The author of this article argues that family culture, communication styles, and learning opportunities can be designed to cultivate and encourage entrepreneurship. 

The task of fostering entrepreneurship in a family setting – not just for intergenerational business and wealth transfer purposes – is an important and ever-present one in this sector. Pictet, a Swiss private bank dating back to 1805, which retains its family culture, is well placed to opine on this subject. A word that comes up several times in this article is “mindset,” and we will shortly see why. 

The author of this guest article, Honora Ducatillon, is head of family advisory, Pictet Wealth Management. The editors are pleased to share this content, and hope it stirs debate. Please comment and email tom.burroughes@wealthbriefing.com. The usual caveats apply to views of guest contributors.

Cultivating entrepreneurship in a family environment
Entrepreneurs often talk about the influence of parents or other significant figures in developing their “can do” mindset. Cultural transmission within families – like many other learned behaviours – comes from observing close family members, hearing relatives' life stories and picking up the habitual sayings and mannerisms of the family unit.

The opportunity to watch the activities, approaches and mindset of a trusted adult is the next best thing to firsthand experience. Understanding how work is integrated into their lives, how they deal with challenges, and where they find energy to pursue their passion can positively, or negatively, influence the entrepreneurial intentions of younger family members.

Storytelling is another powerful tool for cultivating entrepreneurship. Research suggests that the more children know about their family’s history, the stronger their sense of control over their lives and the higher their self-esteem. (i) This is linked to the idea that a strong sense of "intergenerational self " builds a feeling of belonging to something bigger than themselves. The most helpful narratives are the ones with ups and downs normalising setbacks and showcasing resilience.

Communication and parenting styles also influence important aspects of the entrepreneurial mindset – for instance, the level of creativity and, the orientation towards action. Every interaction that takes place within the home significantly influences one’s perspectives and mindset. As the saying goes “values are caught, not taught”.

Leveraging the family ecosystem for experimentation
To further foster entrepreneurship within the family, many see value in leveraging the family ecosystem to create a safe space for experimentation. Families are increasingly recognising that entrepreneurship requires not only a mindset but also the acquisition of specific skills, frameworks, and tools. Practical experiences in business, investment, or impact fields can provide valuable learning opportunities for family members.

Some families include a sort of opportunity bucket in their family investment strategy, which may be referred to as a ‘family bank,’ a ‘family venture fund,’ or a ‘rising generation development fund.’ This can serve as a tool for intra-family financing, providing seed capital for new business ventures or investment capital for testing new strategies.

The aim is to support the entrepreneurial development of the rising generation of family members while safeguarding the core family business and investments.

Families can also use philanthropy and impact investing to cultivate entrepreneurship within their rising generation.

An example of where this worked well was in a family foundation focusing on tackling biodiversity loss across Europe. The foundation trialled a junior board, to engage younger family members in its work.

Each member was put in charge of a sum of capital to put towards the cause as they saw fit, with a requirement to report back at the end of the year. The process generated innovative ideas and approaches. More importantly, it ignited a confidence in the younger generation to take calculated risks, explore and test new ideas, and it gave them the courage to learn from failure – all crucial attributes of successful entrepreneurs.

In the family ecosystem, failure should be understood as part of the learning process, and successes, regardless of their scale, should be celebrated. Creating a safe space for experimentation within the family nurtures that entrepreneurial spirit, where individuals are encouraged to take risks, learn from their experiences, and continuously innovate.

Pulling it all together
By embracing intergenerational cultural transmission, effective communication styles, and providing opportunities for experimentation, families can create an environment that fosters, cultivates and encourages entrepreneurship.

This approach empowers the rising generation to develop the mindset, skills, and resilience needed to succeed as entrepreneurs, while also preserving the core values and legacy of the family.

Footnote
i,  The Stories That Bind Us, Bruce Feiler, New York Times, 15 March 2013.