The Serebrenik model: consolidating family business dynasties

From a very early age I was very curious about the way family business issues and situations were discussed and planned in the warmth of our social and family circles, especially within a nonacademic background to back it up. Ideas and concepts were exchanged about various cases, which would work out for some, but could not be applied to others. I also became aware that throughout the passing of time there were family enterprises and companies that went back to more than 50 generations, but also family businesses that have lasted more than 500 years and even upto 1,000 years. At this stage, it was a real wonder to me how these families were able to overcome crises of all sorts and inherent conflicts related to family systems. This led me to begin a new phase of study and research on business longevities. Patiently, I was able to understand, for example, Leon Tolstoy's Ana Karenina, specifically the first phase of the book alluding to happy families and the path they took in that direction, as well as to those who were unhappy and the cause of their outcomesmost challenging when analyzing the paths they took.

The impact that family businesses have on the development of regions, economies, unemployment rates, and countries, is quite enormous. The more the longevity of a business throughout time, the greater the impact on the progress of people, on competition, liberty, and the ability of a society to achieve its desired development and quality of life.

When considering the business family sector, academic models partially cover the dynamics behind them, focusing more on the day today problems experienced by family businesses, centering on the continuance from the first to the second generation, as well as from the second to the third, wrongly assuming that families are linear social systems. On the contrary, in the field of family business consulting one sole variable may have different reactions to the same stimulus at different moments of time. In other words, just as the scientist may apply heat and pressure to some molecules under a certain procedure to determine their reaction or behavior under one scientific model, one can likewise apply the same heat and pressure to the members of the same family unit and obtain different reactions.

From a very early age I was very curious about the way family business issues and situations were discussed and planned in the warmth of our social and family circles, especially within a nonacademic background to back it up. Ideas and concepts were exchanged about various cases, which would work out for some, but could not be applied to others. I also became aware that throughout the passing of time there were family enterprises and companies that went back to more than 50 generations, but also family businesses that have lasted more than 500 years and even upto 1,000 years. At this stage, it was a real wonder to me how these families were able to overcome crises of all sorts and inherent conflicts related to family systems. This led me to begin a new phase of study and research on business longevities. Patiently, I was able to understand, for example, Leon Tolstoy's Ana Karenina, specifically the first phase of the book alluding to happy families and the path they took in that direction, as well as to those who were unhappy and the cause of their outcomesmost challenging when analyzing the paths they took.

The impact that family businesses have on the development of regions, economies, unemployment rates, and countries, is quite enormous. The more the longevity of a business throughout time, the greater the impact on the progress of people, on competition, liberty, and the ability of a society to achieve its desired development and quality of life.

When considering the business family sector, academic models partially cover the dynamics behind them, focusing more on the day today problems experienced by family businesses, centering on the continuance from the first to the second generation, as well as from the second to the third, wrongly assuming that families are linear social systems. On the contrary, in the field of family business consulting one sole variable may have different reactions to the same stimulus at different moments of time. In other words, just as the scientist may apply heat and pressure to some molecules under a certain procedure to determine their reaction or behavior under one scientific model, one can likewise apply the same heat and pressure to the members of the same family unit and obtain different reactions.

If we begin to look at the differences between the field of action and the academic models proposed, which only achieve a very poor approximation in the field of advising family businesses, I decided to embark on the task of designing a more holistic model that would meet the particular needs of each family business in a more personalized and efficient manner in order to achieve more satisfactory results. I developed a systemic model after having gathered information on those businesses that have lasted longer and which are known in more than sixty countries and territories (Prof. T.Goto), bearing in mind also those dimensions of legacies that have been built and passed on from one generation to another (Prof. D.Jaffe).

Finally, in the year 2011 I designed a very powerful model that allowed us to approach cases on a linear basis, when needed, as well as in a nonlinear manner, when the solution requires more complex tools for unique cases, where the predetermined variables do not have a linear performance. At the same time, this model's purpose is to be able to intervene in a more Indepth way and professional way with those business families that we impact in a positive way.

The Serebrenik model allows us to see and to identify problems and to determine what are the challenges that family businesses confront in their pursuit of maintaining enduring patrimonies and enterprises for several generations and to create a greater awareness and opportunities in the development of greater knowledge concerning the longevity of family companies.

CAPITAL THAT MAKES UP WEALTH

The Spiritual Capital

This is perhaps the most important element of a family enterprise and that actually transcends the most. It is the key pillar and reason for maintaining the family unity and to understand its objective. Although this element may not always coincide with the supreme being or with a specific religion, it is related to values and higher causes that motivate the family to move ahead and achieve success. This dimension is so important that all the remaining dimensions of a family business are going to see themselves permeated and influenced by this objective.

Intellectual Capital

This is the knowledge that a family acquires over a period of time and that directly or indirectlyuses to empower all the other capitals. It consists of various aspects; from the growth and training of each of the children who will be the future owners of the business to the lessons learned during different situations and experiences in a particular juncture that actually make a business solid and lasting institution.

Social Capital

This refers to external relations that members may have with people or institutions that help develop the company. In other words, it is what currently is known as networking, the relations with the trade unions, as well with the competition, including suppliers, the political sector, the business world, and international companies, etc. All this for the sake of promoting entrepreneurship and the wellbeing of the business and its family members.

Human Capital

Families businesses begin with the expectation of creating firms that are long lasting and that support the children, the grandchildren, and all the forthcoming generations. In order for this to materialize, the founders need to prepare their descendants for the time when they are no longer alive. This preparation and training can be done in many different levels and in different areas, but it all depends on each individual. Nothing more guarantees the longevity of a family business than having the following generations having a healthy, focused, and peaceful relations with the other members of the family.

Emotional Capital

Without doubt one of the most difficult things is the ability to adapt to new trends, but once done it is one that provides a real guarantee of success when facing any challenge. This ability to adapt actually foresees situations that may arise and, hence, the need to create ways that will solveconflicts before there is a crisis. At the same time, it also facilitates the decisionmaking process when there is a need to come up with solutions.

Emotional Capital is what differentiates a functional from a nonfunctional family, as well as the ability to adapt to a new world and to different economic environments, as well as the ability to undertake appropriate changes at the right time.

Family Capital

Family Capital is represented by unity and the commitment among the family members. The objective of unity, in addition to being the dream of any family, is where criteria coincide when decisions are needed to be made and, of course, much needed in the development of a business. In other words, it becomes the shared family vision, which is reflected by the ability of a family to remain united and committed one to the other.

It is not easy to reach this point of harmony, but if worked out, with effort mechanisms and training it will be attained and thereby solve any sort of crisis that may arise. This could be through family counseling, protocols or family agreements, including taking trips from time to time where all the members share unforgettable moments that strengthen family ties.

Structural Capital

A good corporate business and family government is implemented through committed team members that carry out wise management of patrimony (networth). Having an appropriate and professional government leads to right decisions for the benefit of all, while it is promoting good communications among the members, which includes good and efficient strategic planning of each and everyone of the remaining dimensions.

Financial Capital

Financial Capital refers to all the goods and services which a family can count upon, such as the company itself, property, liquidity, etc. This promotes the understanding of adequate strategic patrimonies in order to generate impact over time, thereby overcoming the challenges and complexities that a family business may face.