Family Business Audiocast | Episode 5 | Christina Wing | Wingspan Legacy Partners

Available to Listen Now On: Amazon Music, Spotify, Apple Podcasts, Pandora, iHeart, YouTube

New Episodes Live: Subscribe to receive exclusive invitations to upcoming episodes of the Family Business Audiocast. Join us as we explore the pivotal strategies and stories behind successful family enterprises. Click to Follow on LinkedIn.

—————————————————

About Our Guest:

Christina Wing co-founded Wingspan Legacy Partners, an advisory firm aimed at assisting enterprising families in leveraging their business dynamics and philanthropic efforts. She is also a faculty member at Harvard Business School, specializing in Technology and Operations Management. Her course, 'Demystifying the Family Enterprise,' explores family dynamics and operational strategies. In addition to her teaching role, she chairs the executive education program Families in Business and presents internationally on related topics. She emphasizes the significant societal impact families can have when guided correctly.

—————————————————

[Transcript]

R. Adam Smith: Welcome to the Family Business Audio Cast on LinkedIn. I'm R. Adam Smith, creator of this audio cast series.

I've been an entrepreneur, investment banker, and board leader for over 25 years. Today we have over 100 registrants for this event. Thank you for joining. Family business is a passion of mine, having grown up in a family of entrepreneurs and engaged in a wide range of dialogues in business with fascinating family enterprises around the globe for two decades. I founded the Family Business Audio Cast to provide a valuable platform for listeners to hear from veterans, academics, and leaders like today in family-owned enterprises and family offices. Whether you're a seasoned business leader or a billionaire or building a family office, these conversations are sure to be enlightening.

Today we have a special episode focusing on the interactions and intersections between family dynamics, business operations, wealth, philanthropy, and legacy. Family business is a subject close to my heart and I'm excited to delve into these topics with our esteemed guest.

Today we welcome Christina Wing. Christina, great to have you today.

Christina Wing: Thank you. Good to be here.

R. Adam Smith: So briefly on Christina, she's a founder of Wingspan Legacy Partners and a faculty member at Harvard Business School. Christina Wing is the founder of the firm dedicated to helping founders and families navigate the intersections between family business dynamics, also operations, wealth management, and as we know, to philanthropy and ultimately the legacy of the family business. Her belief in family's ability to affect societal change and become business leaders has made her a very respected figure in the field. As a faculty member at Harvard Business School, Christina focuses her research primarily on family enterprises, you can see. She created a course titled, “Demystifying Families in Business”, which covers various aspects of the dynamics and the office and legacy opportunities for the family. And her expertise extends in teaching as well, including those in partnership with the Young Presidents Organization. Before Wingspan, Christina was CEO, also a single-family office before they began her career at Golden Sachs. We're thrilled to have you join us today. So let's dive in. Yeah, thank you for joining today. You have such a tremendous background in this world for many aspects. Tell us a bit about Legacy and then we'll dive into some thoughts during the 30 minutes.

Christina Wing: Great. Well, I also share a huge passion for this space. I came from a family business, which would be a founder family business. My father was a serial entrepreneur, and I believe if some of the family dynamics that we now talk about had been talked about when I was considering joining my family business, we would have created a family business that had legacy. Instead, unfortunately at my father's passing, we sold the family business. And I regret that frequently, because I believe that families in business have an ability to affect society in such a meaningful way. But to get to legacy, legacy is individual and joint. You know, individual legacy, I hope my individual legacy is what my children end up doing. And for that part, many of my students. My business legacy is something very different. And with families, you have to take into account the individual legacy and the joint legacy. And a joint legacy for a family would be keeping the business together and the family together. And that could be done through an operating company. It can also be done through the business of a family office. And we see around the world, many families create extensive amounts of jobs and give locally and globally. Their legacy is to not only affect change in the areas they live, but globally. And since families can take a longer time horizon in what they do, many of them didn't lay people off during COVID. Many of them gave more than they ever have given. Some families even borrow money to give more to make sure that their communities not only survive, but thrive. And so the legacy that can be created through families is unparalleled. And we need families to learn how to work together, stay together, to contribute. And so that's my passion here.
R. Adam Smith: That's wonderful. And families also have the benefit of being independent and not being limited by the fiduciary duties of an institutional or an asset management investing firm. I think Legacy is very, Wingspan is a very interesting firm because you have Legacy in the name and obviously you talk about family enterprises being more than just a business and talk about their opportunity to create societal change. So it seems like you partner with the founders and the families in terms of them as individuals also as an organization, and then you talk about designing and preserving the legacy. So, talk about that briefly.
Christina Wing: Well, I mean, to design a legacy, you have to understand first the individual differences. You know, in families, there's so many past hurts and misunderstandings, and a lot of times expectations and communication patterns that make it really hard to get to the crux of the matter. And so in designing things for families, we first have to understand their history. I mean, it could be something that happened, you know, between two 10-year-old cousins that is now being carried out into some kind of rivalry later in the business. So we start with the individual differences, and then we move them towards being aware that they have shared values. What are the shared values in their behaviors? And then how do we take advantage of the strengths in the family? And the weaknesses mitigate them through communication, empathy, kindness. And that sounds so easy, but families are, families and business are like other families. They don't like to talk about certain things. So things get brushed under the rug and unfortunately you can't take that to work with you. And so when you're mixing family with money, which is what business is, you have to first start with breaking down what happened in the past, seeing how you can prevent it in the future, and most importantly, putting governance in place that allows for all the entities to thrive, meaning the family as a family, the business as a business, and the wealth and whatever giving strategy you have. But that takes a lot of coordination and communication, and a lot
of egos have to be checked at the door.

R. Adam Smith: Right. Now, what are some of these strategies that the family business or office, and they can be distinct, we can talk about that perhaps later; the family business versus the family office, but how do they employ and leverage their unique position to become global leaders and we see this very is a very important topic. With the g1 passing down to g2 and g3 so talk about that opportunity to become a global leader in their space to other families or in their industries?

Christina Wing: Well, I mean, the number one key to success in becoming that is succession planning. And so, you know, succession planning frequently starts at the middle or the bottom, but the succession planning really has to start at the top. So the person in the role of leadership has to understand that there has to be succession planning. And I always tell people, they ask, when should I start succession planning? The minute you're in a job, you should always be thinking of, what are the key positions in my organization? How do we develop good successors? And most importantly, how do we understand that sometimes the succession planning will be to another family member, but often it will be to a non-family member. And how do we bring them in and have the awareness that just because a family created the business doesn't mean the family is best suited to run it in infinity. There can be people with greater talent outside the family. So to become a global leader, there's a difference between ownership and operating. And operating is nuts and bolts, getting things done, putting all stakeholders ahead of yourself, which means employees, customers, society, other shareholders, because many businesses have L-TIP programs or some other program, and then the family. So the families that succeed in this understand stakeholder responsibility and they build organizations that will outlast them.

R. Adam Smith: You're talking about the new generation. I think maybe we deviate for a minute or two and talk about at Chanel with their family office and a long-time legacy with their new CEO, Leena Nair, who is obviously not from the family doing a great job and actually from Unilever, which was Interesting, maybe some thoughts on that.

Christina Wing: Well outside leadership can be amazing because they don't come with the baggage of the history of some of the problems but outside leadership especially in the case of Chanel has to have like a nod to the family values and goals and respect them and act upon them. And so when you bring in a new leader like that, success is very much contingent on that new leader being empowered to execute on the family wishes. So, for example we can say our risk tolerance is low and we would like to be in, you know, XYZ type of geographic areas, and we don't want to be in anything that has a carbon footprint above Y. They then need to leave the new leader to execute on that. That, what they basically did was just create an investment policy statement, but then they let the team execute, find the best ideas, bring them to the table. The family sits in an overseeing role as owners, but the new person is the operator that executes on it. And that is when the beauty and the legacy can continue because you see people with the right skills and the right jobs.

R. Adam Smith: Right. Now, LVMH, a much larger and perhaps more complicated family business, it seems like the next generation there, the G2, right, with Antoine Arnault, and you see this at other companies, the Pritzker family or IKEA, the G2 is a tricky place to be with expectations and trying to keep up with that legacy, but also taking some initiatives that are new and fresh. You talk a bit about the purpose of Wingspan focusing on not just improving the community of the family company, but also the economies of scale. When you guys focus on those two purposes, how do you communicate that to the family? What are you looking at in terms of economies of scale, and how does it relate to legacy over time?

Christina Wing: Well, I think they're two slightly different things. First of all, when a business is started, it's started and it's your heart, soul, and it's typically the founder's entire life. The G2 grows up seeing that family founder do that, and the business they inherit or come into is very different than the business that was started. However, to get economies of scale of talent in a family, the sooner a family can decide on which children might be coming into the business and which children might not be coming into the business, they can actually go out and create other businesses and have other fulfilling lives. If you look at the royal family, you sit there when you're the heir waiting for the time that it's your turn to be the successor. But the others can go off and live their best life and do other great things for the nation and for other people. And so in family businesses, if you have a matriarch who started a business and she has four children, if all four are sitting there waiting to find out if they're going to have a role in the business, if they're going to have the responsibility of the business, if they have the talent to be in the business, then they're all sitting there. If it's decided sooner that these are the strengths of who's going to come in or not, or whatever the system in the employment policy that the family puts in place, the others can go out and do other really amazing things and have fulfilling lives because when you think about it, the family typically grows faster than the business. So those four heirs, they each go and have four kids. Now suddenly you have 16 G3s, they can't all work in the business. And so if you set a pattern of entrepreneurship and having the family go out and do other things, then you can actually create a much bigger structure. And some families even then turn it into a hold co-environment where the first business is one of the businesses, but the other businesses that have been created are all within this hold co. And then you really start to hit your stride.

R. Adam Smith: Right. Just for the audience here, many of which we have some significant family office backgrounds, so thank you for joining today. I see many angels in family offices and some experts in the audience, but just to put it in context, there's maybe up to 10,000 single family offices in the world, they say, and over 5 trillion of assets. So that is approximating the wealth of the private equity industry, which was always perceived to be much larger. And in addition, there are reports that the next generation in the world, which has about 70 million baby boomers, will pass about $15 trillion of value to the next generation, which is three times the size of the GDP of Japan. So it's quite large. So when you talk about societal change, you can see how if the families, as you pointed out, really take legacy seriously and think about the continuation of those organizations, there's a big opportunity there. Now Wingspan, you focus on the family dynamics internally and the operations and then also philanthropy. So talk a bit about the philanthropic side as well.

Christina Wing: Well, this $15 trillion keeps me up at night. And it keeps me up at night because inheritors give at a much slower rate than earners. And that's not because inheritors are greedy and want to hold on to the money. It's that they haven't had the responsibility in many cases of making these big decisions. And so our giving strategy starts at the beginning. It starts at teaching the next gen or the rising gen, as I like to refer to it, to give from the beginning. You know, we work with an amazing family in Turkey that they've always given in proportion to their earning. And in some cases, in disproportion to their earning. Those children from that founder grew up seeing a spirit of giving. It wasn't once the founder became wealthy that they gave, it's that they gave all along. And so as we think about giving, we think of it as a place to educate children of the earners, whatever age they might be. They might be 80. They might be 15. How to give smartly with metrics. How to give in a way that is respectful to the community that you're in, but is also long-term in nature. So we like to teach them to have metrics around their giving. And then when we get further past the education stage, we like to talk about how to organize the family around this. Family foundations are not a place for people that can't work in other parts of the business.

A family foundation is a huge other business with two components, the component of managing the money and the component of a giving strategy. So we work with families to understand how to create a giving strategy, how to pick the organizations that they're going to give to, and to decide whether they build it in-house or they partner with another entity, like Stand Together or some other think tank that has come up with metrics and best practices around how to give. The last part of what we do is we are very happy and want to help families that want to do something monumental and extremely large, and that would be some of our families that have signed the Giving Pledge, how to put the execution team together to actually implement their big ideas. So, it's one thing to give to an organization that's already created. It's another thing to say, I want to build a new clean water facility in India. You know, you need an on the ground team, you need government relations, you need the money, you need the budget, you need so many other things. And part of what we do, since we're not consultants, we're advisors, we advise them on how to do it, how to put the team together, and how to execute on it. And so there's really the education stage, there's the understanding and formation of the foundation and that, and then there's the execution of the big ideas.

R. Adam Smith: Giving pledge was such a huge idea, amazing, founded by Bill Gates and Warren Buffett, right? There's over 200 signatories from 28 countries. That's going to make a big difference. Back to your point about legacy, there's a quote by Benjamin Franklin said, “If you would not be forgotten as soon as you are dead, either write something worth reading or do something worth writing.” So, creating a legacy can be very important to these families, but it can be done in different ways between wealth on the one hand, also scale of the organization, and then philanthropy. What do you see in the cultures within the family businesses? Again, it can be a tight-knit family business, let's say on the board, or it can be, they can have it more casual, but how do you see the families balance the personal responsibility, let's say for their own wealth versus the operational professional side of the corporate entity as a company?

Christina Wing: So, you know, the individual wealth and individual giving, you have to remember that each generation has in-laws that come in with their own set of what's important to them and what's raised. And so I do believe that it's important for families to, if they want to have a family foundation that's multiple generations, to have that, but to also give individually to things that might be not completely what the entire family is interested in, but it's important to them. In terms of the business, what we see is that most of our families also give through the business and they give to the local communities where their employees work. They give to organizations that will help the community and the supply chain in areas that they go. I cannot tell you how amazing it is to travel the world and see how generous the families across the entire world are. And people have different motivations for giving. I am not against it being a good death tax reason to give. The United States with the death tax, that's a reason or a catalyst for a lot of people to give. There are a lot of countries that don't have a death tax, and those individuals give at the same rates that we do and even bigger. And so, my view is that many of the founders, if not most of the founders that I have met that have successfully transitioned their family from one generation to the next, and then to the next, to the next, the family sticks together and gives on a scale that is so much bigger than any individual. But I wanna make sure we compartmentalize what we're saying in that individuals within a family should give individually to things and then also a foundation. And then the business also has a giving strategy and both are huge multipliers. And you know, giving is also through education. I cannot tell you how many families we've worked with that have not only created schools, but given a disproportionate number of scholarships to people in the communities that they live and work, but also to their employees. So these families touch on so many levels. It's not all charitable. Most of it is teaching people and rising the whole tide up.

R. Adam Smith: Where do you see giving going, given the economy, given the demographics, the millennials, the Gen Z, the tax code, the world of social media and digital giving. Right now, about 3% of the global GDP is deemed to be related to philanthropy, both giving and volunteering. But it is quite lopsided, where it's said that about 1.5% of Americans are responsible for 86% of the total charitable giving. So where do you see that going the next, let's say, the next 10 years?

Christina Wing: So, I'm very nervous about where it's going. I think many people are, individuals, family business, or anyone are battening down their hatches a little bit because of some of the political things that are going on and the uncertainty. I also, like I said earlier, this $15 trillion that's going to change hands, I think a lot of that's going to sit on the sidelines for a period of time that's longer than any of us would like. I believe that it would be in the best interest of everybody if our governments would give different tax credits to giving, in addition to the ones that are there and different incentives.

R. Adam Smith: Right. Exactly.

Christina Wing: I think people's spirit to give is great, but as certain brackets, taxes are going up so much, it makes people nervous to make long-term commitments like they used to. So in the short term, what we're going to see is many annual gifts, not multi-year gifts, because people are nervous about committing to a multi-year gift. And the way we're going to mitigate this is by really working with families to train their rising gen of the responsibility of the money they're going to inherit and hopefully getting that group into a position of leaning in and giving.

R. Adam Smith: Absolutely. So, it's part cultural, it's part demographic, it's also signaling from government and big players and business that are role models. Talk about role models briefly for you. Who have been some of your role models, perhaps in investment banking or charity or business leaders, who stands out for you in the space?

Christina Wing: You know, I have so many people that have been great role models to me. I would say that I have one role model who is a founder of a family business that took great risk. He had no money and had to take out a huge loan and has now grown it into one of the larger consumer products companies. And he loves his business and he loves his customers and he loves his employees. That little magic sauce makes it fabulous. We are in a period of succession with him that in terms of whether children will work in the business or not, so we will see, but his impact has been immeasurable. Another one of my great mentors who I'll name by name is Dr. Jim Cash, who was a professor of my father's at Harvard Business School, and then a role model of mine on some boards I sat on, and is still a mentor of mine. He's bridged the academic world and the business world in such a beautiful way by teaching at HBS for a long time and then moving into a bunch of family business boards, he was on the Walmart board for a long time and that is a family business, and he works with a lot of founders and what the reason he's such a great mentor is he listens, he leans in, he gives candid advice and he really tells you the things you don't want to hear but you want to hear and that those are the best role models to have. You need people that have that have kind of walked the walk but will also tell you when you're stepping off the pavement a little bit.

R. Adam Smith: Right. Yeah, today we've had a wonderful audience with actually 193 attendees registered and a good amount on the call live. This will be recorded and sent out later. I see some old friends with Phil, Jamie, Susan, and Richard, it’s great to see some familiar faces. Maybe we finish up talking about legacy a bit. I know you're concerned about the philanthropic trends, but legacy is a really big deal for family businesses. Sometimes they sell. Of course, the M&A business will be significant in this space, but sometimes they don't want to sell. And there's a tug of war between monetizing the operating company and creating more wealth versus keeping it going for the sake of the legacy. Where do you see that going?

Christina Wing: So, I absolutely do not think families need to keep an operating company to create legacy. I believe that a family office is another family business. And so when I say family enterprises, I include family offices in with operating companies. And that is another place to create great legacy and keep wealth together and benefit from the joint money being in one place. There you do get huge economies of scale. And so, it's music to my ears that the family office space is growing at such a large rate. You said $5 trillion. My research shows it north of $6 trillion. And I'm seeing family offices really structure and learn to invest and have a long-term strategy and be great employers. So, I believe legacy will continue through all types of family businesses, and those are operating companies, like we've always thought of them, making widgets, family offices, and then family foundations are also family enterprises. And so if we can get families to understand that they can do so much more by working together, if they can start talking about the things that they haven't talked about before, maybe change some of their family habits to make it more conducive to the rising generation and the changes that are happening with the different generations in the world, then I believe families can have a legacy in whatever form of enterprise they continue. And the most important thing is, they are families and they're individuals. So they need to have boundaries, personal relevancy, friendships, hobbies. They have to have other things that they do. All of that makes the family members as individuals interesting, and it promotes legacy that the generations coming up want to be a part of.

R. Adam Smith: Yeah, it's very inspiring. I'm glad you said that. And to keep thinking about the opportunity to help family businesses collaborate together so they can merge, they can join venture, they can mentor each other, not just in the elite business schools, but within their own communities, within the angel groups, within their clubs, within their friendships. I think especially the G2 and G3 will benefit from that approach and bring the legacies together and honor the continuity of those private businesses.

Christina Wing: I completely agree. All of you listening on the phone, you know that being in a family business can be very lonely, and it's lonely because you are working with some of the same people that are annoying you at home or other places. You have to find safe spaces to talk about what's happening. There's no reason this many family members should be lonely. I'm not saying run out and tell every neighbor what's going on, but I do think there's great learning that comes from sharing how one family got through a tough situation and how they can look at your situation and maybe give you some advice. It's a space where a lot of people are interested right now, and my advice to everybody on the phone is to go slow in both creating and changing things, but don't stop moving. You have to keep moving. And for those that are in a role that they feel like, well, I have to stay in it until I die because my family cannot take over. Well, find somebody else that can take over and find another way to move everything forward. And, you know, if you don't like each other, it's really hard to work together and eventually create legacy. So keep working on the likability. And remember, family members that don't work in the business can be great owners and great ambassadors of both the brand and the family. So be inclusive, don't be lonely, and have fun. You're sitting in a great spot.

R. Adam Smith: Good point. Thank you. That's very inspiring. That brings us to the end of today's episode. I'd like to express my gratitude to our listeners and Christina, special thanks to you for bringing knowledge and insight and encouragement and lessons from your life and from Wingspan. So thank you for joining us today.

Christina Wing: Thank you so much for having me. Everybody have a wonderful day.

R. Adam Smith: This is R. Adam Smith signing off. Stay tuned for our next episode of the Family Business Audio Cast on LinkedIn.

—

Explore the strategic intricacies of family business success with the RAS Family Business Audiocast. Join R. Adam Smith as he delves into exclusive discussions with global leaders shaping the future of private wealth and enterprise. Each episode offers a rare glimpse into the core decisions driving prosperity in high-stakes markets. Tune in to gain expert insights and innovative strategies that empower family businesses to thrive across generations.

Available On : Amazon Music, Spotify, Apple Podcasts, Pandora, iHeart, YouTube

Disclaimer:
Opinions presented are personal and do not represent the positions of speakers’, sponsors’, or guests’ organizations.

Family Business Audiocast™