Serving two masters
I want our business to do good,” says my friend Maris (who wants to remain anonymous), vice president of operations in a retail family business started by her parents in the 1960s.
“When I turned 40 last year, I reflected on my life. Our business is doing fine and my brother and I will be the successors. But my parents are still concerned about profits, and they are scared to take risks. We want to grow the business even more, and afterward, we want to create a foundation in their name. Our parents refused [saying] it would be too much visibility.”
“It’s so frustrating. I want to make a real difference, but how?”
Maris’ parents are smart enough to already have a succession plan in place, but like many founders, they are reluctant to leave their comfort zone and prefer to stay under the radar.
Maris’ dilemma is common, according to the 2016 The Economist Intelligence Unit (EIU) report “Motivated by Impact: A New Generation Seek to Make Their Mark.”
“While many cultures have the equivalent of the American proverb ‘shirtsleeves to shirtsleeves in three generations’ [the Chinese call it the ‘three-generation jinx’], some of the next generation leaders are trying their hardest to buck that trend: 88 percent want to leave a stamp on the business.”
From a 2016 Deloitte study of family businesses in Europe and the Middle East: “[Change] requires leadership, but perhaps of a different sort. Some 80 percent of next generation business leaders say their … style will be different from that of their forebears.”
Though Maris is a bit older than the average millennial, her sentiments echo those of younger ones.
In an interview with EIU, Farida El Agamy of the Tharawat Family Business Forum says millennials are “more open to dialogue,” are more “at ease with the flow of information and ideas,” and are less likely to do “a top-down approach.” The forum is an independent network of family-owned firms in the Arab world.
“Such change may lead to conflict with parents, but this is par for the course with all generational shifts … Clear conflict-resolution mechanisms, such as appointing a mediator or letting an elder adjudicate, can help, but as in any family ‘there’s more coffee involved than anything.’”
Maris is comforted by this. “I am not alone!” she says with relief.
We talk about getting an elder ally—an unmarried aunt who has dedicated herself to the business and who genuinely cares for her niece and nephew, as well as her sibling.
Maris is more upbeat. But what about the social dimension, she asks. Providing fair employment for their workers and good services for customers are already excellent societal contributions.
Not everyone can be philanthropists Bill Gates or John Gokongwei, I add.
But Maris wants to do more.
Around 87 percent of millennials surveyed by EIU feel that business should be judged by more than just financials, and a whopping 93 percent (according to US Trust) say that social impact drives their investment decisions.
Badr Jafar, CEO of UAE family empire Crescent Enterprises, also tells EIU, “There has been a cultural and generational shift in the understanding of what the ultimate purpose of business is … there is a more authentic appreciation now behind the value creation that comes from a focus on social impact in addition to maintaining healthy financials.”
Jafar founded The Pearl Initiative, a nongovernment organization to improve business accountability and transparency in the region.
Doing good in business is not easy. EIU quotes Warren Buffett: “It’s too tough to serve two masters.”
Ironically, Buffett is the second-biggest philanthropist in the world today.
