Founded by Henry Ford in 1903, the Ford Motor Company rocketed to success by mass-producing reliable, low-priced automobiles. When Henry’s son, Edsel, took the helm in 1918, he championed a different strategy for a new era. He sought to replace the Model T — iconic but outdated — with a more modern design geared to high-end and foreign markets, and later embraced compromise with labor amid the suffering of the Great Depression.
But Henry could not let go of Ford’s origin story, undermining his son at every turn. The result was declining sales and years of labor strife that left the company on the brink of collapse by the 1940s. It was only the efforts of Edsel’s son, the more forceful Henry Ford II, that saved the auto giant from bankruptcy.
In family enterprise, generational transitions often pit one narrative against another: tradition versus innovation, continuity versus change. Indeed, when older generations craft painstaking succession plans or build elaborate constraints into trusts or shareholder agreements, they are really constructing a story: about the values and life lessons that helped them succeed, and that they hope will do the same for their children. Younger generations, however, must often adapt this narrative to their own goals and values, along with the changing world around them.
Failure to reconcile conflicting narratives can spell ruin for a family business or the waste of a financial legacy, as it nearly did for the Fords. To avoid this fate, families need to think differently about the stories they tell.
The value of critical distance
Conventional wisdom holds that family heritage, like wealth and reputation, “belongs” to the older generation. In this telling, succeeding generations are merely stewards or caretakers. They are given an inheritance or entrusted with the family business — and then charged with not frittering it away or screwing it up. Framed this way, a legacy can feel more like a burden than a gift.
Of course, it’s not as simple as that. Research suggests that younger generations do value their family heritage, especially as a source of traditions more motivating than money alone, and are motivated to preserve it. According to a 2021 survey of 300 Canadian business owners by the Family Enterprise Foundation, nearly 90% of next-generation family business leaders believe it is important to preserve a legacy.
But younger generations also want something more from that heritage: a sense of purpose, a collective identity for the family, the seeds of new entrepreneurial gambits, permission to go their own way. And as our own research shows, next-generation leaders are uniquely positioned to find what they are looking for in the family story.
Older generations often identify closely with the family or the family business, which can actually obstruct key learnings from the past. Eager to protect the family’s reputation, they may downplay scandal or setback rather than learn from it. By contrast, our analysis of 94 family businesses shows that younger generations tend to have more critical distance from the family story. This lets them grapple with its difficult chapters and respond appropriately, whether by making amends for past misdeeds or by reforming business practices going forward. It also frees them to draw insights from their story that can fuel innovation and sustainability.
Legacy as a source of purpose
How, then, can the next generation build on their family legacy while recasting it as their own? Our research and experience suggest four strategies for next-generation leaders.
1. Seek out role models in the family story.
Some next-generation leaders hesitate to embark on risky new ventures outside the traditional scope of the family business. Locating exemplars in the family story can legitimize a new way forward.
One third-generation CEO used this approach to advance his vision for a more sustainable enterprise. Fredo Arias-King, head of Mexican pine resin producer Pinosa Group, had lamented the disappearance of Mexico’s ancient pine forests that threatened both the industry and the communities that depend on it. Then he stumbled onto the published speeches of his grandfather, company founder José Antonio Arias Álvarez, who had preached environmental stewardship. “I don’t think he could have known just how devastated the forest would eventually become,” said Arias-King, “but somehow my grandfather knew that planting trees would become extremely important.”
Affirmed by his grandfather’s words, Arias-King helped found Ejido Verde, a nonprofit that would later become an independent, for-profit enterprise. By making no-interest loans to farmers and communities, with pine resin as the means of repayment, the organization promotes reforesting through new pine plantations.
2. Forge an identity beyond the founder-entrepreneur.
It’s easy to revere the family’s wealth creator. For the two adult grandchildren of one founder-entrepreneur — a private equity pioneer who rose from poverty to become one of America’s richest people — that was the problem. They wanted their own children, beneficiaries of a generation-skipping trust, to know the person behind the legacy that would pass to them. So they engaged one of us (John Seaman) to probe beyond the classic rags-to-riches tale they had heard growing up.
The founder, they learned, was a gifted yet deeply troubled man. This more nuanced understanding enabled the two generations to have a frank conversation about the issues raised by their ancestor’s life: the obligations of a business to its workers and communities; the consequences of untreated mental illness; and the unfair burden often shouldered by women in wealthy families.
This conversation, in turn, led members of the fourth generation, all in their twenties, to rethink their roles in the family enterprise. One set aside her qualms about joining the family business and put herself on a path to succeed her father as president, but with a determination to nudge the company’s private equity portfolio toward impact investing. Another resolved to pursue her own entrepreneurial dreams outside of the business, rooted in progressive values that were in stark contrast with her great-grandfather’s. Still another joined the board of the family foundation, where she helped steer its grant-making toward her generation’s individual passions.
By seeing their founder-entrepreneur in human terms, the family’s younger generation was able to move beyond hero worship to forge their own identities — which promised to make them responsible owners and stewards of their ancestor’s wealth and the business that created it.
3. Reckon with past wrongs to find a new path forward.
Many families have skeletons in the closet — scandal or wrongdoing they have long concealed or downplayed. (Henry Ford’s history of antisemitism and violent confrontations with unions are examples of this.) The willingness to confront these darker chapters, it turns out, can be a powerful motivation.
That was the case for the Reimann family, owners of consumer goods conglomerate JAB Holding Company and one of Germany’s richest families. The three adult children of Albert Reimann Jr., who ran the company in the 1930s and 1940s, knew they had been born of their father’s affair with an employee, Emilie Landecker. They also knew that Emilie’s Jewish father, Alfred, had been murdered by the Nazis. But it was not until 2019, when they commissioned research on the company, that a more sinister secret emerged: their father and paternal grandfather were themselves ardent believers in Nazi race theory who abused forced laborers.
It was the younger generation — Albert Jr.’s grandchildren — who were most adamant about reckoning with this secret. “When I read of the atrocities…sanctioned by my grandfather, I felt like throwing up,” recalled Martin Reimann. “I cannot claim that I was very interested in politics before…But after what happened, I changed my mind.”
At the insistence of Martin’s generation, the Reimanns paid compensation to former forced laborers and their families. But they did not stop there. They refocused their family foundation on combating antisemitism and strengthening democratic institutions. They also renamed the foundation in honor of Alfred Landecker, making him the narrative driver behind the more fundamental change they sought. Far from an isolated act of corporate atonement, then, this was an attempt by the next generation to use lessons from their family heritage to build a more just future.
4. Leverage the family story as a source of competitive advantage.
For some family business entrepreneurs, the next venture can begin with a step back. So it was for British restaurateurs (and sisters) Helen and Lisa Tse, whose family heritage empowered their rise.
Their grandmother, Lily Kwok, had emigrated from Hong Kong in 1956 and settled in Manchester, where she and her daughter Mabel built one of Britain’s first Chinese restaurants. But the business eventually went bankrupt, the victim of racism and Chinese gangs.
The story might have ended there. Instead, Helen and Lisa picked up the threads of their family narrative and carried it forward. Abandoning successful professional careers, they established their own Manchester restaurant, Sweet Mandarin, in 2004. But the restaurant only took off when Helen published a best-selling memoir about her grandmother. With this narrative platform, the sisters branched out into other endeavors, like cookbooks and cookery classes, tied to their own life stories.
For the Tse sisters, family heritage proved to be a source of competitive advantage. By recovering an immigrant’s tale with universal appeal, they gained acceptance outside of their own ethnic communities. And by situating themselves in an entrepreneurial tradition spanning three generations, they created a sense of longevity that evoked quality and trustworthiness, even as they also innovated new products alongside recipes inherited from their grandmother.
Family legacy is not a monologue; it’s a dialogue, a collective story that belongs to the whole family. When families think of legacy in these terms, they empower younger generations to harness that story to their own purposes, drawing strength from their elders. Legacy, in short, becomes not a burden but a blessing — one that can help families sustain wealth and purpose long into the future.
This content was originally published here.