Modern Intergenerational Success

[Music] good morning everyone good morning to our panelists thank you for joining us on today's panel to discuss modern intergenerational success may I start with you Shea with your question What In your experience makes a successful intergenerational family business first of all Natasha I would like to thank adgm for a remarkable event uh this year seems to be very vibrant and I would like to particularly thank Remi and Afra from the partnership team for their endless support and uh for creating this magic behind this event and I'm very pleased to be here sharing the panel with Marcus Michael and our dear friend chamus um this I think this question needs a lot of time but I'm GNA try to be as brief as I can uh Natasha um I've been I'll just give you a very brief background of myself I've been with the company Rotana hotel management company for around 15 years and uh I was very privileged to closely work with my father who is the chairman and the founder of the company um what I was able to learn from him is something that no book will be able to teach me because the values The Experience he's been through everything he's done in his life is something that is not because he's my he's my father but it's remarkable and today we are who we are because of the team he built because of his dedication because of his transparency we deal with a lot of Hotel owners and we deal with a lot of Partners we deal it's a people oriented type of business and if we don't have the right communication we don't have transparency with the people we deal with from every aspect we won't be able to survive so it's very important to surround yourself with the right team stay close to your values and this goes back to your upbringing as well and uh stay open to knowledge keep educating yourself that's very very insightful for all family businesses um May I turn to you shamis and ask you what are the main highlights of the intergenerational success of your family business uh first of all uh so happy to be here today regarding your question I think uh the main uh factors that plays a role in the success of intergenerational continuity the succession planning and continuity of the business is the ability to be cohesive and working together as one body because uh I know there's a lot of focus on governance I'm not saying that governance is not important it creates a framework to work in but also what's more important than governance is the unity of the family members so when the family members are together are uh working as one team that's the main success of the family business once you lose that any paperwork you have around uh the uh articles or the protocols or anything associated with that is not going to be worth anything at all so that's the first thing I would say is the main factor towards the success and continuity of family is families need to be one and they need to work as one body and be able to deal with their differences and openly discuss them and resolve them so I would say that's the first first pillar the second pillar would be is what she mentioned earlier is continuously educating the Next Generation because what I saw in uh in my experience is that sometimes the second or the third generation are being kind of not listened to and not being developed enough and what that does is that it caused them becoming alienated outside of the family and then when they come in they don't really know what's happening inside the family business they don't really know how to operate and run a family business and this is when problem starts happening so I think continually educating and developing the family business in terms of teaching them how to be good family members how to be good shareholders is also important for uh family business continuity and session and uh I would say the third part is the family need to uh which I mentioned earlier becomes not of Great Value if there is no Unity but the family need to sit together and create clear guidance of how they want to uh govern and manage their family businesses as they go forward so I think I would focus on these three points for now and I think these are from my experience the main points for success and continuity thank you very much if I may add Natasha I think as um just adding to what Shamus was saying alignment and communication is all is very important so it's very important that the members of the family are very aligned and they maintain a very open communication so align and open communication Marcos your question why do many businesses struggle with intergenerational transition in your view so first of all I'd like to to thank you for hosting me here in adgm uh quickly I'm just a representative of a sixth generation who is into Agri business uh mainly soft Commodities which is coffee cocoa and cotton and um from the wealth creation we we have this family office Bank down in in Switzerland now you raise a number of of of of points that go together with what my other panelist Rose is is is the succession planning is the the absence of a clear plan uh and and and delaying the succession you know I I have an uncle who who worked until the age of 96 I mean how how how can the Next Generation really start and and and and start making their own decisions when you have somebody that is still watching over your shoulder and and and and preventing you from from developing and implementing your own strategy um so that's that's one of them you might have also disagreements between families you know as you get bigger in the family trees is who gets to work for whom so so we mentioned a family Charter but I think you should also have a an an employment Charter who who gets to work for the family and and based on what conditions um again this you also have to deal uh between the family members who work and don't work you have active shareholders passive shareholders um and and if you don't make everybody happy um that creates obviously a lot of conflicts between the families which brings you maybe to a third third uh protocol that you need to set up within a family business which is dividends because for those who work in the family yes they see salary and and bonuses and compensation for those who don't work they don't see anything so remaining a shareholder of a family business you have to find the the right grounds for for a dividend policy so that they compensate for remaining a shareholder and being a happy shareholder and it all goes at the end of the day with communication as as what was said so so a little bit of insight thank you very much for that Michael may I ask you the same question why do many businesses struggle in your view with intergenerational transition well thank you very much uh for having me and and I'm sit alongside with our amazing panelist um fourth generation from a family in the commercial real estates and and entertainment uh we have done a lot in figuring out what is a legacy to us I think in the family business Legacy is the most important thing to not only the wealth Creator but also for next Generations uh I think we talk a lot lot about the openness and then the communications and and the discussion within the family but I think a ballar idea um we categorize into two things uh when it becomes difficult for intergenerational wealth transfer uh one is obviously uh the complex Dynamics within the family so I won't go much more in depth on that uh basically your relationship with their parents and their siblings and everybody uh on the other side is external uh pressure so uh in terms of uh the Next Generation how you're actively involved with the family business I started working for my dad uh when hour was a 7 um you know particularly we own the movie theater chains uh so I was selling movie tickets uh when I'm back my my dad called me back to the family business and I said I don't know how to sell movie tickets anymore uh maybe was start something else um um so at the end of the day um I think it's all about active engagement with the family uh stay open uh stay you know humble uh and also sometimes I figured uh a lot of a wealth Creator as well as the parents that they are um uh they find it difficult to relinquit their power uh which make the Next Generation less empowered uh that's what our fellow panelists to talk a lot of things about uh stay openness and then stay engaged and engage with the Next Generation a lot uh when you can uh so the Next Generation can exactly know what's happening in the family thank you so much she what about you your view on the question why businesses struggle with intergenerational transition if I may before um answering your question I just wanted to give the audience a little bit of a background of ran management company so Rotana hotel management company um was established in 1992 and its main its main um scope was in operating hotels so we started with one hotel uh today we're around 140 hotels in 44 cities and 24 countries of which 84 are operating again um the company wouldn't have been able to reach where it is today without values without commitment without dedication without being very close to our owners and our partners and you know hearing my f fellow panelists speak about their own experiences and going back um to my experience um it wasn't easy okay um but and I learned it the hard way um there's a project that is very dear to my heart um uh and I I was very privileged and honored to work alongside his Excellency Shamus on that project and it's the Sana I think if uh you need to go and visit uh for those who are visiting abui I encourage you to go visit S Tana this was the first project which um I was able to engage I didn't have any background in construction I didn't have any background in in project management or anything but I learned it the hard way uh for us it was very difficult to uh because there was a lot of stakeholders engaged we had to have a very clear communication with the partners so without Shamus I know Shamus also comes from a family business background but because he was so dedicated he was so Hands-On as a second generation and I was from the second generation as well and we worked very closely together because we carry the same values and the same principles and we wanted to deliver something that is unique and successful and I think we were able to do that because of our commitment and because we were both listened to by our families and our fathers so if you have the right knowledge if you have substantiation behind your ideas or behind your opinions you shouldn't be worried about delivering and if you have um um an objective or a cause in mind that also Associates to this project in terms of of sustainability or ESG also like it's it's it's the good cause or it's the good intentions you have that will also lead you to a successful path thank you thank you very much was I able to answer your question um that was a very insightful answer thank you shames may I ask you following on from Shea's response what opportunities and challenges do you feel family businesses May face in Abu Dhabi uh before I talk about the family uh to answer before answering your questions I I just want to say I was uh I didn't I didn't have a choice I had to be the project manager on that project with them because her father was the was the client representative on site he was there every day but it was yeah certainly an exciting experience but going uh back to your uh main question I think I think the main uh challenges that are facing uh family businesses is the ability of listening to the Next Generation and adapting to change because what happens is that and probably we touched Bas earlier on this is that we end up having U uh a founder or or a generation who's running the operation who's there and thinks thinks everything he's doing is right and in today's Chang world it's not like before uh uh things are changing on very high highly regular basis and if you are unable to change and adapt and make yourself ready for the future and having the younger generation coming in and giving you ideas of how to create change within the organization because that's the blood that's going to give you the the uh the possibility of adapting to what's happening happening around you in the world so say so many things happening around the world like few years ago it was all about uh uh data uh what do they call it data collection right and I never knew what why we were collecting data what we will do with data and today I understand that it's all comes back to AI right and nobody thought that the hardware and software could reach to a point that could would take the data and analyze it and give you output in such speed and efficiency now if you are sitting and not listening to the world and what's happening around you and fixed in your mindsets you will not be able to change and adapt and you will be left behind and you will die so I think opening the opportunities whether it's through a third generation fund which invests into smart ideas of your upcoming Generations or supporting them in developing smart ideas or getting the third generation into the business through a proper uh as mentioned by Marcos a proper uh recruitment U Charter or mandate or a committee that does that role and engaging them into the business and openly listening to them family businesses will end up uh lagging behind you will not be able to move forward in this changing world thank you and that answer really goes to the heart of good planning so my question for you Marcos is how significant is poor succession planning for businesses um it could have a number of consequences um I mean you you you plan for the future in terms of business continuity um so not planning ahead what if the current founder or or business owner has an illness or retires and and and and there's no no one ahead taking over uh it stops the decision uh process um making process so you do have a number of of risk of business failures um it could also as you know that they say in studies say that um um uh family businesses pass on to the next Generation there you have a survival rate of 30% from the first generation to to the second and from the second to the third about 10 to 15% so so you need to be extremely cautious when when when you you plan ahead um again as I said we we're sixth generation in our family business we probably have 12 family members and and it becomes complicated at as to who who decides what um so believe it or not today in terms of governance we we've put a lot of focus management is no longer family members we have an external CEO an external CFO but it's true that underneath we do still have family members and at the board level what we've decided given that there's a number of family branches is um each family Branch can have a family member as a representative and an external one uh so you you do create uh diverse input in terms of people who who can help you out and and and and and and and move forward the company but even so let me tell you it's it's it's it's always a challenge because it's it's not only having the the the the governance in place but you still have those shareholders who say well we have the money so we should have the power but again it's not because you have the money that you have the skills to run a business and and this is where you enter also into challenges and then you have again maybe some of the conflicts where some board members want to take operational decisions and make investments which do not fall within their scope and again you find yourself into managing conflicts and this is something that unfortunately as a family we have from time to time and and and it's hard to to to run the business so that's where our external CEO and CFO have to put order in the house together with these external board members on my side I'm lucky I'm a first generation business into the bank so I'm the only family member right now but it's true that I need to start planning for succession as well and I'm happy to say that I'll have a nephew joining me in the course of next year so we'll see that's for the long run and educating him fantastic it sounds like you on the road to a successful transition Michael what is one technique that you would use or advise to secure the future of family businesses yeah um I won't say advice but I think speaking on behal myself uh as next um I think I figured out what back to my point which to figured out what is legacy to you and to your family uh we spent our family spent about 15 years um learning in our family history uh meaning write a book for my great-grandfather uh who was a founding member of Chinese fam um then um actively exploring uh what are the educational uh resources out there for Next Generation to be engaged um I think um when I say educational um meaning you know as the Next Generation I think that we need to figure out our own identity uh we normally talk a lot of things about identity capital uh which divide into the uh intangible Capital as well as the tangible Capital um I think the tangible capital is very easily to acquire um but those intangible capitals are are quite often difficult for for for our next Generations um then you figure out that and then you talk about all lot of things about back to your family business and then other family members uh and the ultimate goal is really to think about the way uh we as a Next Generation can make impact not only within the family people around us uh but talking about as a global citizen right now how to create more impact globally uh so that's why our family has been working closely with one of the leading uh a school in the world uh on particularly that research um hopefully that we can share but that's uh that's a little bit my thoughts thank you thank you very much may I ask Shea for your view on the same question any technique that you would views or advice to secure the future of family businesses I think a governance is key so maybe creating the right um having the right board members um having a clear U succession plan in place having surrounding yourself with the right team for in in in our case we have as um uh Michael was saying both our CEO and coo are externally and the board we have some family members and obviously my father is the chairman a family member represents but if you have a clear path if you have clear objectives [Music] and there shouldn't be any um um uh obstacles that would come uh in the way of uh achieving those objectives so uh I think communication is key um um um having an open dialogue between family members is also very important and um getting in the position where you are today is supposed to be based on what you earned so in my case I had to work hard to be able to get to where I am today so it's very clear to the family that the job is not given to you just like that you have to work for it to be able to earn it and educate yourself as well thank you so shamis education and earning the position so my question to you is why do you think many businesses struggle with intergenerational transition um I think uh the main reason I mean it starts sometimes from whoever is is running the business cuz he expects everybody of the uh family members uh who are there should be hard workers and should be the best of the best when it comes to family business but sometimes you need to uh listen to the family members uh I've heard the story doesn't apply to us but I've heard the story of another family which um one of the family members was not aligned with everything the family business was do doing and the founder was forcing him or the the leader of the business was forcing him to come back into the business you have to work you have to work and then they said somebody spoke to him privately and said why are you actually doing all of this he said cuz I don't want to do business I love art and I want to go be buy my art pieces and uh live a different life so I think this is where the there needs to be an Open Mind by the leader of the business because he's the one who Cascades the right message across of the you don't have to force yourself to be part of and to be exactly like U what the business looks like and how how we are so I think listening to the uh to the Next Generation and you know uh coming back to this example and the guy asked him he said why didn't you tell your father and he said cuz I'm scared to tell him he'll think I've put him down you know so it's I think it's one of these things where uh there needs to be open communication between the family members as I think this is the main message open mind that not everybody needs to be the same and this is potentially the success of other family businesses because you've allowed family members who want to do something else to do what they want to do I've seen examples uh in the region where other family members have done something different and what they have done has actually become bigger than the mother company so having that open mind the listening and having that open culture and the engagement with the family members not on on official level and listening to them on uh a mentoring and Advising level I think is is quite important to to uh achieve that education and learning to the to the Next Generation thank you so we don't have time for final questions but any final Thoughts From You Marcos no I think you you said the key wordss communication is important uh and willingness versus capability also in terms of people who want to join a family business you know you cannot push them but they have to be willing to do so and and and work and be capable as well so Michael any F final Thoughts From Me yeah I'll keep it very short uh so next Generation everything is not entitled you have to earn it can can you please join with me in thanking today's fantastic finalist 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