Family businesses that someday evolve into family offices find their genesis in entrepreneurship. Most family businesses begin with a single owner, typically the visionary and indispensable nexus of business activity, building value and directing activity. As these businesses grow from the startup phase and their life cycles unfold, more formal structures and processes become necessary — these help to ensure unhindered growth and harmonious succession.
An organization’s evolution is driven by the need to adapt to the challenges that present themselves in each phase of its life cycle. A steady professionalisation process is a vital mechanism for continuity and renewal. Petru Sandu’s “Framework of family business professionalization,” demonstrates the effects professionalization can have on the family business. But what might family offices also learn from startups where growth is rapid and exponential?
The changing face of the family office
Family offices have evolved from the mega-money-centric, often hidebound institutions of a bygone era. Today the services offered by an energetic family office more closely resemble those of a life coach, creative director or spin-doctor, than a financial advisor. Tasks, like positioning the family business within a specific area, managing potentially negative ‘press’ or guiding the business to the “next big thing”, are all within the scope of the new family office.
As the sheer speed of change today in virtually every business and communications sphere nears the social equivalent of light-speed, many older family offices have had difficulty keeping their services relevant. Ponderous is definitely out—family offices today need to be light, agile and able to pivot. Borrowing from the startup growth cycle allows family offices to make this transition.