Family Business Audiocast | Episode 41 | Octavian Pilati

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About Our Guest:

Octavian Pilati is a speaker, writer, and advisor specializing in succession planning, crisis management, and family governance. Born into a historic Austrian business family, he was thrust into leadership at 25 after a major fraud crisis, reshaping his understanding of resilience and legacy. Drawing from his experience, Octavian now advises families on governance, risk mitigation, and leadership transitions. He has spoken at global forums like Prestel & Partner and Campden Wealth, contributed to Horizons Magazine, and shared his story in Harvard Business School courses. Octavian is dedicated to helping NextGen leaders build stronger, future-ready family enterprises.

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[Transcript]

R. Adam Smith: Welcome to the Family Business Audiocast on LinkedIn. I'm Adam Smith, creator of this podcast series and a warm thank you to our live audience on LinkedIn today and for those listening in the future as well. Today, I am very pleased to host my friend and former event guest, Octavian Pilati. Octavian, it's great to have you here today. Thank you so much for joining.

Octavian Pilati: My pleasure to be here. Thank you for the invitation.

R. Adam Smith: Octavian Pilati is a strategist, investor, and thought leader globally in succession planning, crisis management, and family business governance. And he has a very unique deep understanding of the psychological and structural complexities of multigenerational wealth. Octavian was born into an Austrian family with an aristocratic heritage spanning over a millennium. And he was thrust into leadership when his family's central business faced a devastating crisis, forcing him to navigate some high stakes decision-making and also intergenerational conflict in our area. This experience shaped his pragmatic approach to governance, resilience, and personal and professional reinvention and family enterprises. And now with his work as a speaker, advisor, and founder of his own firm, he specializes in a range of activities, both leadership and investing, bringing a very unique lens to legacy preservation, and also talks and leads about wealth transitions and leadership transformation. Octavian is an active voice in the global family business ecosystem, contributing to the Harvard Business School world through courses, international conferences, and various elite think tanks, where he shares some of these hard insights on navigating power, influence and ownership in high net worth family enterprises. There's only a lot to unpack there Octavian. So tell us about what you're up to these days and a bit of your business, and then we'll jump in.

Octavian Pilati: What's the newest thing that is upcoming right now is that I've launched my own consultancy brand called the Anti-Fragile Family, where I'm taking my experience more into a consultancy role than I did previously. The last few years, I was mostly doing speaking and teaching and writing, and I've always been getting consulting requests, which I denied. But now I've decided that that's something new to add to my portfolio. Otherwise I'm still, you know, an investor managing my own wealth that comes from the family. So I'm trying to combine those two things essentially.

R. Adam Smith: Lovely. Before we jump into some more of our core conversation, can you also share a bit about your leadership and your ongoing newsletter and tell us about when you started that and what your inspiration was?

Octavian Pilati: So I have my ongoing newsletter, Octavian's Daily Thought, which comes more from a journaling practice that I have. There's several questions that I will ask myself in the evening, like what went well today? What am I grateful for today? Pretty standard stuff. And one of them is, what is one thing that I can learn from today? And about, I think, three years ago, I decided to take this one question online and create sort of a newsletter from that. I hope it inspires some people. It helps me a lot to take something from every day to grow with no matter how mundane or how terrible or how great the day has been. I also write some longer blog articles, which is something I started during COVID. I had a lot of time suddenly on my hands. I've always wanted to write a blog and that's basically was the time when I started with that.

R. Adam Smith: I love that. I really enjoy it. And I just want to give a plug for that. People can find his thoughts and writings on, of course, find it through LinkedIn or through the web, but also on Substack, there's Octavian's daily thought by Octavian Graf-Pilati. Okay, good. I'm glad we covered that. It's very inspirational. So your journey into the family business really was not traditional, of course. You sort of stepped into it in an inflection point rather than a traditional succession. So how does that shape your views on next gen leadership? There's a lot going on in the community and of course in the world in next gen, given the massive wealth transfer and the transition of large operating companies into G2 and children. So tell us a bit about your views on that. And there's also the entitlement approach versus the merit approach.

Octavian Pilati: So yeah, as you mentioned, my, I kind of fell into succession. It wasn't planned in any way, at least not at the time and the way it happened. So that brings me straight away to the merit based versus entitlement based approach, to be honest, I was probably not the most qualified to take over leadership. I was the most motivated and that was the main reason why it ended up in my labs. But I initially had no clue what I was doing. And that is sometimes the case in transition, especially when it happens suddenly. Entitlement, I just, it's just this word that I generally often have a problem with because it's used a lot by the wealth management and law industry to scare families. You know, it's been oversold. And it has its place in leadership because in the end, a next gen, they have skin in the game. They have a legacy to follow. They have history that motivates them. They might even have a share in the company. So there's a different motivation to leadership for them than there is for an external person. Not always the case. And of course, some next gens have this feeling of entitlement that they get to have a leadership role, no matter how unqualified there. So it's getting the balance right between being qualified to do the task versus just having the motivation.

R. Adam Smith: On the audio cast, I've talked a lot with global family business and family firm leaders, as you know, about entrepreneurship, about preparation, leveraging internal and external advice and governance and boards and council and consultants and so on. Just talk a bit more about that learning side, given that you have multiple. Tell us about your family and the number of generations and then if you can just share a little bit about your approach to learning, let's say, internally on the fly versus learning externally in the world and gaining cognitive knowledge that's outside of the workplace.

Octavian Pilati: Um, yeah, the generation question, just to get that out of the way. I'm not entirely sure. So we had our first family member from the family side where my wealth or our wealth comes from. It's been around the year 1000. That's the first documentation we have found. So I'm like generation 30 something. When it comes to the education piece in families, it starts at year zero. The moment a child is born is when education kicks off and that is where a family has a lot of control over how qualified the family members will be to take over a leadership role if they wish to do so. So that is something I go on about a lot and there is, as you mentioned, internal learning versus external learning. There are certain things that they can only learn internally from other family members. And having some sort of structure around that is terribly important. Again, some external learning like going to do a good education, maybe working at a different firm from another family or in a corporate, those are experiences that add knowledge, experience and flavor to any family member. And maybe exploring a different industry to where the family business or the family operates in is also tremendously valuable. So it's again, it's both have their place, both are very important and there needs to be the right sort of balance.

R. Adam Smith: I find from my experiences advising single family offices on large investments or their operating companies or some massive transitions that the window situations occur. It's not necessarily a crisis, but a major inflection point that the relationship between ongoing communication and vulnerability and mechanisms for that openness, that transparency is super important. And if that has not been occurring over years, at least through the parents and the children or at least some sort of board charter or board level, like it becomes quite a shock. So certainly you have some thoughts on that, what are, let's say, let's stay on this topic for a moment. Internally, what are some of the best mechanisms for that in your view? And now you're consulting on this, what are some of the best mechanisms internally for that ongoing communication? Let's say sit downs every month, getaways, strategic sessions, some sort of thought leadership camps or more structured governance mechanisms. And then externally, let's say there's the children going to business school, but then again, business school is not the only answer. There's also thought leadership out there in the world that's beyond the advanced education circuit. So let's talk a bit more about that and that knowledge, that knowledge gaining and transfer.

Octavian Pilati: So to your first question with that openness and transparency, again, that's something that starts really early. And it's often an issue in families because the main ingredient to create this trust between family members, particularly parents and children, is time. The less time you spend with each other, and this starts early when you're always in the office, never at home with your kids, you will not have the trust level that, let's say, society expects of a child and parent relationship. And that can be seen in the boardroom, particularly when there hasn't been much time spent, you need to view it more as a work relationship and try and think of it from that perspective. It's uncomfortable, but it will force you to question the way you communicate with each other and say, okay, did I say everything that I need to be saying? Did I pass on all the information? Because sometimes we think that certain information doesn't have to be communicated because it's obvious, but often it's not. So that is something that starts early on. And then as you mentioned some things like have regular sit downs with each other. Some families have a family day or several, you know, family retreats where family can meet together. You can book workshops on all sorts of things like how to communicate well, how to have productive conflict. So some families forget that they put a lot of work and resources into their business activities, but the same amount, maybe even more needs to be put into the family relationships as well. And that is how you can balance this out. And then when let's say crisis situation or something, an inflection point, as you said, comes up, the family is well settled to deal with it together and to be a unit that can tackle the issue rather than start squabbling with each other when it's really not the right time.

R. Adam Smith: And in this digital post-COVID world, how essential is it to do a lot of this in person?

Octavian Pilati: Oh, highly essential. Digital does not replace in-person, but it's the next best thing. So instead of not doing anything, it's better to do something digital. So it's a tool to help you, but you can't replace in-person meetings with it.

R. Adam Smith: Absolutely. Okay, you spoke about transitions for large family enterprises, buying a company, selling a company, transitioning, needing liquidity, major differences. Talk about the silent code and what are some of the other strategies that could be used?

Octavian Pilati: Well, as in business culture, every family has their own culture that has grown and developed. Sometimes, informally, sometimes some rules with the constitution have been put in place to formalize it. It's a bit difficult to generalize here because every family, as I said, is very different depends on the history on where they work and how they work with each other. If I had to choose something, there's probably two silent quotes that come up a lot is one is if a family has done something a certain way a lot or over a long period of time, there's this. No one questions it. Like we've always done it this way. We'll continue to do it this way, but times change. So this is sometimes something very valid for next-gen to question, to say, okay. Yes, we've done it always this way, but is this still applicable to today? That's one. And the second one is, so we talk a lot about in the space of succession, about merit of the next generation, are they competent to take over? But you need to, and this is sometimes very tough for the generation that is now in charge to ask the question, are you still competent to lead? So with age, we degenerate our brain, stop working as quickly. The times change. We might not understand new market dynamics, new businesses. The change can mean that with time you grow incompetent and it is totally normal and it's not something to be ashamed of and then this is also something that's a silent code that often the older generation there's the code that they need to be respected and that they tend to be right and again that's also something that needs to be questioned in due time.

R. Adam Smith: Sort of raises this very complex issue of the right mix of intellectual capital around the family enterprise, internal, external, founders, non-founders, owners, non-owners, board members, independent directors, consultants. It's a very complex thing that I see is increasingly complex and tricky. Putting money and time aside, as you say, time is very important because time gives you time. Time gives you that investment resource to learn and share. But this issue of intellectual capital around the larger family offices and family enterprises I think is super important and very complex and there's no right answer, but it does speak to, I think, an opportunity for these families to respect that need for intellectual capital, not just for preparation, but for learning and sharing, and perhaps take some of that burden off of the internal coaching and bring in external voices. I think the more that I have talked about this the last couple of years, especially on the audio cast, I see there is a role for these mini think tanks and super elite advisors around the larger family offices. What do you think?

Octavian Pilati: So a family doesn't have all the answers and nor does a family office. So there's a lot of external advisors who specialize in different topics and they can bring a lot of value to the equation. There's think tanks, for example, family hippocampus where one of the directors, that's something we do with a think tank and we want to help families exchange with each other on mostly family dynamic topics, but there's others out there on different topics, venture capital, private equity, you name it, there's some sort of think tank that you can probably reach out to and get some on the edge information. There's universities that do a lot of research. You can get great information there. And then of course consultants. So you will not be able to have all the competence in house for whatever you're dealing with, be it a big deal, an M&A merger or a crisis or a family issue. But there is people out there who know what they're doing, who are doing it incredibly well, and who will bring the value to you if you engage them.

R. Adam Smith: Absolutely. And then there's also the different tiers of that knowledge, right? There's informal advisors that are more tactical. There's formal advisors that are engaged with retainers and independent director seats and trustees. Then there's the actual board of directors. Then there's the expert lawyers. And there's the family office super consulting firms. And then there's the think tanks, as you said, there's the advanced education. There's all the major white papers from the, the Ernst & Youngs, et cetera, out there. So, okay, you've been vocal about the tensions between ownership and management. So there's the owners of a big family company, right? Could be G1 or not. Then there's the actual management of that company. And then at some point, putting aside the human capital and the hiring and firing and the culture, but there's often the, let's say, the big moment, the inflection point to sell the company. maybe talk about some of those more complex elements of that preparation and decision making around the control of that business and how, let's not talk about the transition of like the CEO role, but more about what I've been part of over the years of helping to prepare large family businesses to sell. Talk about that interplay between the owners and the management in preparing for a sale or let's say a merger. What are some of your thoughts on that preparation?

Octavian Pilati: Thoughts on the preparation for the sale. So first of all, it can be a tricky one because it's not always all everybody's interests and agendas that align in a sale. So your CEO might be very happy in how things are or not. Depending on that, they might be for sale or against it. Sometimes you need to be careful with your advisors because they earn more if you sell the business than if they stay on advising you on a day to day basis. So there's all these complexities around this topic that you need to be a bit very off. So where would I say you start in the preparation? You would, I say you should start with in the family to make sure that the family, the owners are aligned on a merger or on a sale. So it has to be in the family strategic interest to do so. Also, there comes another discussion into that with the preparation of the sale, particularly if it's a family business or, or legacy asset, that you should look at this from a business family viewpoint, less a family business perspective. What do I mean by that? I mean that a business family can have and start different businesses and sell them again. And that is a bit more of a liberating view and makes it easier for you to decide what's the right move to make right now. Sell the business, do something else with the money, keep it going. Those are like the kind of questions that need to be answered internally in the family. And it takes time and should be prepared well. You don't need one of the shareholders or the family members to go rogue when you're trying to sell that, that is not helpful at all. And sometimes you have to sell quickly. You have to make the decision quickly. That brings us back to something we mentioned earlier, family spending time with each other and with time comes trust the more trust you have with each other, the faster you can make decisions and the faster you can move on a deal.

R. Adam Smith: That's good. Thank you for that. I would also add, if the main family asset is not urgent, needed to be urgently sold, then it's very important to take your time and to, as you say, after the family is aligned, is to really take your time and engage experts, both your bankers and your lawyers and then your accountants, take your time and really do it right. The additional time and cost to prepare for a sale of this super important asset, both emotionally and financially, is very important, as is the friction and pain and frustrations involved later, right? If it doesn't go well, if something is messy, it's not well prepared enough, and something happens, the sale doesn't go through, there's a lot of expectations there, a lot of emotional, financial and organizational preparation. So one of the things I think that is pervasive in M&A and in private company transactions is either a lack of knowledge or just kind of rushing ahead to get it going without that preparation. And maybe you've seen that or you will sort of help consult some families around that balance. You've seen some messy situations and it's great that you're offering to share some of your wisdom with the world, not just with your powerful legacy, but also with your own learnings. And you've talked about how some stories just don't have happy endings. So let's finish up the podcast talking about some more inspirational themes about resilience and reinvention. Maybe share some of your own the ways in which you have learned resilience or you conduct resilience and coach families and clients and friends around resilience. What does that mean to you? And then also I'd love to hear like a story about a family enterprise, maybe in Europe, a brand or a company that inspires you, that does a really good job with their family enterprise, with their culture and their transition and their family values, I've left a pure example of that, that inspired you.

Octavian Pilati: Okay. So in respect to what you mentioned, not all stories have a happy ending. That that's just life. And something that goes with that is particularly when you're talking about, you know, family business sales and so on, is that not every family is meant to stay together and it's okay. Sometimes separating and also doing so financially is the better move than forcing your family to stay together. And the only reason becomes the finances. That can make some really toxic family dynamics for generations. So be wary of that. That's one thing to go along with that. And to the resilience piece, I mean, to a certain degree, it's training. It's, I mean, the next step to resilience is antivirgility. And it's, it's like you go to the gym to become stronger. So you go, you train, you rip up your muscles, it heals and you're strong afterwards than you were before. And it's a bit similar with, with getting a family to be resilient. It's not just this magical thing that suddenly happens. People need to experience hardship in the right amounts. And they grow with it. So if you have a next gen who's never had to worry about anything in their life, a minute problem is huge for them. But if you let them make their experiences, if you know, you can give them in a secure setting where say, okay, let them, let them, let them try startup, see how it goes and that that's laid on or early on have them do some sort of competitive sport, maybe that's a good one to become resilient. So those are like a few, a few little things you can do. It's practice more than anything really. And the more practice you have at dealing with hardship and coming out of it the other way, the bigger the hardship can get that you will be able to deal with. So that's, I think that's at the essence.

R. Adam Smith: That's a beautiful way to say it as to both as a parent and as a leader is to think about allowing for our times, imperfections and, you know, challenges to exist without judgment and without filtering and to, of course, coach and provide a supportive ecosystem in a company or family to provide collaboration and support, teamwork, but then I think from a generational perspective, especially for the millennial generation and now Gen Z, is that there is, it seems to me there is a focus more on lifestyle and a little bit less on resilience and there's a desire to avoid conflict and to sort of to look at life and relationships and work a bit more transactional. I like this approach here. You're talking about resilience. There's a quote from Margaret Thatcher I think about sometimes says that you may have to fight a battle more than once to win it. And I hope that the Gen Zs who are different than millennials and tend to be a little more aligned with my generation, they tend to be a little bit less transactional and think looking more at classic values than the millennial generation. And I also feel like social media and the quick movement of information and the less loyalty to a corporate job or even education and the reliance and trust of those institutions is waning a bit. Not sure exactly why that is, but I don't think that will, it serves the younger generation so well as it did our generation because then they're more on their own. And they may not be as willing to be as resilient or push or embrace those challenges you're talking about. What do you, we'll wrap up there, but what do you think of that generation, the generational differences relative to this team of resilience and being willing to, to indoor hardship or things that are imperfect and be willing to go through them as opposed to skipping them over?

Octavian Pilati: Well, it, it, again, I said it before, but it starts in year zero. So that Gen Z has a certain view of the world and a certain mindset, they didn't just have this idea suddenly in a whole generation that this is how the world is. Children, they learn by observing mostly their parents, caretakers, siblings, and then they imitate. And when they get a little older, they people keep observing and then you see certain things and you're like, and sometimes, and this is what you see with Gen Z is they observe certain behaviors in their parents and then they decide that's not going to be me. So while let's say the baby boomer generation could accumulate a certain amount of wealth by just working hard and saving and investing it smartly, since most currencies, particularly US dollar, aren't pegged to gold anymore. If you look at that, the salary growth compared to asset growth has decoupled. Gen Z doesn't have that option so easily anymore. And they have watched their parents, which would be Gen X, slave away at corporate jobs, but not making the same money than the baby boomer generation. So they learned that this is not the way to make money. And if I can't make money, I want to have a nice life. That is the lesson that they have been taught. And that is how they are basically going through life. Will it serve them? We shall see. I'm not sure. And people Jen said to a different, they come usually from entrepreneurial families because they have, they've experienced something different. They've experienced a family that is working hard and smart on a business idea and makes wealth that way. So they're like, okay, do your own business, work at it, give it a hard shot. And that's how you get somewhere. So that's probably the difference between Gen Z that you described that are, that have similar values, the ones from entrepreneurial families versus the Gen Zs who come from families that where they watch their families, where they watch their parents slave away at a corporate job, you have some other dynamics. Helicopter parents is also something that has taken a certain standing and you have young people who have never, it goes back to the conversation we had before, who've never been allowed to make mistakes and to suffer the consequences of their own mistakes. So if you as a parent fix everything for them, they don't learn how to fix their own mistakes. They don't learn how to go through hardship. And they will not have a tolerance for any risk taking. They will not know how to make hard decisions.

R. Adam Smith: Yeah. You're not creating a generation of leaders to follow you. And my other question, any single, I'm sure you have numerous ones, but if you were to pick a family enterprise, a large brand in let's say Europe, give us an idea of a firm, a family legacy that inspires you. That's a good question. I've already thought a little bit about that when you mentioned it before. I know you're picky and very discerning, but Europe has more longstanding legacy families than we do, and it's inspiring. Of course, a lot of them are messy, they're not perfect, and they're stories, but there are more of them. And I think it is important for newer societies, especially in the US and Canada, Latin America, Africa, Australia, I think it's important to look at these experiences at longer standing societies, Europe in particular. I just wanted to see which one stands out for you and what are some of those values that are relevant in your decision and your choice of that family.

Octavian Pilati: If I had to pick one off the top of my head right now, I think I would actually go with the Liechtenstein family. It's not a typical family business that you would kind of choose because they also have a country that they are in charge of. They have a bank, they have several businesses, they've been in rulership and business for a very long time and they still are and they citizens of Liechtenstein vote them. So it's not that it's a monarchy where they have to be in power, but they get voted in. And I think they, so far citizens always choose the representative of the family to be, you know, the representative of the country. So that's, that's a very inspiring story. And they, you know, I know some of the family I've, I think, yeah, I've been to school with some of the family and it's the way they portray themselves outwards, the way they stay, they structure everything in the family and stick together. I think they're doing a phenomenal job. And there's a lot to take away from that.

R. Adam Smith: It's a great example because the ability for that family to perpetuate and continue in that sense of democracy and capitalism, the complexity of the world for generations combined with the related complexities of the society, of the country, of the family business, of the assets, of capitalism, of political swings. Protecting that beautiful legacy is very impressive and it's very unusual, especially in the post-World War II era. So it's a great example. I think it's impressive because of that continuity within the complexity of the world, of the modern world. So it's a great example not just families can think about in terms of the determination for continuity, but also governments can also look at certain examples of governments and say, what can we be doing better as a government, not just as a company? So thank you for that. So I think we'll wrap up. And if you could just share a bit about how people can best reach you and what you would like them to reach you about with them in the family enterprise world.

Octavian Pilati: Yeah, the easiest way to reach me is to, you can come in my LinkedIn or you go into my webpage, www.theantifragilefamily.com, written together. You can reach out there to me, find my resources. What I would like to be reached out to for is, so I'm very passionate about helping families create an anti-fragile family. So a family that together, can face any hardship and become stronger. So that working together and being a family is actually fun and not just something to stress on about. So that is essentially what I would like to be reached out to for.

R. Adam Smith: I love that. I hope everyone that needs that will think about that. And it's a good point to look beyond the grind and the complexities and challenges that incur and evolve within these complex businesses and family enterprises and enjoy it as well. Enjoy your family, enjoy the journey, enjoy building and protecting, enhancing legacy. That's a great reminder. I would like to thank our Family Business AudiCast attendees today and our esteemed guest, Octavian Pilati. Thank you so much for joining today. This is Adam Smith signing off. Stay tuned for the next episode of the Family Business Audio Cast, available live on LinkedIn, YouTube, and X.

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