Part 1: The ownership strategy provides direction, harmony and resilience

“Our conversations have changed. We communicate in a completely different way, and I have become much more motivated to be a part of the ownership”

“The fact that we have decided to collaborate based on our shared values makes me feel confident enough to voice my opinion openly”

 “Once and for all, I’ve clearly outlined how I believe my life’s work should be managed moving forward”

 “For the first time, we, in the family office, clearly understand, what the owners expect from us”

For the past 15+ years working with ownership strategy, we’ve heard many variations of these statements from families, founders, and family offices. There are undoubtedly numerous benefits for both the ownership group and the individuals involved when time is invested in developing an ownership strategy. The more mature, diversified, and complex the ownership structure is, or is set to become, the greater the need for a shared strategic foundation and clear agreements. An ownership strategy can help with:

• Strengthening family collaboration and fostering a shared desire to be part of both a wealth management community and a family community
• Creating clear distinctions between being colleagues and being family
• Easing collaboration with trusted employees and advisors by giving them a better understanding of the family’s goals, values, and interests
• “Embracing the wealth” and using it to foster awareness of the family’s history, pride, experiences, and unity
• Enabling quick decision-making and seizing good opportunities as they arise
• Demonstrating to future generations that the family has been considered and responsible with regards to legacy and wealth

At the same time, an ownership strategy helps avoid:

• Unresolved questions or tensions that could lead to disputes in the future
• Investments that conflict with the family’s shared and individual values
• Apathy and paralysis due to unclear direction and no sense of urgency
• Individuals shying away from “embracing the wealth” and choosing to turn a blind eye to responsibilities and opportunities

The process of developing an ownership strategy also brings the benefit of getting the family accustomed to making joint decisions and appreciating each other’s input across generations and professional backgrounds.

Which topics should an ownership strategy include?

The emphasis placed on various aspects of the ownership strategy will vary from one ownership structure to another. However, it is beneficial for everyone if the most common issues are clearly defined and decided upon. This way, the ownership strategy can be referenced when questions arise. For example, regarding desired behavior (what does our values say?), the direction of the ownership (what does our purpose say?), how often meetings should occur and why they are important (the annual calendar serves as a guide), and who belongs in which decision-making forums and with what mandates (as outlined in the structure and governance model).

The ownership strategy typically centers on the following six areas of ownership:

• Purpose and values – Description of our joint strategic foundation
• Structure – Who should meet, how often, and about what? Have we ensured that everyone has the opportunity to be heard and informed?
• Roles and contributions – Who is in the driver’s seat of the ownership, and is it acceptable to be more passive? How do we use education, experience, and networks to strengthen our ownership?
• Next generation – How do we develop the next generation to become good owners? How are they motivated? How do we make them good ambassadors for the family name?
• Family office – What kind of family office do we want and need? Which core competencies or services are needed? What is the right long-term structure?
• Philanthropy – How do we build these efforts strategically? What will we support, where, and how? Which structure is right for our efforts and ambitions?

The ownership strategy is not only a strategic tool here and now but also a guide for future generations, where they can seek guidance and advice. In other words, the more comprehensive the ownership strategy is, the better advisor you become for the next generations of owners.

 How do you approach the process of developing an ownership strategy? Read our next article, where we address the big question: How?

You are also very welcome to contact us for an informal meeting about how to get started with an ownership strategy, or you can read more about ownership strategy in the book Generational ownership.