Recently the Musizi Sustainable Business Institute facilitated the world renown Drucker School of Management to hold a workshop on generational wealth.
My friend Charles Ociici, boss at Enterprise Uganda used to
have a statistic about a decade ago, that there was only one indigenous
business that has transcended a generation, that has outlived its founder and
gone on to survive and thrive.
At this workshop the Institute’s founder Elaine Alowo Matovu, said that statistic may have improved but not by much, with only one in five Ugandan businesses transcending a generation. And of those most were not indigenous founded businesses.
She also pointed out that in the next decade or so there
will a massive wealth transfer – about $84trillion, between generations, but
almost of all of this will be in the global north.
Should we care?
My understanding is that after creating wealth, our families
cannot seem to hang on to it, if only for the benefit of future generations. This
trend is worrying because statistically you cannot build meaningful companies
in one generation. As one friend of mine once said, the problem with Uganda is
that we do not have enough wealthy people. And he was not talking about commission
agents and air suppliers.
People who have built wealth independently think different
from the rest of us non-producers and are key to driving a nation forward. The
fewer they are, their voices are drowned out by the mediocre and society does
not progress.
It has been found variously that Uganda is the most
entrepreneurial country in the world. This is no mean feat. The challenge is
that companies that emerge, are not sustainable as evidenced by their inability
to live beyond the founder.
For us mere mortals, we may blame bad luck for this, but
there is actually a science to it.
Enter the Drucker School of Management and more specifically
the Drucker School Global Family Business Institute, who have made it their raison
d’etre to understand and help family businesses navigate the minefield of
family dynamics and generational succession planning.
Lauded as the father of modern business management Peter
Drucker, whose name the school carries, has had his methodology, previously
tailored to public and professionally managed businesses, adopted to the unique
challenges of the family business.
"During the workshop that was held over three days, participants explored issues of their money philosophies, shared family dreams,
advising and creating business systems designed for family businesses....
But the subject that caught my attention for its
universality beyond business was “raising children… with batteries included.”
It is a no-brainer that in order for the kids to take over
from you and thrive, even take the business to the next level there needs to be
some formative training in that direction, the question has always been how
does one do this?
Communities like the Indian business families seem to have
hacked this process, bringing in the children into the family business and
slowly handing it over in a process for there seems to be no written manual.
The Drucker School has distilled it into six keys to raising
children to take over the business.
First, they need to know where they are from, they have found
that children who know their families and family histories tend to be more
resilient in the face of life’s challenges.
"We need to bring up our children to be grateful rather than entitled, the latter being a killer of business sustainability. If they feel gratitude for the business and what it has done for the family they are more likely to want to carry it on and to the next level.
That our children need to have a dream or goals because “If
they don’t have a target they will wander and wonder.” Relatedly, do they have
the grit or resilience to thrive as adults? If they are not reaching beyond
themselves to achieve future goals and overcoming the ups and downs to attain
these, how will they develop any resilience?
We need to align our children’s relationship with money to
that of wealth creation, shift their tendencies towards saving and investment
over consumption.
And finally the million dollar question, are spending time
with your kids, to pass on your values and the vision for your business. Educating
them well is all very nice but it does not mean they will want to or be ready
to take over the reins of your business when the time comes.
"That planning for generational wealth starts early, is intentional and follows some formula should provide some consolation to our businesses grappling with this question every waking hour of their day.
It was an eye opening event for all the participants who
made the workshop and the Musizi Sustainable Business Institute intends to make
it an annual event and central to their elevation to a university in the near
future.
