Synchronicity – The importance to synchronize social systems
A culture of cohesion does impact on the external and internal social capital which are significant and quantifiable family-business advantages in terms of valuation. Family businesses are opaque and less transparent that non-family firms. In a world of high information asymmetry, status signals are very valuable, especially when they costly to imitate. Sending the status signal ‘family business with significant internal and external social capital’ demands a premium on the valuation of a family business in M&A transactions .
Thus, it is conceivable, that investing in the social system of a family enterprise leads to tangible performance and valuation premiums.
Business families are social systems characterized by continuous processes of coordination through verbal and non-verbal communication. Specifically, they are complex, socio-economic, dynamical systems with at least 3 layers: a macro level that describes the system, micro systems that describe the individuals that make up the macro-level and meso-levels i.e., clusters of individuals bound together by sympathy (cliques) or on a functional level based on the 3-circle model suggested by Renato Tagiuri and Professor A. Davies.
Accordingly, groups must be understood and investigated beyond well-defined roles, norms and identities as distinct groups but as overlapping social networks.
Narrative Embedded Family Governance
This paper discusses the importance of Narrative Governance. We explore the effects of narratives on human behaviour in a business family context, the transformative nature of narratives and how they can have sustainable effects on individuals and social systems. We will argue, that narratives are acquired and neurally programmed by social processes as well as biologically through genetic information, with has implications for subsequent generations: Offspring inherit not only wealth but also stories from their parents and their forefathers. Targeted Narrative Management ensures advantageous effects of narratives while reducing aspects that are disadvantageous. It creates a shared identity and supports psychological ownership.
Language that is sensory rich evokes mental images which are predominantly processed in the right brain hemisphere respectively in the default mode network [DMN]. Information presented in the form of narratives ensures better process fluency, i.e. they make information more human, more relatable and hence, easy to process with low energy investment. This is key, because the human brain is wired to conserve energy and prioritizes processes, that are minimal in energy consumption.
In contrast, family constitutions are more energy intensive to process, carried out mostly in the left-brain hemisphere respectively in the cognitive control network [CCN], which is linked to processing language and logical operations. To make family governance most effective in synchronizing the social system by fostering a sense of ‘collective psychological ownership’ [CPO]1 and to create system resilience respectively a social environment for generative collaboration, we need to work with the whole of our neurology.
Intertemporal Cooperative Choices – Business Families During Crisis
Like in any group of interacting agents, family members face social dilemma e.g., conflicts between their individual self-interest and the common interest as a whole. Agents cooperate when their behavioral choices support a common good of their reference group. If they choose to pursue their self-interest in conflict with the common good, they are said to free-ride or defect. The primary reference group is a business family, the secondary reference group is a wider social context; a family business; the business in which the family operate.
Cooperation of family members in business families is dynamic. Family members may act with fierce parochialism or with complete impartiality, going from close collaboration to defection.
We look at likely causes for these dynamics and reflect on social cognition, the influence of narratives on economic and social decision-making, the temporal need for attachment and affiliation and satisfaction of other needs. The way the human reward-system works has implications on socio- emotional and economic decision-making and hence, on cooperative choices.
Stonewalling – Hidden Risks in Wealth-Successions
Stonewalling is one of the four horse men in relationships, indicating the beginning of the end. ‘Stonewallers’ don’t share much about their world with others. When all wisdom about wealth- creation and wealth-preservation is concentrated in one person, this constitutes Key Man Risk with severe implications on successions and business continuity.
In this article, we highlight possible reasons for stonewalling with insights from neuroscience about our decision making and results from studies in behavioural economics. We look at key drivers of decision making in situations of change and think of possible implications and solutions in a succession-context.
The Neuro-Anatomy of Interpersonal Conflicts
When two people agree, their brains exhibit a calm synchronicity of activity focused on sensory areas of the brain. When they disagree, however, many other regions of the brain involved in higher cognitive functions become mobilized as each individual combat the other’s argument
“Our entire brain is a social processing network however, it just takes a lot more brain real estate to disagree than to agree” (Joe Hirsch, Professor of Psychiatry and Professor of Comparative Medicine and Neuroscience)
Conflict is an integral part of our lives and according to the above said, expensive to process in metabolic terms.
Understanding conflict dynamics helps us to prevent conflict or find conflict resolutions with less metabolic effort.
In this concept paper, we look at the anatomy of conflict using insights from neuroscience and complex system theory.
The Importance of Conscious Culture in Business Families
This paper discusses the importance of having a conscious culture for more family engagement in the interest of success for the family and the businesses. The term ‘culture’ has a long history and is now used in different intellectual disciplines with diverse and sometime confusing meanings1. We focus on the anthropological interpretation. Culture is a distinctive way of life of individuals organized in social systems that defines their social reality. It comprises social norms, socially acquired values and beliefs that delimits the range of accepted behaviours. Culture is an emergent property that arises from a complex, highly non-linear dynamics by recursive social process defined by explicit and implicit communication.
We will highlight the importance of culture for social dynamics in business families and the latest addition to the term: ‘conscious’ culture.
Psychological safety – The role of psychological safety in family enterprises
Family enterprises have the added complexity of the family system, which is the backbone of the business. By the same token, it cancontribute to the erosion of socioemotional and financial wealth of the entire family enterprise. The next generation often needs to fight the inertia of the current or even previous generation to collaborate and accept valuable input derived from societal and cultural evolutions which require the adaption of the business model.