation bias occurs when we repeat desired beliefs. The fact is that most people with access to money learn to live below their means. They practice financial literacy.
Restricted access to wealth, or any resource, does not accelerate social change. In fact, restricted access can imprison people. Look at global slavery, work conditions, oppression of women or poverty. Restricted access may cause violence. Look at global divorce, broken families, suicides, loneliness, drug abuse. Instead, what if wealth advisors actually shared their knowledge in a series of educational sessions? What if digital courses encouraged Next Gen leaders to ask questions about index funds, incentive trusts, donor assisted funds, IRAs, retirement, employee matches?
The #1 web browser is Google because people search for information. The #2 web browser is YouTube, because people search for answers. And they are both owned by Alphabet. The fact is that Next Gens are digitally trusting, better educated than many Elders, and often want to develop more financial literacy. Just ask them!
- The notion that Next Gen family members are unable to manage money is based on ignorance. Throughout recorded history, in every corner of the world, most assets are quietly transferred to the Next Generation. (Also called the Rising Generation, like a Rising Tide or a tsunami). If Elders are not able to teach responsible wealth management, then other advisors can do so. One positive outcome from the Certified Financial Professional (CFP) designation is that wealth advisors are better self-managed to actually serve their client interests. For many decades “financial managers” were incentivized by higher commission fees or transactional incentives from their product managers.
Throughout my career I’ve taught people how to manage their precious time, money, treasures and talents. Nothing is more important. Perhaps anyone reading or sharing this article shares that same commitment.
Teaching financial literacy assumes that Elders and Next Gens are willing to learn. When I facilitate family meetings, I encourage the Next Gens to ask questions, because curiosity is the currency of learning. When they ask questions, the wealth advisors can share resources. I also encourage the Elders to bite their tongues- which is difficult. They often want to share their values and knowledge. But our kids learn to swim from other adults, not from their parents. Our kids learn to golf from professionals, not from their parents. In the same way, when Next Gen leaders ask questions and learn, the Elders smile with delight. They are practicing financial literacy and seeing that “light in their eyes” when their children and grandchildren actually learn.
- We want to believe that advisors can recommend effective solutions because we want to trust “experts.” We go to physicians when we require healthcare, and they diagnose and treat us. We go to lawyers when we require asset transaction or protection. For many years, when I asked Google “Can you provide some business consulting?” it replied “Not at this time.” Now over 40% of my clients use ChatGBT for business consulting. Immediately. I have copied responses from one platform, like Claude, to ask other platforms, like Inflection, to provide more details. And recent studies confirm that some AI platforms demonstrate more empathy than “professionals.”
Let’s assume that advisors using AI will be more effective than those not using AI. And they will become even more effective next month. And every month thereafter. The best advisors are already using AI to provide more recommendations than ever for their clients. In seconds. Converging technologies, such as healthcare and AI consulting, will increase in power and provide even more value. Accurately. Imagine an empathic robot that suggests how Elders can bite their tongues. Imagine a hologram of the founders that can explain the values and challenges faced 50 years ago. Imagine a family meeting with 5 generations of healthy, opinionated owners instead of 3 generations.
Now imagine that one “family business consultant” can serve your legacy needs. How silly.
The example of the $100,000 annual retainer from that winking “family business consultant” who says, “you never know when you may need me” could be a waste of money.
My experience is that the presumption that family business leaders are inherently unstable, dysfunctional, heading toward chaos is downright silly. It may be lucrative for those using retainers. But it ignores the reality that family business leaders can flourish.
Yes, I’ll address HOW to flourish in a series of future posts. Please share this post with anyone who might appreciate it.
And add your thoughts or comments on this post about the Family Business Chaos myth? This could become a discussion.
Schedule a 1:1 with me today.
by Doug Gray | Dec 19, 2024 | Business, change, Coaching, Consulting, Family Wealth, Financial Professionals, Leadership, Personal Development, Uncategorized
… and Succession Facts
You know the myth: Business succession is difficult and full of conflicts.
The myth is that outrageous Hollywood movies like Succession, The Godfather, Dallas or Dynasty are the norm. The myth is that tax advisors are never able to minimize taxation, that estate attorneys are well intentioned but haphazard, that more wealth leads to more conflict.
The fact is that most wealth transitions occur quietly when there is shared understanding of decision making. That’s called governance.
Good governance is the reality for ALL of my clients- or they wouldn’t hire me.
Good governance can be taught and developed.
Let’s start with two definitions. Then I’ll share 4 steps that really work.
There are two types of conflict: Interpersonal conflict is usually bad, and Task conflict is usually good.
Interpersonal conflict is based on emotions and should be managed carefully, even if you dislike that cousin who just said something outrageous. But how do we self-manage? We are emotional animals driven by fears. Threats are everywhere. !Right?! Behavioral psychology research confirms that we think faster or slower depending on the stimulus and the situation. When I’m inclined to speak impulsively, I often massage the back of my head. Why? Because I want to slow down, think, and respond with care. We can all practice self-management. The oldest part of our brain is in the back of our skull. The prefrontal cortex, our executive center, is in the front of our brains. So, on good days, we practice self-managing to avoid interpersonal conflicts. (Or not…)
Task conflict is based on different understandings of information or roles. When one cousin wants to invest in a new digital marketing program, and another cousin wants to invest in a new building, they will have task conflict. Task conflict is usually good because it may lead to innovations. I define innovation as “new ideas applied.” One reason for agendas and information packets before board meetings or family meetings, is to share information so that the participants can make smarter, more informed decisions. There can still be emotional moments- full of drama- but the focus of the meeting is on decision-making to address the task conflicts.
One reason for a facilitator with expertise in behavioral psychology (like me) is to minimize the interpersonal conflict and maximize the task conflicts.
As a species we all want to create order out of chaos. That’s why we construct processes, and (occasionally) organize our closets. That’s why we ask experts for advice. When we require a healthcare assessment we expect nurses to collect data, so that physicians using AI can diagnose and treat our evolving needs. Right? When we require a transfer of assets we expect attorneys and wealth advisors to assess needs in a deep discovery process, then recommend next steps. Right?
I organize teams of advisors to serve families because I know what works. Holistic advising is here to stay. And my clients deserve a team of experts. They also deserve a cleanly defined process. Something useful.
Here are the 4 steps in my Family Capital Discovery Process (based on my research and decades of consulting). Think of these as 4 phases in any engagement together. Notice the verbs in bold font. Perhaps you can adopt these?
a. Assess the current and future Family Enterprise ecosystem. I call these states the Now and the Next. Each ecosystem has unique history, values, legacy, stages, visions, and risks. A Family Business may generate assets, like a golden egg or a core business. And there may be multiple businesses over time, called a Family Enterprise. Think of Cargill or Walmart. Or think of the nearby franchise owner or car dealership in your city. Perhaps you know that over 60% of our GDP and job growth is driven by Family-Owned Businesses. How do you assess those unique strengths and weaknesses? Lately I’ve been using AI tools to accelerate that assessment process.
b. Develop a Family Manifesto that describes the Family Purpose and reasons for working with multiple advisors. Most families have a verbal understanding of what the founder, Elder or owners want. When that verbal understanding is written and shared, teams can evolve. For example, in a recent series of meetings, I conducted interviews with the Elders, took detailed notes, and shared their asset map with the Next Gens. They had never seen one list of their capital and financial assets- and there were plenty of rumors! Finally, they were able to draft a manifesto that accelerated succession planning. After decades of avoidance and mystery, they were finally able to make crucial investment decisions. Four branches – over 50 people- were relieved. When verbal or unstated assumptions become written and shared, family businesses can evolve. That’s called organizational maturity. And that process is not too difficult. Perhaps you know a family that can benefit from a Family Manifesto? Perhaps you can accelerate that process?
c. Define the four Family Focus Pillars. These are 4 critical questions used by families with over $50M in investable assets, who may have a Family Office to organize their legacy. (With credit to my friend Peter Vogel and his team at IMD). My experience is that these 4 questions can be useful for any family, with any amount of wealth. Perhaps you can answer them this weekend when you sit down for your next family dinner. Who we are? What do we own? How do we function? What is our impact on society and the environments and legacy? Yes, I’ve had these discussions with our nuclear family. Yes, you can do so also!
d. Organize more effective work guidelines with a team of advisors. We all need a little structure at times. We can’t play football without yard lines and goal posts. We can’t have a swim meet without lanes and a timing system. I recommend the least amount of structure in the moment. Families need to evolve. The reason I wrote the Success Playbook for Next Gen Family Business Leaders (2024) is because clients asked me to do so. It’s a playbook of books, structures, and great resources. Perhaps you know someone who needs a little structure or a loving nudge?
Bottom line: Now you know what works. Please share this post with those who would appreciate knowing what works.
- One fact is that succession usually happens quietly, without conflicts.
- Another fact is that good governance can be taught and developed.
- Another fact is that we can each minimize interpersonal conflicts and maximize task conflicts.
Any thoughts or comments?
Schedule your 1:1 session now here.
by Doug Gray | Dec 18, 2024 | change, Consulting, Leadership, Managers, organizational leadership, strengths, Success, talent
… for better consulting
Recently I read Wealth 3.0. and the authors state that interdisciplinary knowledge is one of the key predictors of success for consultants. I agree.
After a recent client engagement, my colleague said, “I never would have asked about the topics you brought up– increasing 1:1 time with each child, and family meetings to discuss charitable giving. How did you become so damned smart about so many different topics?”
I stuttered and paused with embarrassment.
I do read daily, and study new topics on YouTube, I listen carefully to what people say, and I watch what they do. But those are skills.
The deeper questions are “How did I develop my interdisciplinary knowledge?” and “How can I encourage others to do the same?”
Here are some loosely chronological stories about how I developed interdisciplinary knowledge. Perhaps they will trigger similar stories for you. I encourage you to consider HOW you develop interdisciplinary knowledge.
- As a child I was expected to research answers from the set of books on the shelf, called Encyclopedia Brittanica. Long before wikipedia and digital tools, that was the preferred way to answer questions or settle disputes. My siblings were often more correct than me! We all learned to seek answers.
- Multiple Elders challenged me to think for myself. The Boy Scout volunteers used merit badge content to reinforce new skills, and values like honesty and loyalty. Faculty members, who worked with my father, spent holidays with us and quizzed me on any topic- the power of compounding assets at TIAA-CREF, or the wisdom of building a private campground as a long term investment. I learned that adults may share their wisdom, and I may not agree with them.
- That saying, “Never let schooling get in the way of a good education” is attributed to Mark Twain. It could have been a family motto above our doorframe. We were expected to attend schools.
- At a large public high school in Clifton Park, NY, I was expected to take honors and New York State regents classes. I elected to take AP Psychology and Sociology classes. And as a senior I left school at 1:00 each day to work at a nearby food warehouse to save money for college. I didn’t have a car, so my mother drove me there and back for a year. From her I learned to work hard and save my earnings. From those workers I learned that education could create opportunities.
- When I enrolled at Hamilton College, in Clinton, NY, I learned that it was one of the Top 10 Preppiest Colleges in the country. In my ignorance, I created a survey for all the incoming freshmen and stuck it in their mailboxes to ask “how well prepared are you?” and “where did you attend high school?” I learned that a 40% response rate was strong, and that there was no significant difference between self-confidence and high school preparation.
The class size at Hamilton was about 10 students. We were expected to ask questions and respectfully challenge one another. In one mid-January class, 5 of us sat in the professor’s office while he smoked his pipe and we discussed the explosive power of humanism in the Middle Ages. When a different professor shared that she studied with the author of one of our books, I learned that authors are accessible. And that they often disagree! Academics of any age can and should challenge one another. Later I learned that there was no mandatory course of study at Hamilton. Students there are expected to be interdisciplinary.
- After two years there, amid a family relocation and financial stress, I went to the University of Minnesota in Minneapolis. Some of my class sizes were now hundreds of students! I learned that any undergraduate could substitute graduate level courses, so that’s what I did. My classmates were expert administrators or teachers. They all had strong opinions. I recall doing a project on creativity with a student who was also a professional videographer. Somehow we gained access and conducted interviews inside the public schools. Interdisciplinary skills were tolerated for entrepreneurial students.
- My next few years were spent in applied leadership sessions, as an instructor in wilderness Outward Bound courses, backpacking expeditions in Wyoming and Montana, canoeing in Minnesota, trekking in England… Those seasons were great opportunities to observe how people experience stress, resilience, endurance, conflict. Then I spent years teaching English at four independent day and boarding schools. One prevailing lesson is that financial wealth does not protect people from stress or challenges.
- My next formal schooling lessons were at Dartmouth College, in a program called the Master of Arts in Liberal Studies. We could study anything! So I explored the influence of landscape art in New Hampshire, educational pedagogy, feminism, equality, and social psychology. My thesis was a longitudinal study on Adolescent Risk Taking Behavior, because I wondered what led some people to embrace risks, and others to avoid risks. Perhaps I’m still collecting data on that topic!
- My last example of formal schooling is called a terminal degree for good reason. After years of managing executive coaches, leading a nonprofit, and some time working in colleges, I knew I wanted to focus on applied psychology. And I needed to continue generating revenue through my consulting! The Chicago School of Professional Psychology was a good fit for online content, with two onsite events to validate our identity and assess our knowledge. I loved the structure of weekly reading, writing, commenting. In the three decades since I had studied psychology, there was a sea change in research away from what is wrong with people (anxiety, depression, violence) and toward what enables people to flourish (meaning, engagement, relationships, achievements). My dissertation focused on Positive Psychology Coaching protocols that accelerate leader development. Yes, I’m still collecting data on that topic too!
That’s my listed attempt to answer the first question: “How did I develop my interdisciplinary knowledge?” In short, by observing and reinforcing the strengths of others.
The second question was “How can I encourage others to do the same?”
I think each of us can say and do a better job of practicing interdisciplinary knowledge.
- I encourage you to make your list of influences- formal schooling or informal lessons.
- I encourage you to share that list with your loved ones. They need to know what you think and value.
- I encourage you to share some of your examples in the comments below. Action leads to learning.
I suspect that when we are vulnerable about our interdisciplinary knowledge, then we are better practitioners.
What do you think?
This can become a discussion if you share any thoughts or comments below.
Or schedule a 1:1 here NOW. I’d love to hear your examples!
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