Modern Stewardship

Dr. Jaffe, a member of Wise Counsel Research, is a San Francisco-based advisor to families about family business, governance, wealth, and philanthropy. He is the author of Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises, Cross Cultures: How Global Families Negotiate Change Across Generations, Stewardship in your Family Enterprise: Developing Responsible Family Leadership Across Generations, and Working With the Ones You Love. His global insights have led to teaching or consulting engagements in Asia, Europe, the Middle East, and Latin America. The Family Firm Institute awarded him the 2017 International Award for service, and in 2005 he received the Beckhard Award for service to the field. In 2020 he was awarded a special commendation as an individual thought leader in the field of wealth management by the Family Wealth Report. He has a BA degree in Philosophy, an MA in Management, and a Ph.D. in sociology, all from Yale University, and a professor emeritus of organizational systems and psychology at Saybrook University in San Francisco.

Kirby: Welcome to the Tamarind Learning Podcast. Today, we're talking about the topic of stewardship and I'm thrilled to have Dr. Dennis Jaffe with us who's going to share more about his thoughts and ideas about the topic. Dennis has written one of their most voluminous luminary books called, Borrowed From Your Grandchildren: The Evolution of 100 Year Family Enterprises among other incredible books, such as Cross Cultures: How Global Families negotiate Change Across Generations, Stewardship in Your Family Enterprise, Developing Responsible Family Leadership Across Generations, and Working with the Ones You Love. In all of these books, he's a mass tremendous wisdom, and great global insights. And for his teaching and consulting he has won numerous awards from the Family Firm Institute. He won the 2017 International Award for Service. In 2005, he received the prestigious Beckhard Award. In 2020, he was special accommodation as an individual thought leader in the space of wealth management by the Family Wealth Report. And Dennis has a BA Degree in Philosophy, a master’s in management and PHD in Sociology from Yale. So, we are thrilled to have Dennis here today and I am thrilled to dig into this important topic of stewardship. 

So, Dennis, let's think about stewardship, because it has so many connotations. Can you give us your modern take on what it means to be a good steward?

Dennis: Well, it's a tremendously deep and central topic for family enterprises, so much so that I actually used it in the title of one of my books. The idea of stewardship is to help the next generation develop a clear sense of what it means to be an heir and a participant in the family wealth. Ownership has a personal meaning to most people, which is: it's mine: I could do with it what I want. For instance, I have this this new sweater and it’s my sweater. But the idea of stewardship adds another dimension, and this is really important to families, the idea, that there is a connotation of about serving and taking care of the resource that you have. So you have the wealth, and it's yours, but it's not yours, because you have it and can enjoy it, but there's also a responsibility connected to it. This is what families are increasingly teaching their next generation.

So, the idea that you are an owner doesn't give you an unlimited license. There is some sense that the family will also contain people that haven't been born yet and they want them to benefit from this as well. And if you use it up or overuse it, it won't be available for them. So, it's a discussion around getting this wonderful gift from the family that also entails some responsibility in terms of some limits that family members don't ordinarily think about. And that they, therefore, have to discuss and make clear to members of the next generation that the nature of this gift includes a responsibility for stewardship.

Kirby: Excellent. When we think about these concepts, what are some of the characteristics or values that you feel families espouse as it relates to stewardship? I mean, how does it connect?  You talked about perpetuating, feeling responsible to carry it on? Tell us more about how you see stewardship showing up in different families.

Dennis: Well, one thing that I've learned is that you don't instill stewardship by ordering people or by delivering the edict: You will be a steward. Stewardship is a learning process. What I'd say is that the values are really the implications of the concept itself. The first one is that when the gift is given from the family, the family also has to inform and teach the next generation exactly what that means. What does it mean to be or do? It doesn't mean you can't live well but does it mean that that you can't touch it? What does it mean? So, there's a learning process and that includes discussions in the family of what does it mean to be a steward and answering questions such as: What kind of a life do we lead? What is this money for? What do we want to see happen in the world? Because we're wealthy, there are a lot of conversations that let's say people that don't have this legacy don't have to have.

Another part is that these conversations are not held in the lawyer's office, necessarily, they are held individually. These are collective conversations and they bring the family together. The family talks about the family and the next generation comes to see, Aha, I see why stewardship is important, and I see why it's meaningful for me. So, there's a kind of discussion of the social commitment that is expected, of what do we want to accomplish? What are we? 

And then there's another part of this ethic, which I think is tremendously important, which is with shared legacy and the stewardship comes the commitment to do something together. That it's more than just an individual. Just being a good person is certainly fine and wonderful. But with the legacy and the wealth of the collective and the family, the family starts some discussions about what can we do together, what special thing might we be able to do that if we were just a bunch of individual people, we couldn't do. And the family gets excited about that. So, what I'm saying is that you have to shift people from feeling like the stewardship responsibility is a burden to the idea that the stewardship responsibility is really a capability and an opportunity to really, you know, do something that is meaningful and important. The next iteration with the family.

Kirby: I love that. I love that the idea of stewardship as an opportunity and as a connection point for not just you as an individual, but to broaden and to make it a shared family experience that has weight and meaning that will likely have impact for generations to come if you set that expectation early on. I'm wondering if you have one or two families in mind for examples of how you've seen this take shape. I'm sure our listeners would love to know more about what it looks like.

Dennis: Well, this is not a theoretical concept, and it's not my idea of what's a good thing. In the book, and in my study, I interviewed 100 families that have had gotten together and been stewards across multiple generations all over the world. This is what I learned. I have hundreds of interviews and stories of families, and this is what these families do. Here are two interesting examples and these examples are ones that are not just one family, but I've seen this in different forms in several families.

Example 1
A third or fourth generation young person may be in a family where that generation now has 30, 40, even 60 or 80 people, and they're not a family or household anymore. They're kind of a community of people and this next generation people grow up and some move to different places. They don't live in the same town anymore, where they're getting education, some of them are living even in different countries where they're expanding, but to that young person it seems like the people in their generation are really, really interesting but not connected. They just don't know each other. And so, this person becomes what we call a family champion, and begins to take stewardship as being, let's get our generation together to talk about who we are and to get to know each other. We may benefit by connecting. So, the next generation person begins to bring the cohort generation together. This is very common in later generation families, that they, the new generation, has to come together, get to know each other, get engaged, learn about the wonderful things that they're doing, sharing and networking.

And so, this is a task that the parents can't do. Their children's children, have to do it and reach out and bring everybody together and also get the older generation onboard because sometimes this can be expensive. That's a great example of stewardship and it's a common one. It takes someone who takes the message to heart and begins to do it.

Example 2
Another common example is a family member who says, wow, we have a great business. We've created a great company and maybe in addition to the company, we have other investments. We have a family office. We have a foundation. There's a lot of things that we do, but it's not complete. For example, in the legacy business that we have, we're not paying attention enough to sustainability to the future of the environment. Our investments are making us wonderful returns which are creating more wealth for the family, but we’re not really sure that they're fulfilling our values to 
next generation. So, they begin to convene a conversation about sustainability. And this is something that the great, large networks like the Family Business Network, which is the global network and families, have started to do. Family should come together and talk about their values and talk about sustainability.
Even if they don't work in the business, reach out to the business. Look at their investments, and begin to ask, what is our score? What is our relationship with long-term sustainability? 

What I find is that a member of the family kind of gets religion about this and gets excited, but it doesn't stop there, and it doesn't become an argument with their with their father, or mother. But it really is something that, where the generation gets together, and says let's build upon what we have. Let's not throw it out. Let's not blame each other, but let's build, create some change in the business, investments, the things that we do so that it more clearly represents our social commitment. These are wonderful opportunities. 

And again, these are examples that are each of these I see in many families as a way of practicing and implementing. They represent their vision of stewardship and make it real for the family. That's fantastic.

Kirby: Thanks so much for those two great examples. The first one around stewardship, really being driven by the up and coming generation, as you call them, the family champion, who might inspire a conversation with the more senior generation to talk about the collective family and what stewardship means. And then the second one I've heard you say, was more focused on sustainability, and the impact that sustainability might have in relationship to a family enterprise, or to collective family, trying to identify how are they going sustain us? What does this look like and does it have maybe some social impact connotation? Or how does it, again, bring family together? I love both of those examples. Dennis, in closing, are there any one or two takeaways that you think are most critical to stewardship and being successful at it?

Dennis: Well, I would say the takeaway is every family: whatever their level of wealth, has to have a conversation. Most families generally don't talk about wealth and they, therefore just kind of leave it for everybody to make their own conclusions. I think the first step of every family is to get together and to say, What does our wealth mean to us in terms of our lives? How does it affect us, and most importantly, what is our wealth for? We have more wealth then we can use we have more wealth in some cases than we can even imagine. What do we want it to do, what's it for? That seems like a silly question, but it's not. In the super wealthy family there's only very little that you could do, your life is fine. But question of what it's for and where you're going is the family's values and vision. This is a conversation that starts over the dinner table, with wealthy parents and they're now grownup children, or growing children to say, this is what we have, and this is who we are and what we stand for.

Kirby: Great, final thoughts. So, again, thank you so much for being here on the Tamarind Learning Podcast. Dennis's, thoughts and ideas also show up in chapter four of the Complete Family Office Handbook, the Second Edition which releases November 9, 2020. Dennis has just so much incredible information and you can learn more about Dennis on his website www.dennisjaffe.com.

Dennis: You just go onto it and it's really a library of the Resource Center. I have about 70 or 80 articles and publications that you can download, and other than leaving your contact information which I don't use for anything other than telling people that there are other resources you can download, all kinds of resources and articles.

Kirby: And tools. The different helpful tools you have created like your values cards. Again, back to the first step, being having those conversations. And sometimes your conversation aids, which I think you've created some great ones that can be extraordinarily helpful.

Dennis: Kirby Rosplock, I'm thrilled to have spent the time with you.

Kirby: Dennis, thank you so much for sharing your wisdom.

Dennis: Kirby, we look forward to more of your research, writing and thought leadership that you bring to this space with your learning platform and the work that you've done is such a service to everybody as well.