The Titanic and the family-owned business

Why did the Titanic sink?

The quick answer that comes to our minds is…”The Titanic crashed into an Iceberg,” but that is not completely true. Actually, the captain and the rest of the crew thought that they had avoided the crash with the visible mass of iceberg. But the part of the iceberg that is under the surface caused a scratch below the waterline that later caused the tragedy that everyone knows.

You probably are wondering….and what is the relationship between the Titanic and family-owned businesses?

In my view, something similar happens in a lot of family businesses. We give attention to preserve what is visible above the surface, (”the having)-the financial capital,(=the tangible assets, business, properties, family investments of the family that have financial value) and family-owned businesses tend to be focused on the DO level (what families do: Governance –or control of financial capital, Taxation - issues that might diminish financial capital) and the process necessary to achieve those results.

My experience shows that families are even less aware of the infrastructure (the being) that underlies processes and provides the necessary capability to preserve the family wealth from a holistic standpoint (financial capital and non-financial capitals: human, social, and cultural capital) and have lasting success.

Just like in the Titanic movie, while people were dancing, drinking and enjoying the party, the scratch below the surface was already sinking the ship. Nobody realized what was happening and when they realized did, it was already too late.

In some family businesses, family members are focused on the having, but below the surface, especially when the family grows and becomes more complex, the lack of alignment on purpose, vision, values, and mission starts to erode the foundations of the family. Soon, likely without anyone realizing, this lack of alignment and this lack of shared purpose and values, causes a fracture that finally, just like the Titanic, becomes the main obstacle for the family and the business to thrive.

Carlos Agustín Moreno

Chief Engagement Officer, Axialent

Founding Member, Family Hippocampus