If Only Queen Elizabeth Would Have Understood That She Is Actually Running A Family Business

Impact Partners is proud to have family office member and expert Nava Michael-Tsabari in our ecosystem. She wrote this amazing and timely article that deserves to be shared. Please note that this article was translated by Google from Hebrew to English. Hope you enjoy.

Much of the drama surrounding the rebellious couple in the British monarchy would have been avoided with mechanisms that allow family members, who are not about to inherit the crown, to be like shareholders - without working within the "business".

What are Prince Harry and his wife Megan about to reveal about the royal house in their interview with Oprah Winfrey, which will air tonight in the US? How will the royal palace react? Will Queen Elizabeth continue to oust Harry from his official duties and deprive him of his royal titles? How are Harry and Megan "doing it" to the royal family now, while Prince Philip is hospitalized at the age of 99 for a medical procedure?

Queen Elizabeth's mistake in managing the current crisis with her grandson and his partner began long ago, in her inability - and the ability of her staff - to see herself as the head of a family business. Such a diagnosis, and the tools for managing crises expected in a family business, would prepare her for the events, give her coping tools and help her avoid heartaches and dramas.

A family business is defined as a situation in which a family runs a business or assets, in which more than one family member is involved, and they intend to transfer the assets to future generations. The British Royal Family fully meets this definition. Elizabeth II heads the business, which also employs other family members, and her husband Philip received an official exemption from the "family business" only about four years ago, at the age of 95.

What could have been the use of the diagnosis as a family business for the current drama with Harry and Megan? How can one understand their desire to retire from their royal positions and develop for themselves an independent and new identity in another country, in light of such a diagnosis?

First, when the tools and models for analyzing a phenomenon are lacking, in this case tools for analyzing a family business, claims fall into individual claims: "He is rebellious, and always wanted to attract attention" or "She is an abusive and arrogant American." This time the palace accuses Megan of behaving tyrannically toward some of its employees. That is, the argument and the media pounce on the individuals themselves, trying to explain the events in their character traits. There is no way to come out well from such analyses. On the other hand, it is clear that with juicy details about quarrels and photos of the dresses of the two sisters-in-law to the royal family the newspapers sell more copies.

If the Queen would have examined the issue with the tools of managing the challenges of the family business, she would have understood the need to develop mechanisms for future generations, since not everyone can work in such a business - especially when it comes to a family of tens and even hundreds of people. Therefore, as one moves away from the first generation who founded and ran the business, the question of family members entering management positions is replaced by the question of how to maintain their involvement as shareholders, with most of them not working directly at all.

Business families develop a variety of tools, including tutorials and "intra-family academies" for learning about ownership issues. Specific tools are also being developed, such as a family investment fund, through which family members who have entrepreneurial ideas can develop new start-ups: for example, in an equal division of the family investment with the entrepreneur. Thus finding avenues for new initiatives, which are not within the traditional business of the family, and allow the younger generation to chart for themselves a new way, still with the family's support and partnership. 

It is very complex and challenging to be a next generation in an established and successful family business. Especially for those who are not heirs, and will probably never reach the top of the pyramid. Harry's chances of becoming king are slim, but he needs absolute loyalty to the "family business" in managing his life and business. And these strict requirements also include his wife - who was reprimanded because she was spotted at an official event with black nail polish on her nails… Harry's wife must not be seen with nail polish in such a color, because these are the rules of this specific royal business. And if there are family members who will never run the business, is it not possible to create mechanisms for them that will keep them interested in the business, but allow them more flexibility in determining their careers? Is it impossible to have involved and contributing shareholders and have a career that is outside the family business? It is possible and should be possible to do so. Families who have managed properties for generations specialize in developing such solutions as a matter of routine, without waiting for a crisis lurking around the corner.

The failure is that of the Queen and her advisors. They had to plan the intergenerational transfer not only with those who are going to inherit the leadership of the business, but also for the family members who are shareholders in it, but will never manage or work in it. Proper planning in due day would have produced solutions and possibilities, which would have been offered to Harry even before he got married.

In this way the discussion is not about one's character or personality, but about governance and rules for the future. For example, when a family decides that next-generation shareholders need to sign a prenuptial agreement before they get married, it is best to reach this recommendation long before the marriage is already in the planning stages. When the family decision comes from above it can be passed on to the future spouses as an agreed instruction, and then it is independent of the character of one spouse or another. A discussion of such an agreement when there is already a spouse, inevitably leads to a personal discussion.

The Queen actually conveys that it is important for her to maintain family ties, even with Harry and Megan, who want to shape a future for themselves as shareholders but not as managers within the family business. Maybe someone can tell her that there are in-depth insights and research on these topics, and that one can learn about family businesses and intergenerational transmission?

___________

Impact Partners is a public relations and strategic introductions firm launched in 2018 that represents the world’s ultra high net worth (family office, venture capital, etc.) and the companies where they invest, mostly start-ups / emerging technologies.

Initially funded by a prominent family office, our firm drives the reputation and leadership positions of our clients, as well as help them with strategic introductions to sync up with investment opportunities throughout our vast network of start-ups.