A new book, Circular Economy Principles for Family Business and Wealth Stewardship, has today been published by STEP, a global professional body that helps families plan for their futures.
In this new publication, authors Philip Marcovici, Kenneth T Goh and Iraj Ispahani pool their expertise to consider how circular economy principles apply to family business and wealth stewardship. They look at how wealth stewardship can provide a new approach to governance frameworks for wealth- and business-owning families.
Circularity, in broad terms, means both avoiding and finding value in ‘waste’ – not only of natural resources but also of the human resources within families. This includes family members not directly involved in a family business but who have a stake in the future and who need to support those in more active roles.
Such family members highlight the kind of paradoxes families face: should a family member work in the family business or be allowed (and encouraged) to pursue their own career? Are there ways to achieve this that add meaningful value to the family and its wealth and business interests? This book suggests the answer may not be ‘either/or’: a ‘both/and’ option could be a solution.
Philip Marcovici TEP, who is an author, speaker and expert on the responsible stewardship of wealth, said: ‘Family and business continuity is an inadequate goal for an ambitious wealth and business owning family. Families can enjoy more than just continuity – with the right focus they can regenerate and ignite new generations of family stewards and entrepreneurs to not only steward and continue, but to build and contribute.
‘Our thinking on family business and wealth owners applying circular economy principles to their governance frameworks is impacting the way in which families discuss their constitutions, trusts, partnerships and other governance, ownership and stewardship approaches.
As an example, a “revolving door” that allows family members to re-enter the family business can be an effective replacement for one-way exit procedures that might be more suitable to a non-family business arrangement than to a family seeking to regenerate their business and keep together for generations.’
Dr Kenneth T Goh, Assistant Professor of Strategic Management at Singapore Management University, said: “For wealth- and business-owning families, applying circularity principles involves embracing a paradox mindset – a perspective that is sensitive to the interdependencies rather than the conflicts between alternatives. This mindset can allow families to draw on the generative rather than the divisive potential of diversity and conflict to create and sustain their impact through generations.”
Iraj Ispahani, Chief Executive Officer of Ispahani Advisory, said: “Families must ensure that they themselves are sustainable. By adopting a circular approach wealth- and business-owning families can better inform and enhance their family governance structures and decision-making. Circularity is multi-faceted and can also be beneficial for family wellbeing and a family’s social and spiritual capital.”