Generational Change

Maintaining a family business can be extremely challenging for several reasons:

1. Family Dynamics: Personal relationships can complicate business decisions and affect productivity.
2. Generational Change: Differences in vision, values and working methods can generate tensions and mistrust when it comes to passing control.
3. Financial Sustainability: Ensuring long-term financial viability requires careful planning and often significant reinvestments.
4. Adaptation to Change: Family businesses must adapt to changes in the market and technology, which can be difficult if there is resistance to change within the family.
5. Talent Management: Attracting and retaining external talent can be tricky if employees feel that opportunities for growth are limited to family members.

It is a conceptual tool developed by John A. Davis and Renato Tagiuri, which identifies three interrelated systems that influence a family business:

1. Family: Includes all members of the family, both those who work in the company and those who do not.
   Family relationships and expectations can significantly affect decision-making and company culture.
2. Ownership: This refers to the owners of the business, who can be family members or outside investors.
   Ownership decisions, such as share distribution and succession, are crucial to the stability and growth of the business.
3. Business: It encompasses all employees and the daily operations of the company.
   Professional management and operational efficiency are essential to business success.

These three circles overlap, creating areas where interests and roles can overlap or conflict.

The Family Protocol is a document that establishes the rules and guidelines for the management and governance of a family business.
This protocol connects closely with the Three Circles Model in several ways:

1. Clarification of Roles and Responsibilities: The protocol helps to define them within the three circles (family, property and business).
   This reduces conflict and ensures that everyone understands their roles and expectations.
2. Succession Planning: The protocol helps a lot with this, which relates directly to the circle of ownership and the business, ensuring a smooth and planned transition between generations.
3. Governance Standards: This affects all three circles and includes how decisions are made, how conflicts are handled, and how important decisions are communicated.
   VERY IMPORTANT!
4. Family Values and Culture: The protocol can also include the values and culture that the family wants to maintain in the business.
   This mainly affects the family circle, but it also influences how the business and property are managed.
5. Growth and Sustainability Strategies: The protocol may include strategies for the growth and sustainability of the business, aligning the interests of the family and owners with the needs of the business.

In short, the Family Protocol acts as a bridge that connects and harmonizes the interests and responsibilities of the Three Circles, facilitating a more efficient and cohesive management of the Family Business.