Family Business Audiocast | Episode 58 | Jeremy Cheng
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R. Adam Smith: [Intro] This is R. Adam Smith, welcome to the Family Business Audiocast. I'm pleased on today's episode to be joined by Jeremy Cheng, who is the principal at Landsberg Gersick Advisors, one of the world's leading advisory firms dedicated exclusively to family enterprise continuity across generation. Jeremy is calling in from Hong Kong today. Jeremy, it's great to have you on the show.
Jeremy Cheng: My pleasure to be here with you, Adam.
R. Adam Smith: Wonderful. I'll tell our audience a bit about you now and we'll jump in. Jeremy works at the intersection of family advisory, education, and research. He is not simply focusing on problem solving, but also building the entire learning capacity for enterprise families in Asia and beyond, helping them rethink legacy, governance, and shared futures in a world where careers, identities, and ownership roles are increasingly boundaryless and global. In addition to his advisory work, he is deeply involved in family enterprise education, working closely with rising gen members to help them develop clarity, capability, and confidence. Not just as heirs, but also individuals navigating complex family and professional systems.
R. Adam Smith: [01:00] Jeremy also teaches at the Chinese University of Hong Kong, which is a globally respected institution known for integrating Eastern tradition with Western academic rigor. This perspective deeply informs his work with families across Asia and beyond. I'm very delighted to have you today on the audiocast. And just briefly about your firm that you work at, Landsberg Gersick is a global advisory educational partner to leading families and supports families by designing government systems, guiding families through succession, ownership evolution, translating significant research over decades into actionable solutions, and then helping families navigate the complexity of all the issues around their ownership and liquid and business wealth. And it's a leading firm in that space globally.
R. Adam Smith: [02:00] So, Jeremy, we were talking earlier about some of your passions, why don't we start with your journey into the family enterprise space and what are some of your passions today in the business and through which you advise your clients?
Jeremy Cheng: [03:00] Sure, Adam. I think my journey of advising families or researching family goes back to almost two decades back, when I was first time with the Chinese University, and then our dean having a very great friend with University of Pennsylvania, and then he was an expert in this field of family business, and then the dean wants us to, you know, do something while his friend is around. At that time, when you talk about family business in Asia, you know, the father is there, the mother is there, the son is there, they will say we are not a family business, a lot of the stigma, you know, attached to the words family business.
Jeremy Cheng: It was an interesting experience organizing courses for family business since then, and it was a failure experience because people are not even aware of what family business means. But then, that particular failure triggers us to think a lot more about what is really need for families in terms of education, in terms of research, and in terms of advisory work. And it comes to me in one year later, when we work with FFI, the Family Firm Institute in the United States, we are to launch the first family advisory course in Hong Kong, the first one in Asia as well.
Jeremy Cheng: [04:00] And that brings me the fortunate opportunities to work with many of the leaders in the field in Asia. I think that brings me in the field of family advisory. And when we teach or when we do research, it is often times when you teach from the theories, families are not that interested in it. So it brings me to a bit of more advisory work and I often jokingly said my clients, especially the first few ones, are my guinea pig. Guinea pigs of, you know, what we have been thinking of in terms of the research and dynamically trying something out. But Asia has been a very interesting market in terms of the Western philosophies and the Western tools in family advisory may not always pluck well into the country in terms of the culture and sometimes in terms of the family establishments as well. So that's why all these evolve a little bit over time.
R. Adam Smith: [05:00] Right.
R. Adam Smith: Now, there's a lot of expertise in the market for family offices and family enterprises, of course, as we've covered on the podcast over 55 times the last two years with some of your colleagues in the industry. There's really incredible advice out there to support the family in their transitions, their next generation, their liquid assets, their governance, their culture, of course. It's very multi-faceted, and a lot of this advice really is increasingly complex and needs to move into a systems-based framework, which also includes research, not just the practicalities of it.
R. Adam Smith: [06:00] So, could you just talk about the evolution of of these family learning systems and also the role of research in the advisory side?
Jeremy Cheng: This is a very good question, Adam. So, we always talk about learning and education, but then you are, I think, the first one to ask me about how the learning system changes or evolves over time. And, of course, in the field of family business or business family, we always talk about the generational changes and that will drive the changes in the learning system. Well, transitioning from the first generation to the second generation, the type of learning or the content or the competencies required by the second generation leaders will be very different from that of the first generation. And similarly, for the transition from the second generation to the third generation.
Jeremy Cheng: [07:00] But then, back to basics, I tend to see that over time there are key competencies, no matter you are in the first generation, second generation, or third generation, you will need them. So, this is the core competence that I will tend to see over time that a family has to build. Well, but then, to what extent each of the family member will have to build different competencies? And to what extent that would be an art and then the family will have to think about the roles that they want for each of the family members, whether they are an investor, whether they are an governor, or they are an owner. Or, of course, they can combine two roles as an owner-governor as well.
Jeremy Cheng: [08:00] All this brings up the evolution of the learning system and, as a learning architect of those kind of governance system, this would be important points to note to see how the family changes, the ownership system changes, and the business system changes.
R. Adam Smith: [09:00] Okay. There are gaps in learning within the family enterprise that need to be addressed internally and or externally all the time. I think that increasingly because the family office business is getting so large, maybe 10,000 family offices, 6, 7, 8 trillion, multi-generational, multi-locational, of course the family businesses globally are probably 60, 70% of the entire global GDP anyway. So, there it's a very large, very complex business, and I think also in Asia it's a different culture, different type of business, more focused on longevity, maybe more stickiness with the generational transfer. But in any event, learning is a really core soft activity talking about the softer power drivers versus the hard power drivers. So, maybe just talk about the essentialness of the continuous learning process by large family enterprises.
Jeremy Cheng: [10:00] Sure. So, with this, we have to bring up a keyword here, which is by the word curriculum. A lot of the families, when they are thinking about education or learning or development, they think that it is about formal education. And we all know that business families and their rising generation members do not only need formal education, doing a very good degree with a top US school or European school or here, schools in Asia, is a and an essential element I would say. But then, does it equate to helping the family and then the business and the ownership transition to be very successful? I don't think so.
Jeremy Cheng: And we all know that families will need different dimensions in terms of the family skills, how we can make sure that the rising generation can work with their cousins or with their siblings. How can we make sure that they understand the business even though if they are only in the investor's role, they would be able to make a good investment in the business while getting the equivalent return from that. There are ownership skills as well. But basically, and back to basics, we have to remember that we all are human. There are fundamental personal skills in terms of personal finance, in terms of how we should interact with our family, and understanding our health, well-being, etc. And all this are important.
Jeremy Cheng: [11:00] The question becomes, there are so many things that we have to learn as an individual and as a family, how should we make sure that the resources are best utilized and invest into the dimensions that aligns all the family together or jells all the family members together. And this is where I coin the term governed learning. In a way, it starts off again with the values, the vision, and the purpose of what the business family is about. And then, to achieve that particular vision, what kind of learnings should we be building in the family system or the business system or the ownership system? And with that, how can our governance system be an active supporter or the guardian to do this? So, this is where I come up with the term governed learning and there are different stakeholders with it.
R. Adam Smith: [12:00] So, the broader learning environment for the more complex enterprises, I think is well covered by the by some of the lead colleagues of yours and organizations in the business, right? We have the Ultra High Net Worth Institute with James Grubman and Dennis Jaffe talking about family capital and the ecosystem. I cover legacy and the more holistic family enterprise on this show. We have also, of course, the ever elite Alfredo De Massis talking about the the galaxy of the family enterprise. And then, we also have the Family Firm Institute and so on, looking at the holistic ecosystem that also includes governance, I think. Do you think the larger families are starting to appreciate governance more in the world as their organizations get more complex, you know, looking at like technology, cyber security, generational transfer, illiquid concentration? How far is the governance learning evolving, and how much more learning needs to be needs to be like understood to really have these organizations operate super effectively as a corporate entity?
Jeremy Cheng: [13:00] Great question, Adam. I think from what I have observed or what my clients request me to support, basically, I can see that there is a better understanding of what governance is about. So, recently, I think even with mainland Chinese families, they are looking into trust solution or other wealth management solution. But then, they are thinking how we can make sure that those hardware will function well, and what are the software required to make sure that all this hardware, the technical side of it, will be helping the family to sustain the future. So, in that particular sense, I think the families are more aware of what governance is, and to prepare for that particular learning journey.
Jeremy Cheng: [14:00] That said, there are still significant gap in the field about matching or, you know, bridging the hard side with the soft side. And then, going back to what we have mentioned, of course there are a lot of colleagues working on what you have mentioned Dennis, and then Jim on Wealth 3.0, and then, you know, many other colleagues like yourself talking about family office and legacy. The important piece is still about family. How can we make sure that the family develops? That would be the fundamental goal of governance. Let me backtrack a little bit because there are three major pieces of governance conceptualizations that I have. So, to begin with, it is really about control. A lot of the the corporate governance literature or a lot of the corporate governance work is really about building the rule book for families or for the business to follow and then to make sure that all those deviant behaviors do not happen.
Jeremy Cheng: [15:00] This is where the word control comes in the governance work that, you know, many families or many business are doing. The second part, I've mentioned the importance of family, it is about collaboration. How we can make sure that the two generations work together, and within the same generation they work together, and for family and non-family members they work together. Governance, if I can cite my my colleague Dennis Jaffe's work, governance is about decision making and how we can make collective decisions together effectively. That is the important part. And a lot of the time advisors stop here with the control and collaboration. Fail to think a lot more about how the family and then the business and ownership may evolve. And that is where development would be needed. With that, how we can build a governance system that evolves with all the needs of the individuals and the families will be required, and that is, you know, where families are getting more and more attention to.
R. Adam Smith: [16:00] Okay. Thank you. Some really wonderful reference points and people you mentioned. I just was noting to celebrate James Grubman's movement from his more full-time role at the Ultra High Net Worth Institute, just stepping down this month, actually. So just a hats off to him for his work to the community and being on the podcast previously. Taking governance to next gen, there's two things I want to mention: the ambiguity of how next gen members become involved in management and their struggles in doing so effectively, either because of the intellectual capital capabilities and related imposter syndrome or stress, or just their desire to be in that role within the family business.
R. Adam Smith: [17:00] And then, the related issue of diversifying their knowledge and applying their passions in ways that are different than the traditional family business activities. Could you can comment on that, please?
Jeremy Cheng: The role ambiguity is a true phenomenon that we observe in rising generation members. But then, if I could be blunt, some of the thinking or that particular role ambiguity comes from the parents itself because parents often ask the wrong question. So I just mentioned at the very beginning of this particular interview, I did a research on the rising generation career. And then, I see often times the parents of the rising generation ask one important, but I would say wrong question to the rising generation, which is do you want to come back to the family business, or do you want to work outside?
Jeremy Cheng: [18:00] Often time, the rising generation, they have to think and they have to make a false choice between working in the family business or working outside, and there is no other alternatives. But we can see that in this particular world with a lot of the changes, it's so dynamic, and then we begin to see more of this boundaryless career, meaning rising generation members can come in to the family business, leave the the system, work outside or create their own ventures, and then come back to the family business, and work outside again. That is not an issue. Parents in the earlier days, they still hold the thinking of linear progression. In a way, what they believe is career has to be progressive. You have to work from bottom up and then at each level you gather different knowledge, experience, and then you move to the next tier and then you continue with that particular cycle.
Jeremy Cheng: [19:00] With the rising generation and with this disruptive world that we live in, we see that this particular mentality of linear progression does not work well. And then, allowing the rising generation to create their own mark, to create their own legacy by building their own ventures is one of the ways that we can engage the rising generation as, you know, a business family. So from my research, we identify four different career patterns in terms of how the rising generation can build success in terms of their career, and I can go further, but then I I will just take a pause here first.
R. Adam Smith: [20:00] Let's continue on the topic of entrepreneurialism. We did cover entrepreneurialism in the podcast several times in different ways with next gen. Like, the the issue of entrepreneurialism is tricky because it is a very important focus to to both catalyze the intellectual passion of the next gen, but also to infuse entrepreneurialism and innovation into the company. But there are different types of entrepreneurialism and there's also different capabilities to to absorb the dynamic nature and change of entrepreneurialism. So, can you just talk about how that's different between the Asian societies and, let's say, the capitalist American society?
Jeremy Cheng: [21:00] This is a deep question, Adam. We believe that it is still about risk taking, and this is the fundamental. In Asian society, we tend to see that failure is something less acceptable, even though I will have to say that the norm has been changing. But then, going back to, and by the way, this is very different across different countries. Last week I was in Bangkok and then Thai family business, they are really supporting their rising generation for those entrepreneurial ventures. And then, I would say for the rising generation if they miss out that particular opportunity in Thailand, it's a big issue. And they can see that, well, because the family is giving a lot of the resources to support, you know, what they will try to build in terms of the financial resources, in terms of the family network, which is basically very important.
Jeremy Cheng: [22:00] But then, the most important thing for them is they allow the rising generation to fail. This is the the reason why I really love Thai as a market. But then, if we go to another anchor market of my clients, which is the Philippines, very substantial families there and when I talk to their rising generation members, they fear about going on their own and then building their own venture because if it is a failure, it will means something to the family that is seen still sometimes as an outcome of losing face. And that is something detrimental to the success of the continuity of the family portfolio.
Jeremy Cheng: [23:00] That said, I think, you know, families in Asia, they are trying a lot more to embrace the portfolio concept. By portfolio I'm not talking about the investment portfolio that Adam, you have been a master of. It is really about how we can make use of the family resources to build the ventures and to make sure that the rising generation, they can find their own niche in the family enterprise system itself. And the family has been embracing also different roles. We have mentioned about the role of being an owner, the role of being an governor, or the mixture of both. And then, the business families that I work with, they begin to see that this differentiation is truly useful, and that actually fits the portfolio concept more and more. If we have to force the rising generation into a particular role of being an operating owner, and you have many of the very capable rising generation, it is going to be pretty problematic. So allowing them to find their own niche by giving the adequate support, that is important. And I think for this particular part, the Western philosophy and the Eastern philosophy are pretty much the same. That said, it is really about the implementation, how the parents can express their support to the rising generation, that may make a difference here.
R. Adam Smith: [24:00] Great. Thank you. I agree with that. It's a wonderful response. We're going to cover just one more topic, talking about the expectations, which of course is linked to the process and communication, consistency and the curriculum of governance and learning and external advisors coming into governance, coming into the ongoing learning and systems because expectations are both practical and ego-based. So, if you could just talk about the emotional intelligence side and the expectation side within the family enterprise and where is the most challenging to deal with those expectations across both wealth and the next gen within their family dynamics?
Jeremy Cheng: [25:00] Adam, we talk to many of the rising generation, and of course it is not only about the rising generation, it's the entire family. When we work with families on improving the emotion, the relationship, emotional intelligence comes in. And then, it is not only about, you know, nurturing the rising generation. I think one of the important phenomenon or one of the important advocacy here is really, when we try to develop the rising generation, it is also about developing the parents or incumbent generation itself. In a very recent work with a family, we talk about mentorship. When we talk about, oh, let's have a program to mentor the 4Gs, every single senior generation they think well, this is a great idea.
Jeremy Cheng: But then, they become to hesitate a little bit when we come down to the, you know, implementation. Who could be a good mentor? What is a good mentee? And then, what is the qualities? And then, a lot of the current generation they are thinking, should I become one? Or could I be one? And that actually brings us to the concept of shall we actually train the mentors itself, which is actually an important element for all these learning and development initiatives. And emotion comes in because every time when you have a parent mentoring the kids, which may not be a very good idea, or when you have an uncle or an auntie to come and serve as a mentor for the rising generation, the dynamics issue, the emotions issue have to be resolved. And that is where when we embrace a family system thinking, that would help a little bit more. Of course, managing the emotions itself will also requires a power dynamics.
Jeremy Cheng: [26:00] A lot of the times, when we have the rising generation who will be mentor or who work with the current CEO, who is their uncle or the father itself, they may feel a lot of pressure. And even the learning opportunity is presented there, they may not be able to, you know, go to the full benefit. And we have to understand that particular emotion in the rising generation in terms of working with a current generation, especially it is for a high-stake project, meaning if that particular project will determines the outcome of the current company or the performance of the company to a substantial extent, that would actually matters, and the supervision of the the current gen as well and how closely they will look into it. So there are many different elements. So governance again, set the boundaries or the criteria here. How could we design the best interaction, the frequency, the way of all these learning and development activities? And who should be ultimately responsible? That would be, you know, the questions that well, many families would have to think about.
R. Adam Smith: [28:00] Great. Thank you. Okay, good. Last comment is, let's say going back to your point of view philosophically on governing within families and their transition, their growth, their change, their continuity. To me, that all relates to their legacy. Can you just talk about your own personal view of legacy, which is the core thread of this podcast, is what is your view on legacy, what does it really mean, and how does it relate to the society at large for the large families?
Jeremy Cheng: I think these days I hear more and more of the rising generation talking to me saying that Jeremy, please take me out of the plan, meaning the plan of inheritance. They don't want to do anything with the family wealth, in a way. They feel like it is a burden. And back to the market that I just mentioned, Thailand, there is a rising generation sharing with me, he built a business, well using the parents' parent company's resources and then basically listed that particular business as well together with the parent company. Before listing, he actually gave back all the shares of the new enterprise, LGA, to the parents. Which is to me a big surprise. And I ask him why. He gave me a simple answer, I want my freedom back.
Jeremy Cheng: [29:00] Often time, when we talk about legacy, it is something that you have to preserve and you must preserve. Parents or the current generation sometimes fail to see and give room to the rising generation to reinterpret that particular legacy. Often times, that emotional burden actually will suffocate the rising generation quite a bit. So, back to a simple advice, which is basically allow the rising generation to reinterpret what the legacy is about, what wealth is meant for, and how they can be the better version of themselves without losing the tight with the family. And then, I think that would be good enough for a lot of the families who suffer from the issues with legacy itself.
R. Adam Smith: [30:00] Wonderful. Thank you so much for that. It's wonderful to have you today in the early hours of the morning in Hong Kong for hearing your wisdom. Thank you for joining today on the podcast, Jeremy.
Jeremy Cheng: Thank you, Adam, for this inspiring interview.
R. Adam Smith: It's wonderful. This conversation reminds us about continuity. I think it's not just designed on structuring and a curriculum, but also through continuous learning and how that forces us to think together and bring value to large families and help them in their journey to to build and sustain legacy. Thank you for your perspective today. This is R. Adam Smith signing off. Stay tuned for the next episode of the Family Business Audiocast.
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