Multi-generational family enterprises, their businesses, governance structures, and teams are many things, but perhaps their most common attribute is busy. Across the enterprise, there is inevitably a growing number of activities to complete and actions to engage in. In busyness and action, it can be easy to let task completion become what defines the family. Yet, understanding identity is exceptionally critical for organizations of all sorts. We must know who we are, before we can determine what we will do.

While families are each distinct with their own nuances, I would argue that there is in fact a common thread of identity across all families, namely that all successful families are at their core investors. Said differently, investment is the core activity that the family is engaged in. Of course it is easy to point specifically at explicit financial investments as clearly being investment activity. But across the totality of the family’s activities, it is their character as investment that is the thing most in common.

This may be surprising, for many business-owning families, it is easy to point to roles as ‘operator’ or ‘manager’ of the business as the most critical statement of identity. I would offer to that Warren Buffett’s excellent rejoinder that he is a ‘better operator of business, because he is an investor; and a better investor, because he is an operator.’ The key is that these are two sides of the same coin – arguably it is more a question of degree than activity. The day to day business operator is just a more completely engaged investor vs. an investor who may be more broadly deployed in his investment activity. The business owner is ultimately engaged in making resource allocation decisions to achieve growth – sounds similar to investment right?

So, What is investment? A quick dive into the word’s etymology, points to investment being derived in in the 14th century from the Latin investire, or namely the putting on the official robes of an office. It is easy here to picture a priestly garment being put on prior to engaging in religious activity. In the early 1600s, the term had come to have a financial context, as it was seen as one’s capital being given a new form in the pursuit of profit.

Capital today is a term that may only be used in reference to ‘capitalism,’ but not long ago, Capital was an exceptionally important concept. Marx, for example, was acutely aware of Capital and its struggle with Labor. At its core, Capital is a ‘supply of useful assets or advantages’ per Merriam-Webster. In the family business / office world, it has become quite common to acknowledge that family’s possess multiple forms of capital (Jay Hughes’ Five Capitals for example).

The family, whether conscious of the fact or not, is always choosing between investment of its capital or letting it remain fallow. Life here is in fact quite binary – either we can be busy growing or we can decline. Families would do well to be conscious of this fact. They must be regularly and consciously choosing to ‘clothe its capital in new forms.’ These new forms might be new financial investments, but it could equally be in sending a family member to an institution of higher learning, or assembling the family together for a summer retreat.

These actions take one or multiple forms of the family’s Capital and converts it into something new. The natural next question is “to what end?” Done thoughtfully, these conversions deliver back to the family profits in some form. The quantifiability of financial assets makes those the most easy to measure, but families would do well to at times pause and contemplate the growth of their other Capitals and the efficacy of their investment activities.