Family businesses underestimate the importance of storytelling

For all its heartache, Covid-19 has brought a degree of intergenerational harmony to family offices. Zoom has helped, plus conversations at a family home used as an office. 

Dominik von Eynern, founder of Family Hippocampus, a think tank, says family members close ranks in a crisis because they perceive a threat to their wealth and status.

Companies spend billions seeking to reinforce the value of narratives that reinforce their brands. But family networks falter because families have not invested enough in the narratives which produce engagement

But the pandemic will surely pass and Eynern believes centrifugal forces will inevitably lead to fragmentation.

Eynern is a fifth-generation principal at a family business. He used to be a partner at Blu Family Office, a multi-family firm. Weary of finance, he turned his attention to human behaviour. 

He has learned that families cannot rely on constitutions to keep clans together.  Instead, Eynern believes families should pursue “narrative-embedded family governance” derived from an activity better known as storytelling.

In his best-seller Sapiens, Yuval Noah Harari says storytelling led to the development of human society.

“When it succeeds it gives immense power because it enables millions of strangers to co-operate and work towards common goals.”

Stories can breathe life into stock markets, legal systems, religion – and family values.  Success in telling them, for good or ill, helps dictators rise to power. San Francisco academic Bruce Wydick says people are incredibly good at learning from stories, but reluctant to go to the effort of interpreting data.

He recalls an experiment where would-be donors offered to donate $5 to Save the Children. Half were told the story of an impoverished girl in Mali and gave an average of $2.83. The rest received data on the impact of poverty but only donated $1.17.

Storytelling is so powerful, that lies and short cuts create the risk of narrative fallacies. Nassim Taleb points out we constantly fool ourselves by putting together flimsy narratives of the past and believe them to be true. 

You can hoist a statue in your estate as a monument to a family founder, but without an accompanying narrative of their achievements – and flaws – the statue’s essence evaporates. It becomes a statue, nothing more, says Zita Nikoletta Verbenyi, founding member of Family Hippocampus. 

Companies spend billions seeking to reinforce the value of narratives that reinforce their brands. But family networks falter because families have not invested enough in the narratives which produce engagement. 

Effort is also required to push back against false family narratives developed through unstructured gossip and malice. 

Eynern is emphatic that families seeking to achieve unity should avoid relying on constitutions: “We don’t sit on a train reflecting on a fantastic family constitution. But we do that with a good book that is somewhat self-relevant and evokes emotions.”

Different members of a family tend to recall different parts of a narrative. Eynern says: “They can all be teased out to create a narrative, an awareness of reality, to create a shared meaning.”  And this can include the voice of stakeholders.

Everyone’s narrative needs to be included because this drives the system, along with the actions of previous generations. Acts of philanthropy can reinforce a narrative, but should not be an end in themselves. Likewise, war stories may now require a different approach.

“Narratives must be written in an entertaining way. They should be an account people can enjoy reading.  If a younger family member starts a tech venture, that needs to be added. Narratives need to be kept alive, to be continually reinterpreted to stay relevant,” says Verbenyi. 

“A friend of mine and his family have been in fine mechanics forever.  And you often find that the narrative of a family business means you do everything for it. But my friends decided to sell the business and were able to turn their narrative into a message of family cohesion.”

Eynern says he can advise on how the stories which make up a family narrative, including contributions from stakeholders, should be structured and edited.  Over time, it can become a podcast or video. 

But it should never amount to a vanity publication to keep the principal happy. It is all about a tool of governance, capable of restoring the value to family values.