Family Business Audiocast | Episode 57 | David Werdiger
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R. Adam Smith: Welcome to the family business audiocast on LinkedIn. I am R. Adam Smith, creator of this audiocast series. As an entrepreneur, investor, founder, investment banker and board leader the last 25 years, I'm fortunate for my many experiences within the family firm industry. A warm thank you to our live audience on LinkedIn today and for those listening in the future. A brief comment on why I created this broadcast. Private companies are a passion of mine having grown up in a family of entrepreneurs, and having engaged for two decades in deals, strategic transformations, investments and boards, with an array of fascinating family enterprises, family firms, and family offices. I founded this series to offer useful platform for listeners to hear from veterans, academics and leaders in the vast family firm ecosystem. Whether you're a family business owner, building, running, or advising a family office, or just expanding your family office activities, I hope these conversations are useful and enlightening. And now it's time to turn our attention to our accomplished guests on today's episode.
Welcome to the family business audiocast, I'm R. Adam Smith creator of this series and a warm thank you to our live audience today and those listening later. On this episode of the family business audiocast, I'm joined by David Werdiger, a globally respected family enterprise advisor, best-selling author, and speaker based in Melbourne, Australia, and also a repeat visitor to the audiocast. David it's great to have you today. David has spent decades working with high-net-worth families and family enterprises, helping them navigate succession, governance and intergenerational wealth, informed by his professional experience and his own background as a second-generation family business member. I'll tell you a bit more about David then we'll jump into the podcast.
David is the founder of the Power of Pause Institute, a leadership platform and practice focused on helping leaders create clarity, presence, and better decision-making in complex, high-stakes environments. Through his work with family enterprises, family offices, and leadership teams, David emphasizes the discipline of intentional pause as a critical capability for stewardship, governance and long-term alignment. Also, he's a member of the leaders council of the Ultra High Net Worth Institute, and a frequent speaker at global family enterprise forums, and also an adjunct industry fellow at the Swinburne University, and also a guest lecturer at Harvard Business School. Finally David is the author of the best-selling book, Transition: How to Prepare Your Family and Business for the Greatest Wealth Transfer in History. At the heart of his perspective is a belief that family enterprises thrive when leaders balance strategic clarity with relational awareness, and when they value time, intention and presence as core leadership assets. I'm really excited to have you back on the audiocast today David, so tell us a bit about this power of pause institute please and the leadership practice and platform that you're building in addition to everything else that you do, it's amazing.
David Werdiger: Thanks so much for having me Adam. I really enjoy our chats both in person and on podcast. This came to me over a long period of time that and I guess is rooted in my aspects of my upbringing. It was probably a time in my life when I was actually dealing with some serious health issues, and my attention was drawn to the importance of time because I didn't know what my future looked like, and it didn't look anything like I had planned. And I thought, what am I going to do with the rest of my life? Fortunately I'm on the other side of that, but that that period of reflection had me thinking that my most important decision in my life is what I do with my time. I'm blessed with family wealth, and that generally will largely from a financial perspective look after itself, but what I do with my time and what I do with that decision, what I do with my time is my most important decision in life, how I allocate my time and how I use my time intentionally and well. And after years working with wealthy families helping them navigate intergenerational wealth transition, I'm now also branching out into a new area focusing on the wealth in time and the power of pause.
R. Adam Smith: Thank you for that. I'm really glad that you're doing that, to share more on the emotional psychological side and how that impacts soft power versus hard power in wealth. Of course we talk a lot about soft power and you guys talk about that also at the Ultra High Net Worth Institute, and all of the brilliant teachings and papers that Jim Grubman and James and Dennis have put into to the institute and also the industry. Of course you bring your own experience from your family business as well. So, in the past we talked about governance and stewardship and decision-making and wealth transfer in our previous podcasts, I'd like to talk also bit about your experiences for those listening today, and what you went through in your family business and how that created some leadership skills that you have today and your perspective on the family business, and then we'll talk we'll jump into the wealth of time.
David Werdiger: Sure. So I'm the youngest in my family, and the youngest by a long gap, and that gave me sort of different perspective on my own family to others. And I didn't have pressure to join the family business. I worked in the family business when I was a child and when I was a student, but by the time I finished university, I formed the view that I actually didn't want to join, even though that was available to me. And so what I did was I embarked on first a job and then went into business for myself. I had that that entrepreneurial spark inside me, probably from my father, but I felt a need to express that myself rather than through the family business. And that led to what I now refer to as my second career as a tech entrepreneur, which spanned five businesses and a number of non-profit roles, and a fantastic learning experience about stewardship and governance, and the essence of good decision-making.
I probably learned the most from non-profits, because I think non-profits are so similar to family enterprise in that they are organizations that have been there for a long time before me, before my involvement, will be there for a long time after my involvement, so there's that sense of you being having a window of time where you're involved and have a role, but you put that in the context of something much bigger, part of something much bigger. And I'm very fortunate to have a number of experiences where the board was very humble and very aware that they are just stewards of the organization, and their job is to look after it for a period of time and then hand it over to somebody else. That attitude is exactly the attitude that family enterprise needs. If families want come from a rich history and want to continue on and continue to build a legacy, they're only going to do that with strong stewardship approach and good governance and decision-making.
R. Adam Smith: That's wonderful. We did discuss this also with Jim Grubman on our podcast earlier about the intellectual emotional side of the family working together. You were talking about the lack of pressure that you had. That's not always the case. Sometimes the pressure is good, sometimes it's not good, depends on how it's applied. And it seems to me working with many family offices in transactional matters as governance, there's some intensity in in moments of time when there's not a luxury of time, right? So there's urgency in certain events. So, obviously, you're making the case and it's very important that time is a leadership resource, it's super valuable, it's a subtlety, maybe talk a bit about what is wealth of time and how to incorporate that in let's say a complex family office functionality.
David Werdiger: So, when I think about governance, I think of responsible use of power, we touched on power earlier, but really it's about decision-making. And when people ask me what I do, my slogan is I help families make good decisions together. And that goes across what is good decision-making, and how to make those decisions as a family. And as families transition, particularly from G1 to G2, you move from a situation where one person is making decisions, suddenly to more than one person. And as soon as more than one person is making decisions, it becomes more complex. And yes, there's pressure associated with this and responsibility, you're thinking, these decisions I'm making, what is their impact going to be, not next week and next year, but in 10 years from now? And that builds pressure. You also have at the table potentially people, might be from the same family, but with a lot of diversity, with different perspectives, different generational approaches to things.
R. Adam Smith: But there's also the leadership style, right? Some people that are powerful and aggressive and wealthy and came from nothing or very driven, like they're not wired to be patient and give space and time, that's an emotional trait of EQ. So, what about training that? Do you think there's ways to train that as a cognitive action?
David Werdiger: It's very interesting point you make, because the attributes that make founders successful, often the attributes that hold them back when it comes to succession and including others in decision-making. I can certainly relate to that in terms of my own family and other families I've seen. Can you train it? No, it's really difficult because again, consider a parent and a child and the parent is well-established in their role and they've got a lot of authority, they've got a lot of power, and the power comes not just from the financial side and the role they have, but also generational power, that natural dynamic between parent and child. And I've not seen a lot of parents who are naturally able to create space for their children to individuate to become their own people. I know one founder in particular, contemporary of my father, he was one of the only people who said to me, my children are my partners. He told that to me in his 90s, and he really did an outstanding job of empowering his children and doing a partial wealth transition to enable them to do their own thing, and create their own space.
R. Adam Smith: That's super interesting, David. I just want to say that the ability to pause and learning that, as we're talking about, is tricky, as you're saying, because the personalities involved in being a successful entrepreneur results in certain elements of how the brain and mind works of being driven, that comes from persistence, that comes from grit. The grit comes from maybe not coming from much. So, there's an inherent grounded drive that can be can be also linked to the ego and greed, and just like being very aggressive, right? So, in in that context, most entrepreneurs are looking at the goal of creating wealth or power at scale. In terms of pause, especially for children, this gets to another element of next gen, and if next gen is really necessarily the children, it's anybody that's following the lead of the founders. Love to talk about that and like how you're incorporating pausing as a discipline and coaching your clients.
David Werdiger: Yeah. Pausing is essentially about intentionality, but it's also the term I use is to respond rather than react. And this goes back to Stephen Covey, to Viktor Frankl, and to the essence of what makes us human, what distinguishes that us as human. And that is the ability to intercept in between stimulus and response. Yes, entrepreneurs have that urgency, they have that ability to make quick decisions, and the decisions that they make, they may be quick, but they're not necessarily hasty, and there's a difference. Again, the difference is between reacting versus responding. So, understanding the nature of your decision-making, that your decision-making comes from a wealth of experience, and therefore you're able to do it quickly, again, doesn't mean you're doing it hastily. But when you bring others into that, and having the patience, and this is really difficult, for the rising generation who have not yet necessarily developed that decision-making skill, but to understand that you're doing something at hyper speed, but you're still going through a decision-making process, you're just doing it a lot faster, and the use of pause to say, okay, when I made this decision, how did I do that? What were the considerations? Talking through that with family members to explain to them the nature of the decision-making that you're doing and how despite being quick it is a process.
R. Adam Smith: And clearly pausing can create disproportionate impact even if you learn to pause and reflect, have empathy, and observe as a leader, that can be literally five seconds. It doesn't have to be like an hour or five days, right?
David Werdiger: Oh, absolutely not. Because just like nature abhors a vacuum, we hate silence. We live in an age of 24/7 news, and the worst thing in the world in the world of online media is dead air. So, if you're having a discussion with somebody and you just pause before answering, sometimes you can look at them and see the the discomfort. You don't have a response immediately? On social media we immediately want a response, but we don't need to do that. Even a pause of a few seconds to breathe, to center yourself, is so powerful to just bring yourself back to where you are, to be present. And it's a discipline, and it's a discipline that can be learned and can be taught.
R. Adam Smith: It's also a discipline to rewire because corporate America, Wall Street, consulting, all the private equity, the drive, the intensity of of the elite world that we work in, almost 100% is a you can say we work in an elite world. That elite world comes from advanced education, comes from intense industries, and perhaps even the way that our parents drove us, or sometimes we want to fill the gap from our parents that did not succeed and you want to succeed despite that. So, there's a lot of psychological and cultural and industry factors there and it takes a lot to learn something new.
David Werdiger: Absolutely. It's very interesting, if you think about one particular discipline in HR. A lot of people say, rather don't hire than make a a bad hire. Okay, but that's counter-intuitive, everybody wants to say I must do something, I must do something. No, the choice to do something is a choice, and when I go back to helping families make good decisions together, a non-decision is a decision not to act. And being aware of that, being aware of the pauses, the non-decisions that are actually decisions, the pauses that help ground you, those are the discipline practices that help you become a better decision-maker and also become more collaborative, creating space for others with those pauses as well.
R. Adam Smith: I was looking up quotes on this this pause issue, Ram Dass had a quote, he's a a powerful speaker and coach, and his quote was, the quieter you become the more you can hear. And that's just counter-intuitive to capitalism and speed, and of course venture capital for example we have some really powerful concepts of building in a fast way, like the brilliance of Reid Hoffman and blitzscaling, it certainly worked in many ways. And we also have to keep up with other people, so there's that developmental element, and when you get into a situation of intensity like you're going to sell a company, you're going to hire somebody, you're going to make a decision, that training with our clients, this market is very pressure to act, as you're saying. Can you talk about how to train that as a repeatable leadership behavior as opposed to a one-off experience?
David Werdiger: How we teach this is based on the principles of practice and whatever we practice we get good at. The wolf we feed is the wolf that wins. But the question is how do we build that self-awareness? Self-awareness is very difficult particularly for high-performing people who may not have that self-awareness because they're too close to it themselves. And that goes to the role of the coaches and your trusted advisors and your facilitators, who can be in the room and help guide conversations, help the participants be more aware of what's going on and to teach better communication skills.
So, when I work with families we talk about communication, good communication involves two things: one, it involves communicating with curiosity, but the other thing really important is active listening. People think communication is about getting the message across to somebody. No, it's a two-way process. And if you don't listen to people, you're not a good communicator. So, these things can be taught, they can be coached, and this is where the presence of externals, be they trusted advisors, facilitators, coaches, can be really beneficial because we as individuals are very subjective, and it's only an outside perspective that can see through it.
R. Adam Smith: Thank you, David. There's some important nuances there. So, again, from the family business lens and thinking about the importance of reflection and observing and like the family working together, right? I've seen advising many families on their more significant decision-making, there are learnings from their family history that affect their decision-making, how they communicate together, first of all. And then second of all, there's that need to have an opinion and get ahead and have your position heard because of the pressure to perform, let's say especially the next gen, they want to perform, they want to be moving quickly to make decisions and prove themselves, and then from that perspective there's the desire to keep up with their parents, or posture syndrome, all the things you guys talk about and coach in your business and the Ultra High Net Worth Institute. So, it's tricky, that's both a communication element and also psychological element, right?
David Werdiger: And also a culture and values element. And that's also really important in families to understand their values, individually and shared values. And it's fascinating when I do this with families how you see these patterns show up, stark differences in values between generations, but also you see a lot in common. And the the challenge in family is always balancing the collective and the individual, because we've got our values in life which come to us from two primary sources: the families we grow up in and the world we grow up in, the influences, the things that were going on in our lifetime in our formative years. The process of articulating values individual and shared and family values, chosen values, aspirational values, again, foster good decision-making, slow us down, make us more intentional, help us understand that there's an emotional aspect to seeming business decisions, but they are actually informed by our emotions, informed by the history of the family, and to be more intentional about that by being aware of it. So, I guess the first most important step is raising self-awareness.
R. Adam Smith: But it's not just the individual act of self-awareness that requires courage, it's also the incentive to do that within the family ecosystem that comes from the parents who allow that risk-taking.
David Werdiger: Yes, and that's where you need buy-in from that incumbent generation to participate in a process like this, where they might say, ah, we don't need this, this is nonsense, just do what I did. No, that doesn't work. And again, it's the role of externals to take the family on that journey together, and to say to them, yes, this issue may be raised by your rising generation, but you've got to be part of that process and you've got to acknowledge that they are wired differently to you, they're not your clones.
R. Adam Smith: That's nice. Talk about next gen briefly because I always talk about next gen in this podcast as going beyond the children. And we've had guests like Alfredo de Massis and Tom Deans, Ram Diamond, lots of different talks about next gen, but I think it's important to look at next gen as the next gen for the company, for the wealth, not just children, because some diminishing percentage of next gen of children will actually run the family business, which gets back to legacy of the company itself. So, can you just talk about training the next gen more generally speaking and what are some mechanisms to do that?
David Werdiger: My view is that it can't start too young. The greatest fear of parents is that their children will end up entitled, spoiled, nepo babies. And because of that, they often jump to the other extreme of wealth withholding. And again, the challenge for families is to find that Goldilocks zone where the children are able to be aware of wealth and the benefits that it brings their life, but at the same time not lose their drive. As you said before, many entrepreneurs start from nothing or start from adversity, and the second and subsequent generations of family don't have that. How do you introduce that to your kids? It's really hard.
The best way to do it is like a tough love, I call it manufactured adversity, making sure that the rising gen in the family go through a little bit of adversity, a little bit of holding back, so that they learn to make good decisions, to make financial trade-offs, to overcome challenges, not have everything handed to them on a silver platter. And I think that's probably one of the most important parts of rising gen education to establish resilience without the tough background that that the first gen might have endured, not because they wanted to. Okay, so withholding from children, but withholding from enough that they can learn.
R. Adam Smith: That's a good one, manufactured adversity. It's very interesting going from the G1 to G2, the older to younger, creating adversity in thoughtfully, so there's a natural experience of learning, of doing tough work intellectually, not just physically like in the old days, but intellectually hard work.
David Werdiger: Yeah, and financial. You may be able to just buy your children a house, but there is benefit for them to live on a budget, to pay a mortgage for a few years, to have that experience, so that they know what it's like. After that period of time, they will have learned that, they've gone through that, they've made some financial trade-offs, and that puts them in a better position to work from a position where they don't necessarily have to do that again.
R. Adam Smith: This is good. We're going to wrap up soon, but if you flip that around, as an educator, an author, an academic, a coach, a consultant, and this is sometimes relevant when you're selling a company, the next generation may or may not agree and wants to get their opinion heard to the owners, to the family owners, to not sell a company, not create wealth, or to in fact sell it when there's a disagreement, and so those disagreements are quite powerful and they're very binary. And those are the situations I see in advising on M&A and corporate private equity transactions, these are binary decisions. So, the other direction is also tricky where the owners, the parents, who may not have been trained in emotional intelligence or may not be willing to give that power of pause to the youth, so the next gen or the management it's very hard for them to request and expect that type of pause and reflection. So, what do you say to that?
David Werdiger: Gee, there's quite a bit there to unpack. The decision as you come from an M&A perspective, what to do with the family business, sell it or keep it. And I working with some families on these decisions and one of the parents says, ah, the business to her is a financial asset but an emotional liability, she just wants to get rid of it. And it took a while for the parents to accept that their son who's got a senior role in the business needs to make his mark on the business. That's first of all. So, again, creating the space for the kids to say, I need to, I just don't want to be a beneficiary, I want to be a contributor to this family wealth. And then to explore the full spectrum of options in between the binary of sell the business or don't sell the business. Maybe we can simply get the business to the point where we can move from being owner operators to owner investors, or maybe we can sell down. And all of those things go to governance and training the rising generation not to be business operators but to be good owners, learning how to be an owner is a skill into itself that needs to be taught.
R. Adam Smith: That's nice. And being connected to the definition of legacy in your own way, which is the the fundamental topic I weave through the podcast of what is legacy, what does it mean to each person, it's different for each person, and to work together to extend that legacy in a way that works for the ecosystem. So, today we talked about time as a leadership asset, the power of pause both directions for the entire family enterprise as we look at the family circle that we talk about at the Ultra High Net Worth Institute, and also the family galaxy which I love that term that Alfredo de Massis talks about also on this podcast, and the importance of clarity and presence within the family business, within the family office. So, maybe just a parting word David and reflecting on this leadership trait of the power of pause if you would.
David Werdiger: Yes. So, the research from Yale says that more money doesn't make us more happy. What makes us happy is not things, it's experiences. And when we talk about experiences, what's that? It's how we spend our time. And in today's world where our time is being sucked away from us by our mobile phones which we love and hate, it's more important than ever to develop a better relationship with technology, to pause whether it's short pauses, whether it's a weekly pause, whether it's take away from technology for one day a week which is something I've been doing my entire life, there's such a power in that to appreciate what's really valuable in life. We don't know how long we're going to live, but we what we can do is we can make sure that every day we do have is spent intentionally.
R. Adam Smith: Thank you for that. And I'd like to thank you and our audiocast audience today for thoughtful and grounding conversation, really stimulating and a lot of a brilliant ideas and no shortage of things to consider. We talked about leadership and family enterprises is not just driven by urgency and the power of pace and constant motion, which of course is important to stay going and be competitive, but also the ability to pause and create clarity and separate this emotional drive, greed, wealth creation, being competitive, with decision-making and steward the business and the relationships across generational transfer with a culture of thoughtfulness. So, thank you for sharing some of those perspectives today on the podcast.
David Werdiger: Thanks so much for having me. Always been a pleasure.
R. Adam Smith: Really great. Thank you so much. This is R. Adam Smith signing off, stay tuned for the next episode of the family business audiocast.
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