“We understand that culture is key to the company’s success, but if it doesn’t evolve, it can hinder change. Culture can only remain a success factor if it continues to evolve and renew itself.”
– Family Business Leader
Family businesses are known for honing their ability to create long-term prosperity. Their historic growth is usually underpinned by deliberate attention to culture, characterized by both long-term thinking and a focus on continuity. The most successful family enterprises strike a delicate balance between honoring their legacy and adapting to new realities, ensuring their culture remains an engine for growth rather than a constraint—particularly when navigating leadership transitions.
As companies today face mounting systemic shifts and surging complexity —something CEOs overwhelmingly expect to accelerate in the next decade, according to a recent Egon Zehnder study—cultural misalignment threatens to become an acute vulnerability. This could be especially pronounced during leadership transitions, when different stakeholders, often representing different generations, may have divergent views on the company’s direction. In every organization, there is a “next generation” waiting in the wings—whether they are family members, rising executives, or external leaders being groomed for succession. How they are nurtured, integrated, and ultimately empowered to lead shapes not only leadership transitions but the evolution of culture itself.
A recent Egon Zehnder study, titled “Building a Winning Cross-Generational Culture in Family Business,” found that while 88% of respondents recognize the importance of culture in driving performance, few feel fully prepared for the cultural challenges ahead. Even when alignment exists, generational differences can create friction:
“I’ve seen many companies fail, not because of their product, but due to the founding generation’s attitude, stubbornness, or overconfidence. This does not have to be the case.”
– Ascendant Family Business Leader
Bridging these gaps demands concerted, intentional effort. The best family enterprises don’t leave culture to chance—they actively shape it, ensuring that each generation understands and contributes to the company’s shared vision. The lessons from these businesses extend well beyond family-owned companies. They provide a universal framework for any company navigating the major cultural shifts accrued through leadership succession and organizational transformation at large.
A Framework for Managing Culture
Sustaining and leading a strong culture across generations requires intentionality. Our study identifies four productive enablers frequently employed by family businesses for building and evolving a common cultural language within an organization. These principles ensure continuity while allowing culture to adapt to new leadership, business realities, and external shifts.
1. Proactively Manage Culture
The best-run family businesses rarely settle into the inertia of default cultural norms. Instead, they actively diagnose and manage their cultural landscape by integrating past wisdom with future goals—working collaboratively across generations as well as tapping into outside networks and external talent.
Leaders can gain a clearer understanding of their organizational culture using available tools and methodologies designed to analyze the current culture, indicating areas of both strength and possible weakness, which help map out a vision of the culture they strive to create. Our Culture Profile analysis enables leaders to do this work. Overall, taking this proactive approach ensures that the organization’s evolving identity is deliberately aligned with its strategic priorities.
2. Make the Implicit Explicit
Within all enterprises, values such as “integrity,” “hard work,” and “care for employees” are often understood intuitively. Yet, without clear articulation, these principles can lose their impact. By intentionally engaging in open dialogue and collaborative reflection—whether through charters or structured discussions—leaders translate these implicit understandings into explicit, actionable commitments. It is often extremely helpful for leaders within companies, sometimes representing different generations, to share stories of key moments during their tenures when aspects of the culture endured or shifted with certain challenges. This full picture often provides more clarity, which is vital in aligning diverse perspectives and ensuring that every stakeholder understands what the organization stands for.
3. Shape the Right Decision-Making Structures
Robust governance is essential to sustain a culture that can withstand the pressures of growth and change. As organizations expand, transitioning to governance models that include external board members or advisory panels fosters transparency, accountability, and a balanced approach to leadership—ensuring that cultural and strategic visions remain aligned.
4. Keep the “Glue” Strong
Perhaps the most distinctive characteristic of family business culture is the emphasis on unifying values—the “glue” that binds the family, the business, and its employees. Best practices in these organizations include regular, meaningful interactions that promote cross-generational dialogue and shared learning. Whether through family councils, dedicated retreats, or informal gatherings, these practices reinforce a common cultural language that endures through change.
A Universal Blueprint for Enduring Success
These practices exercised so enduringly in family businesses serve as a universal blueprint for any organization seeking to fortify their culture and make it more future-ready. By regularly cultivating these four initiatives common to family businesses, CEOs in any organizational structure can better assure they are creating an environment where every transition is an opportunity to reaffirm the organization’s mission and vision and better assure its longevity over time.
