By Prof. Enrique Soriano
In the previous article, we explored the distinction between ownership and stewardship, emphasizing why a stewardship mindset is essential for ensuring the long-term success of family businesses. One compelling example of this is the Japanese concept of stewardship, where responsibility for the business goes beyond mere ownership.
A notable practice within this framework is Mukoyoshi (discussed in detail in my July article), where non-family members are sometimes adopted to ensure the right leader is in place, regardless of bloodline. This practice highlights Japan’s belief in stewardship over inheritance, prioritizing the business’s longevity and success over personal entitlement. The focus is on finding the most capable leader—whether inside or outside the family—to ensure the business’s survival and prosperity.
This approach offers valuable insights for family businesses globally, shifting the focus from leadership as a birthright to leadership based on capability and stewardship.
The Path Forward
The shift from ownership to stewardship is not just about passing control—it’s about passing on a legacy. While ownership often prioritizes short-term gains and maintaining personal control, stewardship is about ensuring the business’s long-term success and the well-being of future generations. By adopting this mindset, family business leaders can create a foundation for sustained growth and prosperity, ensuring their legacy endures beyond their tenure.
As this series continues, we will provide strategies and insights to help family businesses transition from ownership to stewardship, drawing from global practices like the Japanese model. For instance, Toraya, a 500-year-old confectionery business, has thrived across 17 generations by balancing tradition with innovation and emphasizing stewardship over ownership. This commitment to stewardship has helped Toraya maintain continuity for centuries, while staying true to its core values.
The Japanese concept of stewardship teaches family businesses worldwide the importance of placing the business’s legacy and societal contributions above personal control and ambition.
Why a Stewardship Mindset is Crucial
Family businesses that embrace stewardship are often more resilient during generational transitions. Without stewardship, businesses frequently encounter internal conflicts, weakened leadership, and stagnation. By adopting a stewardship mindset, families can ensure that their businesses continue to grow while remaining aligned with the values that initially made them successful.
In this series, we will explore key topics with valuable takeaways, including:
- Developing Leaders, Not Just Successors: How to cultivate leadership within the family to ensure the next generation is prepared to take on meaningful roles in the business.
- Creating a Culture of Stewardship: Practical steps to instill a stewardship mindset in your family and business, ensuring long-term thinking and values-based leadership.
- The Role of Governance in Stewardship: How family governance structures, such as constitutions, councils, and boards, can support a culture of stewardship.
- Managing Family Expectations: Navigating the challenges that arise when shifting from an ownership mindset to a stewardship one, particularly during generational transitions.
- Sustaining Family Values Through Stewardship: Ensuring family values remain intact as the business grows, while adapting to new circumstances and evolving market conditions.
The Journey Ahead
In upcoming articles, we will delve deeper into these principles, providing guidance for family businesses on adopting a stewardship mindset that secures their long-term success. By making stewardship the foundation of their approach, family enterprises can safeguard their future, honor the legacy of those who came before, and pass on a thriving, values-driven business to future generations.
