10 Generational Challenges in the 21st Century

Since the 1980s, family businesses began to take shape as a subject of study led by John Davis, founder of Cambridge Family Business, and the Family Business program for the Sloan School of Management at MIT. Thanks to their case studies, accompanied by a robust bibliography, it is feasible to assist family businesses in identifying risks, methods, strategies, and challenges they face as an organization, and on which they can proactively act. What concerns in business successions lies in the organization's stability, transcendence, and continuity in the industry.

Identifying challenges for new generations is a task that generates multiple questions and invites a reconsideration of how some of these issues have been previously conceived. Below are the most acute topics for the central theme, considering precepts exposed by John Davis and Raul Serebrenik:

Maintaining Family Interest in the Business: Engaging new generations involves constant training, demonstrating the value of what has been built, and the impact on different stakeholders, encouraging the involvement of all parties. Family businesses are characterized by their constant innovation, traditions, and desire for growth within their industry. Inviting new generations to see the value that the company holds in its social, emotional, and human capital, which translates into wealth, consolidates a shift in the mindset of these generations to create, transfer, enhance, and develop the family legacy.
Family Conflicts: Establishing strategies to anticipate these situations involves having an action plan to resolve possible differences and disagreements. Similarly, having a reserve of capital is important when a family member requests their liquid capital.
Migration of New Generations: The trend indicates that new generations increasingly lose attachment to their nation and become 'citizens of the world,' detaching them from local permanence in their country of origin. Instead, it suggests relocation that values new lifestyles, with guarantees in education, security, and development. This trend is becoming more common, especially in developing countries, constantly reconsidering their involvement in the family business. It also poses another challenge related to relocating the business to a new geographical location, resulting in a new challenge for the company in terms of establishing a new learning curve in business culture.
Disruptive Changes: The challenge in public policies is a constant in each nation, adhering to nationally and internationally evidenced needs, often unpredictable. They also pose a challenge in terms of productivity, contracts, and social aspects. Thus, new generations must ensure the careful use of resources and their release to face these new dynamics required for the continuity of their business at technological, political, economic, and global levels.
Family Business Growth in the IndustryStudying and identifying the industry sector where the service or product is located is part of the learning that new generations must have to develop the required improvements. Understanding the technology that can optimize processes is fundamental to stay relevant. Additionally, consolidating a long-term growth project requires studying diversification options to develop new businesses that can be consolidated and added to the heritage.

Succession to New Generations: In the 21st century, new generations increasingly feel distant from family businesses and opt for entrepreneurship as a continuity strategy in business. Deterring them from these initiatives would be a mistake. Instead, attracting their ideas, capitalizing on them, and integrating them into the heritage as a new line of business represents an affinity and closeness of new generations to the heritage. New generations bring new family members, which should be seen as new capital that can leverage, contribute, and enhance the business in the industry sector to which the company has dedicated itself. Accepting their genuine contributions allows driving the organization's growth. This approach ensures their involvement, commitment to the company's strengthening and development, translating into the company's human capital.
Control of the Family Business: Education in new generations has an impact on being able to have greater proximity and efficient control over the company. Professional management is the key to judiciously controlling each area of the company. Although the term suggests external redirection for its management, it does not necessarily have to be so. Instead, it suggests professionalizing the management in the generations that govern it, which, in turn, will enable better decision-making in their businesses, especially in supplier acquisitions.
Capitals of Family Wealth: Measuring wealth solely in economic terms is limiting and a mistake. Serebrenik divides and develops the concept of capital into eight dimensions, which must be leveraged in protocols established previously by the government—understood as the organizational structure of a family business to direct, rule, and govern the company. This involves respecting, maintaining, caring for, projecting, and fulfilling policies for each dimension, allowing current and future generations to develop stability. The eight capitals are: spiritual as a guiding axis, inspiring element that can be religious or a cause that allows maintaining transcendence intellectual based on the family's experience and expertise social care in good relationships with collaborators human family by descent and politics emotional self-care and tolerance in the face of defeats or frustration family commitment of the entire family to the legacy, maintaining vision, harmony, and trust structural communication, strategies, processes, and decisions and finally, financial and economic powers all dimensions, establishing a budget to manage the needs of each.
Attachment to Mission and Values: The consolidation of spiritual capital implies the continuity of the mission and values. Adhering to these precepts leverages the care of the capitals that contribute to consolidating the legacy. New generations must have clarity about these precepts that help maintain this solid and robust structure.
Recognizing the Need for Change: Traditions are valuable elements within organizations; however, change refers to recognizing the state in which they should be maintained, either from their operability or from their static legacy. Recognizing the need for change in tradition to give it the place it should occupy, according to the scenario it faces, is an essential resource for new generations. It is part of their task not to be carried away by the moment and, instead, identify the momentum of each one. momentum de cada uno.

At IR Foundation, we believe in anticipation as an unavoidable foundation for strengthening businesses. Therefore, having tools for identifying challenges presented by the environment, circumstances, or era is based on solid knowledge, contributing to obtaining successful results.