0:07

Welcome to the Leadership Lounge,

0:09

a place to kick back and

0:11

listen as our experts dissect some

0:14

of the biggest questions leaders face

0:16

today. I'm Emma Coon, leadership advisor

0:18

in our London office. Today, we're

0:20

talking about family enterprise leadership. These

0:22

businesses are the backbone of economies

0:24

around the world, but their

0:26

leaders face an increasingly critical

0:28

challenge, how to preserve their

0:31

organization's legacies in a fast -changing

0:33

world. So in today's episode,

0:35

I'm excited that we're exploring

0:37

how family enterprise leaders can

0:39

successfully balance preservation and progress.

0:42

How can leaders maintain what made

0:44

their organization successful while adapting

0:46

to a new business landscape? And

0:48

what are the top issues that leaders will need

0:50

to think about if they are to continue

0:52

to thrive across generations? Before

0:54

we dive in, remember to share

0:56

any burning questions you want our

0:58

experts to answer by emailing redefiners at

1:01

RussellRennolds.com. We look forward to hearing

1:03

from you, and we'd love your feedback

1:05

on these episodes. If you enjoy

1:07

listening, please leave us a five -star

1:09

review on Apple or Spotify. So let's

1:11

dive into the topic. Our

1:13

first guest in the Leadership

1:16

Lounge today is Justice O 'Brien,

1:18

leadership advisor in Russell Reynolds' associate

1:20

Stanford office and global leader

1:22

of RRA's Family Enterprise Advisory Practice.

1:24

Justice, welcome to the Leadership Lounge.

1:26

It's great to have you back.

1:28

Thanks, Emma. It's great to be

1:30

here. So Justice, how do

1:33

successful family enterprises maintain their

1:35

core values while adapting to market

1:37

changes? What we've observed

1:39

with family businesses that

1:41

have flourished over generations

1:43

is how central the value system

1:45

is to those businesses. Our view is

1:47

that companies that focus on the

1:49

values as opposed to a set of

1:51

rules tend to thrive and tend

1:53

to be able to pass on those

1:55

values from one generation to the

1:57

next. Good companies engage the...

2:00

next generation and engage

2:02

them in the strategy and strategy

2:04

development, they make them participate in

2:06

that. That's a way in which

2:08

family or businesses can strike the

2:10

right balance between continuity and

2:13

during values and refreshing their

2:15

strategy and refreshing their thinking. By

2:17

bringing in the next generation,

2:19

you bring in new thinking, which

2:22

in a sense helps bring

2:24

that business into the present tense

2:26

and eventually into the future

2:28

as opposed to being firmly rooted

2:30

in the past of the

2:32

business. I think that's a great point,

2:34

Justice, about family enterprise. It's key to

2:36

strike the right balance between protecting the family's

2:38

values, what makes it a really special

2:40

way to work and somewhere that has been

2:42

delivering value over many, many years, whilst

2:44

also having permission to evolve, to transform, to

2:47

not have to stick to a set

2:49

of rules that it's always been done in

2:51

a certain way. It's fascinating to advise

2:53

on these kind of topics and how the

2:55

right balance can be struck. I'd

2:57

now like to introduce our second

2:59

guest into the lounge, Anu Paranik.

3:02

She's a leadership advisor in Russell

3:04

Reynolds Associates Singapore office and advises

3:06

family enterprises throughout Asia. Anu, welcome

3:08

to the leadership lounge. Thank

3:10

you, Emma. It's a pleasure to be here. Thanks

3:12

for having me. Anu, Justice

3:14

just highlighted the importance of engaging

3:16

the next generation to ensure family

3:18

enterprises continue to thrive and evolve.

3:21

But this isn't always easy and

3:23

can cause tension to bubble to

3:25

the surface of family enterprises. Can

3:27

you talk a bit about this

3:29

tension and why it arises? We

3:32

are at a very important time

3:34

in the evolution of family businesses around

3:36

the world, especially here in

3:38

Asia. And as we

3:40

all know, any change in management

3:42

that happens creates a lot of tension

3:44

within organizations and that's no different for

3:46

family businesses. So we often

3:48

see a lot of

3:50

strife happening at the time when

3:52

families are either going through

3:55

a generational shift. So the next

3:57

generation is stepping in as the leaders

3:59

are perhaps planning their journey

4:01

out, but haven't necessarily gotten

4:03

there. We could have

4:05

a situation where new family members, cousins,

4:07

in -laws, et cetera, are getting added

4:09

to the business, or we have

4:11

a whole bunch of new professional managers

4:13

coming in with absolutely new ideas.

4:15

And you put all of this together

4:17

in an environment that's rapidly

4:20

changing because of digitalization,

4:22

because of sustainability issues, because

4:24

of environmental factors, it

4:26

starts creating a lot

4:28

of different opinions within the organizations. And

4:31

you start seeing that tension coming

4:33

up within the families themselves as well.

4:35

I completely agree, Annie. A family

4:37

enterprise isn't just a company, but a

4:39

family legacy that often spans generation. When

4:42

the market demands change, the thought

4:44

of transforming what's been carefully crafted over

4:46

decades can sometimes feel incredibly hard

4:49

for family leaders. But change, they

4:51

must. Keeping pace with transformation can

4:53

be the difference between whether a family

4:55

enterprise can endure across generations

4:57

or not. Interestingly, our research

4:59

has found that just 43 % of

5:01

family enterprise leaders globally say their

5:04

organization is ahead of their competitors on

5:06

innovation, and only a further 43 %

5:08

say their leadership team feels prepared

5:10

to address the threat of technological change

5:12

at their family enterprise in the

5:14

coming year. So, Annie, what advice would

5:17

you give to family enterprise leaders

5:19

who are struggling with transformation? Am

5:21

I thinking, as organizations are

5:23

going through this transformation, especially

5:26

family businesses, it is extremely

5:28

important for them to reflect

5:30

on whether this is

5:32

a transformation on their brands and

5:34

the family values, or is it

5:36

really about the business context? And

5:39

often, when the older generation and the

5:41

younger generation sit together to discuss

5:43

this, the lines get blurred. So

5:45

the important part is, have that

5:47

very open and honest conversation. When

5:50

the shift is about adapting

5:52

to the new business context, to the

5:54

environment, to the new ways of

5:56

doing business, and de -alienating

5:58

that from... from the original

6:01

brand and value proposition of the

6:03

organization, those conversations get a

6:05

lot easier. So the key is

6:07

finding that distinction between what

6:09

is needed to transform. When leaders

6:11

can separate strategic business changes

6:13

from the fundamental identity of the

6:15

family enterprise, it often removes

6:17

a lot of the emotional barriers

6:19

to progress. For family enterprises

6:21

struggling with transformation, in my experience,

6:23

having an independent chair or

6:25

independent non -executive directors can really

6:27

make the world of difference, particularly

6:29

if there's a non -family member

6:31

as CEO. It means that

6:33

a CEO isn't so isolated. There's

6:35

a conduit, a sounding board,

6:38

a trusted independent advisor between them

6:40

and the family members, and

6:42

it can be a very effective

6:44

construct. Justice, I'd like to

6:46

turn back to you. Aside from

6:48

innovation and transformation, what are

6:50

the other critical leadership challenges that

6:52

family enterprise leaders will need

6:54

to confront, to thrive across generations?

6:56

I mean, the one thing

6:58

we hear consistently as we talk

7:00

to family businesses around the

7:02

world is the importance of thinking

7:04

about succession. And it doesn't

7:06

matter whether it's first generation, second

7:08

generation, or even more evolved

7:10

family businesses that have professional management

7:12

in place, it's critically important

7:14

not to delay CEO succession. It's

7:16

not something people generally want

7:18

to deal with unless they're in

7:21

a crisis mode. And if

7:23

there's good leadership in place, there's

7:25

a tendency and natural tendency

7:27

to sort of put that off.

7:29

You need to start this

7:31

work early. And only by starting

7:33

early can you think through

7:35

what the needs of the business

7:37

are gonna be in terms

7:39

of your leadership requirements and really

7:41

start thinking about who you've

7:43

got internally, start to plan, put

7:45

together development plans for those

7:47

individuals with enough time for them

7:49

to really realize their full

7:51

potential and through those activities, be

7:53

ready for that eventuality of

7:55

having to switch out a CEO.

7:57

And so that's one of

7:59

the things we... Try to do

8:02

with our generation and our

8:04

family enterprise advisory work is help

8:06

clients through each of those

8:08

steps. It's

8:10

not complicated in design, but

8:12

it's extremely nuanced in execution. It's

8:14

a critical part, Justice, of

8:16

the service that we offer to

8:19

clients and it's understanding how

8:21

to run a really thoughtful process

8:23

where everybody feels considered, developed,

8:25

listened that things can go smoothly.

8:27

And when it comes to

8:29

family enterprises, we know that each

8:31

of them operates in a

8:33

very unique way with unique relationships.

8:35

Independent advisors such as my

8:37

brilliant colleagues can help these relationships

8:39

and family harmony across generations

8:41

while ensuring that businesses continue to

8:43

thrive. I'd now like to

8:46

introduce another guest into the Leadership

8:48

Lounge to talk on this

8:50

topic. Diego Esteban is a Leadership

8:52

Advisor in Russell Reynolds Associates

8:54

Barcelona office. Diego, welcome to the

8:56

Leadership Lounge. Thank you so

8:58

much, Emma, for inviting me to

9:00

this conversation and certainly my

9:02

favorite subject. So Diego, Justice mentioned

9:04

that succession is one of

9:06

the most critical leadership challenges that

9:08

family enterprises need to confront

9:11

and our research supports this as

9:13

we found that 32 % admitted

9:15

their approach to succession was

9:17

reactive rather than proactive. Can you

9:19

talk through any other challenges

9:21

that family enterprises will need to

9:23

confront to continue to thrive?

9:25

Yeah, I totally agree that leadership

9:27

succession is probably the biggest

9:29

challenge. This is not something that

9:31

you can improvise. There's a

9:33

lot of conversations, a lot of

9:35

assessment of the talent available

9:38

inside and outside, and a lot

9:40

of preparation and development. Another

9:42

of the areas where we see

9:44

huge differences between different family

9:46

enterprises is how they develop the

9:48

next generation leaders within the

9:50

family. You see some of them

9:52

that grow within the company,

9:54

some of them go to fancy

9:56

business schools, but in most

9:58

of the cases, you don't. see a

10:00

tailor-made development program to face the challenges

10:03

today and of the future of

10:05

the company. This requires a lot

10:07

of time and effort and this

10:09

should be very tailor-made programs for

10:11

each of the components of the family

10:13

and the roles they're going to play.

10:15

I think you're right there Diego. It's

10:18

critical for family enterprises to create

10:20

personalized development paths. After all, leading

10:22

a family enterprise is more than

10:24

preserving what you've built. It's about

10:26

continuously looking forward and planning for

10:28

the future and being able to

10:30

bring the outside in. So having

10:32

those external experiences, having mentors from

10:34

other industries or on the board

10:37

is so critical in my mind.

10:39

It's about being comfortable having brave

10:41

conversations with family members about

10:43

their own development and how you

10:45

can best set them up for success.

10:48

We know that when family enterprises fail

10:50

to develop their most talented leaders they

10:52

risk letting them walk out of

10:55

the door. Our research in fact

10:57

found that 71% of leaders in

10:59

family enterprises said they're likely to

11:01

consider moving organisations with 36% citing

11:04

career advancement as their primary motivation.

11:06

We now like to welcome our

11:08

final guest into the lounge Peter

11:10

Gramkov. Peter is a leadership

11:12

advisor in Russell Reynolds Associates

11:14

Copenhagen office. Thank you very

11:16

much for having me. Peter,

11:18

what skills and mindsets will the

11:21

next generation of family enterprise leaders

11:23

need? So one key skill that

11:25

I think leaders need is a

11:28

strong emotional intelligence, EQ. So you need to

11:30

understand what is going on in

11:32

the family. You need to understand

11:34

the values. And this also spends

11:36

several generations. So this can actually

11:38

be that you work with the

11:40

older siblings and the next generation

11:42

is coming in. So really try

11:44

to understand. the different requirements,

11:46

the different needs that a family

11:49

wants. I think getting to the heart

11:51

of what makes a family tick

11:53

is indeed critical Peter. In every

11:55

family there will naturally be a

11:57

complex web of relationships, traditions and

11:59

emotional connections. get to grips with, and

12:01

larger family enterprises will have

12:03

different setups in terms of boards

12:05

of trustees, family boards, different

12:07

delegated sets of responsibilities, and understanding

12:09

the interplay between these is

12:11

also really important. Annie, I know

12:13

you wanted to talk about

12:15

another skill, the importance of being

12:17

an active listener in a

12:19

family enterprise. A lot of times

12:21

people react the way they do because

12:23

they feel like they haven't been

12:25

heard, and if this next generation can

12:27

spend that little extra time

12:30

listening to their stakeholders, understanding

12:32

where they're coming from, and

12:34

then using those guidelines to decide what

12:36

that business context goes, where it

12:38

goes from here, they will find

12:40

it a lot easier to bring that change

12:42

which they want to bring within the business. And

12:45

this point, Annie ties really nicely to

12:47

Diego's point about the importance of

12:49

thoughtful career planning and development, educating

12:52

family members on what's happened in the

12:54

past, where the business is now,

12:56

and where it wants to go in

12:58

the future. From much earlier on

13:00

in their career, setting up appropriate forums

13:02

to do that does allow new

13:04

family members who are onboarding to really

13:07

understand the legacy as well as what

13:09

they're tackling in the here and now. I

13:11

think what you have all stressed here with

13:13

these skills and mindsets is that it's

13:15

a careful balancing act. Successful family leaders will

13:17

know when to be bold and challenge

13:19

the status quo, and when to stand back

13:21

and listen. I also think it's critical that

13:23

a leader can be adaptive and can

13:26

pivot, especially given how volatile the business landscape

13:28

is today. This will help

13:30

your family enterprise remain competitive and

13:32

resilient. This has already been a

13:34

really insightful session, but before I let you go,

13:36

I'd like to close this episode with your

13:38

thoughts on what the future holds for family enterprise

13:40

leadership, either globally or in

13:42

the regions each of you advise in. Justice,

13:45

over to you first. Family businesses

13:47

afford the opportunity for leaders

13:49

to think through the long -term

13:51

benefits of a strategy

13:53

and deploy the resources as

13:55

needed without those pressures

13:57

of short -term gains or

13:59

results. I think family -owned

14:01

businesses will continue to attract

14:04

top -level talent who find that

14:06

to be a very favorable environment in

14:08

which to lead. So Emma, the

14:10

Asian family enterprises are now coming of

14:12

age and they're making their mark in

14:14

their world as they grow out of

14:16

their local markets. While they're younger families

14:18

compared to the U .S. and European

14:20

families, probably in their second or third

14:22

generation at best, these families

14:24

are growing in a world

14:26

that is rapidly digitizing and so

14:28

their growth trajectory and the

14:30

speed of growth is way faster

14:32

than what you might have seen in other

14:35

families from other parts of the world.

14:37

With family enterprises, we're going

14:39

to see best -in -class corporate

14:41

governance. What they require from

14:43

the boards is not only

14:45

for approval, but it's much

14:47

more consultative. People that

14:49

provides advice and helping and

14:51

coaching members of the family.

14:53

So we believe that you're going

14:55

to see the best evolution in

14:57

corporate governance and new

14:59

trends coming from family

15:02

enterprises. The future of

15:04

family enterprises is bright. I

15:06

think we are seeing a

15:08

professionalization taking place already now. I

15:11

see the families becoming more

15:13

digital savvy. I see

15:15

them becoming more global in

15:17

their mindset. I see them becoming

15:19

more proactive in the way they're

15:21

handling among other succession planning

15:23

and then sustainability and ESG is

15:25

also playing an increasing part. Thank

15:28

you so much to each of you for

15:30

sharing your perspectives today. I hope it's given

15:32

our listeners as insight into life as a

15:34

family enterprise leader and the obstacles they may

15:36

face. In 30 seconds, this is what

15:38

we've learned. First, successful

15:41

family enterprises thrive by focusing on

15:43

enduring values over fixed rules or

15:45

managing the status quo. Creating

15:47

a foundation that allows both stability

15:49

and evolution across generations is the

15:51

way forward. Having a

15:54

clear distinction between business transformation

15:56

and core family values enables

15:58

leaders to drive necessary while

16:00

preserving meaningful legacy. Proactive

16:02

succession planning is critical. The

16:04

most successful family enterprises develop

16:07

their next generation of leaders

16:09

systematically and early, including their

16:11

family members, not in response to

16:13

crisis. Exceptional family enterprise leaders

16:16

combine strong business acumen with

16:18

emotional intelligence, active listening and

16:20

the confidence to challenge constructively.

16:23

If you work for a family enterprise,

16:25

we'd love to hear your thoughts. And

16:27

likewise, if you have any topics or

16:29

burning questions you'd like us to cover

16:32

in future episodes of Leadership Lounge, then

16:34

get in touch. Email your questions to

16:36

redefine us at Russell reynolds.com. And if

16:38

you've enjoyed listening to this episode, leave

16:40

us a five-star review on Apple or

16:42

Spotify. You can find us on LinkedIn

16:44

and follow us on X at RRA

16:46

on Leadership. You can also find us

16:48

on Instagram at Redefiners Podcast and you

16:51

can now subscribe to our YouTube channel.

16:53

Until next time, goodbye.