Guest contributor: Tarek el Sehity
Tarek el Sehity is a researcher and lecturer at Sigmund Freud University in Vienna.
As explored in the first article of this two-part series, core family values represent a central differentiating factor between family and non-family enterprises, as well as a strategic driver.
Rather than a static, top-down process, our recent study found that values can become a powerful organizational asset when they evolve through a dynamic process of co-creation that actively integrates the insights and contributions of each generation.
In an atmosphere of mutual respect and appreciation, family members collectively determine which values are retained, which are let go and which are adapted to better reflect contemporary realities.
In this second installment, we outline the four pillars that sustain this co-creative process, as well as actionable insights to make your foundational family values visible throughout the organization.
Co-creating values: four core pillars
This co-creative approach reflects the evolving nature of family business, where family composites—shared meanings that bridge generations—become integral to strategic adaptation.
Successfully transmitting values from one generation to the next depends on four essential components:
1 – Mutual recognition
Families cultivate psychological safety when each generation acknowledges the legitimacy of the other’s perspective.
Senior leaders must recognize the unique contributions of younger members: fresh ideas, innovative perspectives and digital fluency, for instance. Meanwhile, junior members honor their elders’ experience and stewardship.
This reciprocal respect becomes the basis for all other processes.
2 – Negotiation
Values take shape through interactions around dinner tables and in boardrooms ,when family members pose essential questions like “Why do we approach things this way?” and “How does this value translate into action?”
Negotiation is both concrete and continuous, often catalyzed by real-time decisions that demand immediate clarity.
3 – Reinterpretation
Family values remain relevant when family-owned firms are able to reimagine their expression. For example, a family foundation originally dedicated to fighting substance addiction might expand its mission to address digital dependencies.
Reinterpretation preserves the moral essence while adapting applications to emerging realities
4 – Adoption
Influence flows bidirectionally. Senior leaders embrace next-generation initiatives when they recognize their underlying rationale, potential benefits and alignment with family values.
Likewise, junior members actively commit to lived values while experiencing their tangible benefits in the family enterprise. Adoption is what makes co-creation endure.
Generational crossroads: when are tensions most likely emerge?
A notable pattern emerged across our sample of 23 multigenerational family-owned firms: while values often remained consistent with the founding generation, critical reorientation typically occurred between the second and third generations.
Our interview-based study found this generational transition to be when operating authority and identity stakes most visibly collided.
Recognizing this pattern allows families to normalize tension and channel it toward constructive evolution rather than zero-sum conflict.
From theory to practice
- Make values visible. Embed your family values in corporate culture, HR policies and board agendas to bring them into daily practice. Visibility invites feedback and continuous learning.
- Institutionalize intergenerational dialogue. Establish family councils, strategy sessions, or open forums where junior members can freely question decisions and propose ideas. Document insights and revisit them regularly.
- Encourage and proactively search for reinterpretations. Invite successors to reframe cherished values for new markets, technologies and social challenges. Focus on preserving the “why” over the “what”—agree on the enduring ethos while allowing forms to evolve.
- Cultivate bidirectional adoption. Encourage senior leaders to pilot next-generation ideas, and vice versa. Track outcomes, and when initiatives succeed, integrate them into routines and governance structures.
- Measure what matters over time. Periodically assess your family’s value composite: Which themes persist? Which have evolved, and why? Use these insights to align strategy, philanthropy, and succession planning.
Values as a living legacy
Continuity is not the absence of change— it is the result of an open, dialogical and continuous evolution forged across generations.
By embracing this approach, business families can promote their core values as part of a living legacy rather than a dusty museum relic.