April 3, 2020 – Innovation is Everybody’s Business Tamara Ghandour and Borrowed from Your Grandchildren Dennis Jaffe – School for Startups Radio

03 Apr April 3, 2020 – Innovation is Everybody’s Business Tamara Ghandour and Borrowed from Your Grandchildren Dennis Jaffe

In our brains, we are all wired for innovation. Some of us have trained ourselves out of it. Everybody has the ability to innovate but you have to make the choice to engage that part of your brain. 

Tamara Ghandour

Tamara Ghandour is an author, podcaster, keynote speaker and founder of an innovation training company, LaunchStreet. Mainstreet used to believe that innovation was the domain of a select few, exclusive to certain industries, or relegated to a specific job role. But, as Tamara discovered in her 25 years of work and research, everybody has the capacity to innovate. It’s a person’s unique innovation style (which can be assessed and channeled) that can transform inertia into innovation. Drawing on data from her proprietary Innovation Quotient Edge Assessment, her book is for those that recognize that being more innovative is their ticket to being indispensable.

 
 
Dr. Dennis Jaffe – Multi-Generation Wealth Expert and Author of  Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises – Read the interview highlights here

Wealth is not a one time event. The second and third generations
also are wealth creators. 

Dr. Dennis Jaffe

Dennis Jaffe has helped families overcome personal and organizational challenges to enable successful and fulfilling transfer of businesses, wealth, values, commitments and legacies across generations. As both an organizational consultant and clinical psychologist, he is one of the architects of the field of family enterprise consulting. His work with multi-generational families to develop governance practices and capability of next generation leadership, ensures ongoing capability of financial organizations and family offices to serve their family clients. He is an active speaker and workshop leader in programs for business families and financial service firms. For 35 years, Dennis was professor of Organizational Systems and Psychology at Saybrook University in San Francisco, where he is now professor emeritus. As a member of the Family Firm Institute since it was founded, he has presented at annual conferences, served on their board, designed and delivered continuing education courses in Family Governance and Family Wealth Advising, written frequently for their journal Family Business Review, and has received the Richard Beckhard Award for his contribution to practice.

 
 
 
 
 

 
 
 
 
 

Highlights from Dennis’ Interview

The idea behind the quote “You don’t inherit a family business; you borrow it from your grandchildren” is that when you get the business, it isn’t just yours to spend the money and waste; you also have a responsibility to passing it, to maintaining it and developing it, and passing it on to your children and grandchildren in better shape than you got it. Even if you don’t give them the business or money, you’re still passing on to them values, traditions, and legacy of the family. Very often, the families that I looked at in my study, The 100-Year Family, were less passing the business on and more passing a philanthropic legacy or a values legacy, or just a value to be productive and add to the world rather than just be a consumer.

The Giving Pledge is where people with vast amounts of money pledge to give half that money, at least, to philanthropy. Actually, when you have billions of dollars, you could afford to give much more than half. In my study, I have been in 20 countries, and I interviewed more than 100 families that had succeeded and thrived into the fourth generation. So, I’m looking at the very successful and very wealthy families. What I found, among other things, is that all of these families, by the second and third generation; the young people in the family, they were happy to be wealthy and it isn’t that they were rejecting wealth, but they weren’t excessive about it. Their concern was about sustainability, the environmental future, how they develop their communities, and in the third generation and later, they developed a real social commitment. Largely, the family had that already, but that was what they found most meaningful about the family wealth; not how much they could spend.

Now, there certainly are third or fourth generations that have excessive spending habits and develop next generation family members who are not responsible. But what I wanted to do in my research is study the families that were doing well, so I sought out families that had succeeded beyond the third generation, that had a sense of shared identity as a family, and that were large and had created value over the generations. So, what I was looking at is, what are these successful families all over the world doing to, be successful. One of the things that I found is that maybe not the first generation, but the second generation or third generation developed a culture, where they had a set of standards and values for what they were doing as a family. They committed themselves to developing a great family, they promoted social responsibility and entrepreneurship in the next generations, and they acted very differently than these consumer mentality and spending-oriented people. I wanted to look at what these families did to create a sense of responsibility and values in their next generation. So, the people in the families that I studied all over the world have a very different approach to how they developed and shared and engaged their next generation.

To dive in a little deeper, first of all, what they were doing was they developed a shared culture as a family. So, they said, the wealth in the family is not yours to do with as you want. They create trust, and they also create family agreements to define how they use the wealth and what their wealth is for. These families, for example, have policies about what you’re expected to do. A lot of families have a very clear expectation that people in the family will work for a living or develop and do something that makes a difference in the world. They meet as a family and they talk about what their wealth is for. So, they give, they create philanthropic foundations, they create norms and expectations about working, and they usually don’t just pass on wealth to be used in any way you want; there’s usually limitations. They also have a family culture that says, this is what we do with our wealth.

So, people in third or fourth generation with great wealth, families like the Rockefellers for example, they have an extraordinary record of philanthropy in their three to six generations. It’s not that they’re not wealthy and people don’t have nice houses, but they are not supposed to be spending the wealth, rather they’re supposed to be giving it away and sharing it and doing good things in the world. That’s what many of the heirs in that family do. It wasn’t just the Rockefeller family, all of the families that I interviewed had that sense of responsibility. They grew up not saying how much can I spend and how rich can I be, but they grew up with a sense of, as many families say, to whom much is given, much is expected. They grew up with an ethic that said that we as a family stand for certain things. Because we have so much privilege and we have so much to give, we want to meet together and create an organization and have impact on the world. That’s what the next generation is interested in, not spending and consuming. Then these families create what I call a family organization around those values; a family culture that is about this concept of stewardship.

The story that John D. Rockefeller I made all the money and was a fairly bad person and made some really despicable choices, and his son Jr. was so disgusted with his reputation that he devoted his life to philanthropy, that’s not exactly true. First of all, John D. Rockefeller was a very devout Christian and he taught his family about tithing and about moderation. While his business practices may have been questionable, his philanthropic expectations were very clear and he set the tone. Actually, by the time he was the age of Bill Gates today, he was very committed to philanthropy. His business was broken up when he was, I believe in his 50s. So, he actually ended his life with a commitment to philanthropy which he passed on to his son, and his son certainly wanted to redeem the family name and that was his mission. Then he in turn had five sons; two of whom became governors, one became America’s Vice President, Laurance Rockefeller was one of the first venture capitalists, David Rockefeller was the chairman of the Chase Manhattan Bank. So, they all worked for a living, even though they were immensely wealthy.

The other thing which is definitely not true of the families that I studied, is that wealth is not a one-time event. The people in these families in the second, and especially the third and later generations also are wealth creators. Like, Laurance Rockefeller was a venture capitalist and invested in things that were socially responsible well before that was popular, but also, they were profitable. He bought land and branches and things like that. So, wealth creation is something that is not a one-time event, but something that continues across the generations. Many young people from third or fourth generation are extraordinarily entrepreneurial, and create many new businesses in addition to the original family business. So, these families have continual wealth creation, not just one-time.

The challenge that these families mainly face is to instill that drive and competitiveness and desire to succeed in the next generations who grew up in luxurious houses. The way you do it is, first of all by example, not by telling them to do it; so, the family sets an example. Sometimes these families are a little bit more understated. Also, the older generation in these families is engaged with the younger generation. They teach them, they mentor them, they talk about social projects; not just how wonderful our vacation is and how beautiful our house is, but how can we give back to the world. The younger people in these families often grow up with a little bit of guilt and concern that they have all this money and why have they been so blessed? The family then helps them not to feel guilty, but to say that because of these blessings, you have to do something productive in the world. When you’re a wealthy family, productive doesn’t necessarily mean you have to work for a living; you can work in a social enterprise. Some people become artists and composers and give back to society in that way. Others create social ventures; they create schools and healthcare organizations and workshops.

The older generation in these families is engaged not just in saying that let’s spend, but in talking about what it means to be wealthy and how to be responsible. What is our wealth for is the question that these families talk about. And they don’t start when the kids are 25 or 30 years of age, they start when they’re three, four, six, and eight by talking about how is it that you have this. Because unless the family teaches them, they’re never going to know that there are people that don’t live like this, and that there’s a world out there, unless the family helps them see it. So, these families, for example they’ll do Habitat for Humanity as a family. Even though fabulously wealthy, the family gets together and builds a house and then they have their Family Retreat at a nice place and talk about what they do. They do service work. For a lot of families, part of their annual family meeting is a service day. Some families spend a lot of time talking about the foundation and what they’re going to do with it. So, you have people like the Buffetts and the Gates family and the other people that signed The Giving Pledge. They spend a lot of time like John D. Rockefeller did, training and helping the family members become philanthropists; not to say that you have to go out there and get a job, but that you have to go out there and do something useful with  what we have.

But again, the families that I’m talking about are the 1% that succeed. There are families that have the most disgusting and despicable things come out about them, and then you see the third generation suing the second generation and things like that. But what I’m trying to do in this book is to tell stories of families that are not like that, so that the families that have these tendencies can do things early enough to avoid them. Certainly, it is true that for every family that’s philanthropic and elegant and understated and moderate, you can name five families that aren’t. But the purpose of my research is to offer families a roadmap so that they can go on path two and do what they can to avoid path one. Path one is definitely more likely and doesn’t lead to greater happiness, and it certainly doesn’t benefit society.

What I’m trying to do in my research is to offer positive models to counteract. The media certainly doesn’t have any trouble talking about the families and the spoiled brats and the lawsuits and things like that; you can read about that all the time, but the stories of positive families tend to be more secret. They tend to be more circumspect because they don’t want publicity, they don’t go out tooting their achievements, and they’re quieter. So, what I wanted to do by doing this research is to get the stories of families that are, elegantly and quietly productive, and gest them out front. My book has hundreds of stories of what families are doing, in the hopes that families avoid these lawsuits and avoid these spending and crashing and burning, and all of the terrible things that the families can do. Those kinds of experiences are exactly what led me to write this book.

Apart from the fact that billionaires have a particular I think responsibility and they have incredible impact on the world, any family can learn to be socially responsible and develop statesmanship and stewardship in their next generation, and talk about what do we want to see happen in the world. A lot of families that consider themselves not particularly well, by standards of the world are still very excellent.

I have about 100 or so articles and resources and things that can be downloaded from the website “dennisjaffe.com”. The book is available on Amazon, and presumably in independent bookstores, as well. Also, there’s a Kindle electronic version of the book, but this is a hold and browse through kind of book. The book has got a lot of stories in their own words of what these families are doing and how they’re trying to counteract that ethic of entitlement in their next generation. I think my book is an attempt to tell another story that is quieter, but in some ways more inspiring and more meaningful.