Interview with Dominik V. Eynern
Dominik V. Eynern, a member of Delfin’s Advisory Board and a founding member of Family Hippocampus. Recently, Dominik contributed to a report titled ‘Family business fallouts – It’s business. But it’s personal’.
Background: Dominik could you briefly outline your experience and how you’ve become a thought leader in family enterprise?
I’m a 4th generation member of an industrial family business, now in its 5th generation. When I became a shareholder, I realised the need to shake things up despite facing significant resistance. This journey led me to research family business dynamics using insights from behavioural economics, cognitive neuroscience, and other disciplines.
At Family Hippocampus, we share our insights in educational frameworks and offer training at retreats for members of family enterprises who desire to shake the trees in their families and want to empower themselves to navigate family dynamics more effectively.
Common Family Business Disputes: In your experience what are the most common types of family business disputes? What are the hardest and easiest to solve?
Conflicts in family businesses often stem from internal issues within individuals, like a lack of self-synchronicity. These internal conflicts can spill over into the industry, causing misunderstandings, role confusion, and information asymmetry. Emotional injuries from these conflicts can become entrenched and even passed down to the future.
Families should invest in their social capital to reduce conflicts and work towards greater self-synchronicity. A synchronised family system is more agile and resilient, which is crucial in today’s volatile world.
Hiring Non-Executive Directors (NEDs): What should business or family offices consider when looking to hire Non-Executive Directors (NEDs) to foster a successful partnership?
In a family office setting, NEDS must understand family risks are a complex portfolio of mutually constituent risk domains: behavioural risks that arise from family dynamics, operational risks associated with the family’s behaviour and financial risks which boil down to an asset-liability management problem.
As well as understanding these risks NEDs should also have relevant expertise. Nepotistic approaches to setting up a board are understandable though detrimental as a family member’s qualifications are rarely comparable to market standards. In this case, I sometimes advise creating shadow director positions for family members.
Generational Gaps: How do you contend with generational gaps leading to conflicting visions such as older members preferring stability & younger members pushing for innovation?
Generational conflicts often arise from differing mental models and subjective perceptions. Both older and younger generations need to understand each other’s perspectives and, therefore, realities to reduce family conflicts.
Informational levels: What is the best way to approach family businesses where family members have differing levels of involvement and information levels?
The degree of information asymmetry is not a fact but a social construct. It’s crucial that all family members feel they have the perception of being well-informed. When they feel part of the decision-making process, they are more committed and perceive lower agency risk. Simply put, when people feel part of it, they put their heart into it.
Three actions: For a family business reading this article right now, what are three actions they can take to protect themselves from future conflicts?
- Invest in social system synchronization.
- Create a formal governance framework after achieving synchronization.
- Go back to step one because systems are only synchronized at one point in time.
Closing Thoughts
Family enterprises are central pillars of the world economy and powerful change agents. They must manage their dynamics effectively to fulfil their missions and positively impact the broader economy. Thus, to my mind, it is the responsibility of enterprise families to get their act together, not only for the sake of their family legacy but also for their implicit social mandate.