**The Importance of Conscious Culture in Business Families**

17 min readJan 9, 2021

Dominik v. Eynern, Family Hippocampus

Carlos Augustin Moreno, Family Hippocampus

Abstract

This paper discusses the importance of having a conscious culture for more family engagement in the interest of success for the family and the businesses. The term ‘culture’ has a long history and is now used in different intellectual disciplines with diverse and sometime confusing meanings[1]. We focus on the anthropological interpretation. Culture is a distinctive way of life of individuals organized in social systems that defines their social reality. It comprises social norms, socially acquired values and beliefs that delimits the range of accepted behaviours. Culture is an emergent property that arises from a complex, highly non-linear dynamics by recursive social process defined by explicit and implicit communication.

We will highlight the importance of culture for social dynamics in business families and the latest addition to the term: ‘conscious’ culture.

The Emergence of Consciousness and Culture

Consciousness is the ability to experience reality, to be aware of our inner and outer worlds. It allows us to adapt to our environment and act to promote our lives. All living beings possess consciousness, but human beings have a unique kind. Unlike plants and other animals, we can think and act beyond instinctual drives and conditioning. We can be autonomous (from the Greek, “self-governing”). While this autonomy is a possibility, it is not a given. We must develop it through conscious choices[2].

Consciousness is an expression of life, an emergent mental state, a process and phenomenon that still cannot be explained and analyzed to the full extend by neuroscientific methods. So far, we cannot locate conscious experience in one region of the brain.

What we know is, our neurological structure generates consciousness, but what does it emerge out of? Consciousness is a neural process which occurs in our mentalizing network of which much is located in the prefrontal cortex rsp. in the cognitive control network, where executive functions like top-down attention focus, reasoning, abstractions and awareness are processed. Subcortical regions like the amygdala (threat detection and response) and the reward circuitry (ventral striatum, nucleus accumbens), the anterior cingulate cortex (error detection) the thalamus (stimuli selection and attention focus) and the insula (involved in processing bodily experiences) are also involved in generating consciousness awareness for bottom-up and top-down attention.

So, consciousness is not to be seen in isolation. It is a combined product of constant, bidirectional communication and interaction with sub-cortically driven ‘other-than-conscious’ processes that tend to dominate conscious processes and mental states.

We can say that conscious processes are emerging in conjunction with subconscious bodily processes. Other-than-conscious processes are always in action (even during sleep) and in interaction with the internal and external environment, guiding conscious awareness, intentions, perceptions and actions. Thus, other-than-conscious processes leave fingerprints on all our mental and phenomenological experience, our subjective mental model of the world and corresponding beliefs and expectations.

The difference between conscious awareness and the realm of other-than-conscious processes is a function of successfully competing semantic markers that reach a critical level of neuronal activity and signal strength.

Semantic markers (respectively semantic pointer theory as it is called originally) can be applied to mental concepts, rules analogies, emotions, action and intentions, language and meaning, beliefs and values, creativity, the self, and finally — consciousness and perception[3].

Semantic markers can be described as vectors that build our mental model of the world, which defines how we perceive the world and how we respond to it.

These semantic markers are basically complex neural firing patterns across assemblies of neurons creating sub-systems, that drive perceptions and actions based on integrated cognitive and emotive information. They consist of recursive bindings of simple neuronal representations of multi-sensory stimuli, derived from experienced stimuli including associated emotions that are generated and maintained through neuronal firing patterns running on distributed networks in our brains.

Multi-sensory binding means that we associate various neural stimuli that occur on a given spatiotemporal scale and build combined representations which emerge into complex, semantic markers. For instance, a smell from a scenic landscape we wander through and value highly and we form the belief it must be protected by all means while feeling relaxed and happy because from this experience our purpose to safeguard the environment emerges which provides the basis for the development of goals and strategies to service the purpose that has emerged. This embodied experience is codified and compressed in a semantic marker which is more than the sum of its parts. It is a sentence like structure, a created concept and neural symbol pointing to a fuller semantic content.

Perceptions occur with mixed awareness levels and works also through semantic markers. It converts internal or external sensory inputs into symbolic structures[4] i.e., semantic markers as input vectors and the mind searches for matching semantic markers or response vectors within the neural structure in order to create the most suitable output vector, based on inferences i.e., a neurally calculated, intentional and malleable probability. So, the neural state described above is reconstructed based on semantic markers, triggered by internal or external stimuli like smell and can only reach consciousness depending on signal strength.

More precisely, consciousness is a multilayered self-organizing, dynamic, neuronal firing process with structural coupling, characterized by reinforcing (excitatory neuronal relationships) and diminishing (inhibitory neuronal relationships) feedback loops that can morph into neural symbols made of semantic markers that are malleable[5]. For conscious awareness the net result of neuronal, semantic marker activity needs to generate sufficient signal strength in order to reach the threshold of the limited resource we call ‘consciousness’Conversely, when neuronal activity is reduced, the signal strength falls below the threshold and the information slips out or conscious awareness.

Typically, we become conscious on what we focus attention on. Brain resources are focused on what is important to our organism driven by internal or external bottom-up stimuli or top-down, by motivations, intentions and emotions. And what we focus attention on, we become consciously aware of. Most important in this context: attention and neuronal firing patterns can be shifted via cognitive appraisal! Behavioural intervention on a reflective consciousness level can enhance or reduce neuronal firing rates and the synchronicity of competing patterns. The amplified neuronal activity reaches the threshold and new information (re)-enters conscious awareness.

Targeted behavioural Interventions can create the required consciousness by increasing the signal strength on the individual level as well as on a social system level. Regular family meetings that are designed to discuss the prevailing culture in a psychologically safe environment should elicit the interpretation and re-interpretation of social norms and system dynamics in current contexts. It fosters shared meaning making of ‘culture’, which increases signal strength to permanently reach the threshold of conscious awareness.

We are obviously alluding to reflective consciousness, which is unique to humans, because it requires the building and holding of mental images and abstraction in various spatiotemporal dimensions with the help of language, communication and interpretation (forming and re-forming semantic markers). This ability is essential to develop culture as allows us to form conceptual thought such as identity, values, beliefs, purpose, goals and strategy.

Culture is a meta-narrative that provides a meta-frame which shapes social cognitions, social expectations, motivations and social- as well as moral emotions along the consciousness continuum. Culture answers deontological questions about how things should be done.

Culture works on a conscious and unconscious level! Cultural norms on higher consciousness levels also innervate lower, other-than-conscious networks that in turn, impact behaviours on a conscious level. It affects attention focus and learning patterns[6] perceptions, and actions. It leads to inattentional awareness and inattention outside conscious awareness. This in turn affects culture which we can see as boundary condition.

But where does culture come from? Like ‘consciousness’, culture is an emergent property derived from the dynamics of social organisms. It is created by an autopoietic self-organising, dynamic social process of intersubjective, explicit and implicit communication[7]. It is a social mechanism for the transfer of semantic markers[8], which takes place in a recursive process with feedback loops that never stops, because we ‘cannot not communicate — as every behaviour is communication’ to quote the Austro-American psychologist Paul Watzlawick[9]. Furthermore, to exist means to interact[10]. Like every cell, we humans fight for our existence and survival, so we seek to perpetually interact and form social systems that are defined by an exchange of information in communication. To evaluate the communication process, we attribute ‘meaning’, which is a multidimensional, relational interpretative process that results in a social construct that can be seen as the currency of communication. Neurologically, meaning making is complex: it depends several different kinds of nested interactions of synaptic activity among neuronal assemblies embedded into the neural processing of context and social environment. The interpretative meanings of boundary conditions feed back into any meaning making process.

Collective meaning making with shared values, beliefs, purpose and goals lead to the social construct we call ‘culture’. But culture is not always helpful. At the time of creation, it provides social utility for the many, but boundary conditions may have changed due to social interactions influenced by culture and suddenly — it is outdated. A minority may be endowed to the perceived utility derived from the old culture, but the majority does not and may initiate change that might be turbulent and ridden with frictions, tipping the social system into chaos. Systems go through transition phases and can re-emerge stronger because of the high degree of adaption capacity, which is rooted in culture. A lack of adaption capacity leads to rigid systems and risks the collapse of the system into chaos. But even without detectable big, perturbational events — systems are constantly transitioning from one state to another on any spatiotemporal scale. Every time you take a look at the system, you only see a snapshot of a system in transition[11], it only seems to be in a stable state. In reality, it exhibits constant variations.

The role of conscious culture in social systems perturbed by generational succession

Family succession is not just a transfer from one generation to the next, but from one culture to another. In general, to create long-term success, family members have to transform their underlying mindsets by embedding more conscious mental models (mindsets) and behaviors

Victim: Unconsciously focusing on factors outside of one’s control and blaming others/circumstances. Passivity and lack of willingness to step up.

Knower: Unconsciously treating views as objective truth and lacking curiosity to alternative views. Closes down options that others may contribute.

Attached: Being so attached to results, at any cost, and unconsciously sacrificing personal values/integrity.

Player: Consciously focusing on what is under our control and what we can do to improve the situation. Drives performance and results.

Learner: Curious to understand views of others and alternative perspectives. Encourages family engagement and real understanding of stakeholder needs.

Integrity: Consciously acting in accordance with personal values and acting with integrity (e.g., not saying “Yes” when you mean “No”).

Successions are major perturbational events, that require conscious mind sets. Generational handovers are a prime example for large, significant perturbations with ambivalent outcome options. They are reoccurring perturbations that re-gestalt systems and the success or failure of the transition outcome very much depends on the prevalent culture, which shapes our mental model of the world respectively our mindsets. The outcome of this transition phase very much depends on the cultivated mindsets[12] of the protagonists. The knower-mind-set as described in the left box above is basically what is called a fixed and soldier mindset. It is easily threatened by challenges and does not belief in the ability of adaption, radical changes and learning. It exhibits a strong self-protection bias, tends to defend positions (often interpreted as ‘ego’) and is less likely to focus on common interests. It is a rigid mindset that demands controlled adoption of the old way, cementing the traditional culture and prevents successors to ‘be’ themselves and influence the culture, which hinders natural system-evolution and frustrates successors because they feel they are denied agency. This rigidity can be detrimental to the desired outcome of a successful succession in an ever-changing environment that can be intensely dynamic in our VUCA world.

Conversely, the learner-mindset described in the right box above can be compared to what is called a growth and scout mindset, which has greater adaption capacity. It is intrigued by challenges and contradictions to the current mental model of the world that inevitably come with successions. Someone with a growth and scout mindset beliefs, that new stimuli are an opportunity to grow and learn by adapting the mental model of the world with agility in a way, to improve navigation capabilities and manage transition with successfully.

Culture is shaping mindsets that are key for system evolutions and phase transitions of any sort, which has wider implications than successions. In fact, the advantages of family businesses are rooted in their specific mix of private and business-culture, their attitudes, responsibility respectively accountability, and endowment to the business, which often includes the region the business is operating in. The Austro-American management consultant and founder of modern management Peter Drucker once said: ‘culture eats strategy for lunch’[13]. This is further substantiated by The Conference Board CEO Challenge: ‘The cultural DNA of an organisation is critical to success, from operational efficiency to better customer service, to greater talent attraction and retention, to higher levels of business performance and breakthroughs in innovation[14].

Thus, culture takes a pivotal role in the success of business families and family business.

But only a conscious culture empowers a social system through group agency to manage social system change, evolution and success. Non-conscious cultures may create mindsets that lead to turbulent revolutions and social frictions at the expense of the social system in terms of evolutionary success.

To manage culture, to make and keep it useful in terms of social utility, it is paramount to become aware of what culture has been created by the process described above and to check, if the prevalent culture and the mindsets that have been shaped still provide the social system with sufficient social utility. After all, we can only manage what we are aware of, what we are not aware of, tends to manage us[15]. If the culture does not deliver the optimal level of social utility, orderly change can be initiated to maximize the benefits and to minimize frictions and avoid turbulences which can tip the system into chaos. In the interest of all stakeholders, this is not an option — it’s a must to create and preserve socio-emotional and financial wealth of the family and thus, the wider society for all current and future generations to come.

We have established that consciousness and culture are emergent properties, how they are impacting our social behaviour on a conscious as well as unconscious level with various degrees of social utility and that they are malleable. Next, we want to highlight what conscious culture means in a family business context and how it can be analyzed and changed in practice.

Consciousness in business families

Business is an essential part of business families, so doing family business consciously is an essential aspect of living consciously. In order to do family business consciously, we need to be aware the family dynamics and business world.

A conscious business family promotes meaning for all its family members. They are also asked to think of their relatives as human beings. As human beings we all are different, we look at the inner and outer world with different lenses due to the way we look at the world around us is conditioned by our beliefs and mental models. On the other hand, a conscious business family requires for its family members to understand their business.

A conscious business family fosters engagement and happiness in individuals, respect and solidarity in all stakeholders, and mission accomplishment in the business.

While most of business families recognize that family-owned businesses need family members with a high level of technical knowledge in order to succeed in this disruption times, we do believe it is even more important to have family members with a high level of consciousness.

Without conscious family members, a family-owned business cannot get lasting success. How many business families have lost their wealth? How many family-owned businesses went bankrupt because the lack of shared long-term vision? How many business families have broken because of a lack of authentic communication based on values?

Conscious family members are a business family´s most important asset for long-term success.

A conscious business family consider 3 dimensions: the impersonal, task, or “It”; the interpersonal, relationship, or “We”; and the personal, self, or “I.

Over the long term, the It, We, and I aspects of this system must operate in concert. Although it is possible to achieve good financial results in the short term with unhappy family members, cold relationships, or wasteful processes, the gains will not endure. Strong profits will not be sustainable without equally strong interpersonal solidarity and personal well-being.

But, how do we become a conscious business family?

“The best way to do is to be,” said Lao Tzu nearly 2,500 years ago.

Attention is normally drawn to preserve the financial capital (the having) and business families tends 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. Our 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 capital: human capital, social capital, and cultural capital) and get lasting success.

Conscious business families require conscious family leaders.

Consciousness in family leaders

Conscious family leaders take responsibility for their lives. They don’t compromise human values for material success. They speak their truth and listen to others’ truths with honesty and respect. They look for creative solutions to disagreements and honor their commitments impeccably. They are in touch with their emotions and express them productively. They are able to:

· Demonstrate: Practice setting the example of 7 key qualities: Unconditional responsibility, essential integrity, ontological humility, authentic communication, constructive negotiation, impeccable coordination, and emotional mastery.

· Demand: Once you are able to demonstrate and walk the talk, you earn the right to demand others the same behaviors.

· Deliver: Uphold the standards holding family members accountable showing that you are serious: regularly acknowledging good examples and discussing breakdowns.

· Disseminate: Empower more family members to be the carrier of the way our business family does things over here: Our culture.

Culture in business families

Let’s agree on this, to start with: culture is too important to leave to chance. It will either help or hinder the family’s ability to execute strategic objectives, preserve their wealth and retain family bonds. A shared culture will inspire the engagement of family members — which is why it is a leader’s primary role to develop and maintain it.

Everybody knows it exists, and everybody knows it matters to family-owned businesses. But there’s little consensus on what conscious culture actually is. Let alone how it influences family dynamics, or how it can help achieve lasting success.

Conscious culture

Conscious culture is a mentally owned social construct made of semantic markers of shared beliefs (what is true); shared values (what is important); and shared norms (what is right) that are strong enough in terms of neuronal signal strength to permanently reach the neuronal threshold for consciousness in all members of the social system. The advantage of conscious culture is that members know what they are doing and can change their culture if circumstances require.

Culture, orients family members and shows them how things get done in their organization; what expectations they need to fulfil to fit in; and what they can expect — or indeed demand — from others. The culture is conscious to because it is explicit and collectively agreed.

Like a magnetic field that invisibly forms iron filings into infinitely intricate designs, conscious culture can align human thought and behaviour into productive patterns. The energy of this cultural field comes from our deepest needs and aspirations: to survive, to belong, to achieve, to grow and to find meaning in our lives. We can only satisfy these needs in a community, and there’s no community without culture.

As expressed above, culture is in part comprised of norms. Norms are shared standards derived from a family’s values. Norms help family members interpret and evaluate events and set expectations about appropriate behaviours in response to these events.

Norms represent expressions of a family’s core beliefs, such as how to prioritize objectives and treat one another.

Norms influence how family members see themselves, one another, the family as a whole, the business, and the world in which the business functions. They define how they approach decisions, and solve problems.

Norms are powerful. They ensure conformity. Not by formal sanctions as rules do, but by praising compliant behaviours and faulting deviant ones. Research shows that norms shape behaviour even more powerfully than financial rewards.

We humans are, after all, social animals who want to fit in. Conversely, social rejection causes cognitive dissonance and even stress, all those mental states we humans are eager to avoid. We care about other’s expectations. We are willing to adjust our behaviour to assimilate, knowing that we risk ostracism if we don’t. That’s a powerful incentive to comply.

There are three ways in which a conscious culture can support business lasting success and the family bond:

1. It uplifts family members’ spirits, appealing to their sense of purpose and value.

It quenches our thirst for meaning, eliciting an internal commitment to pursue a noble ambition. This alone unleashes tremendous energy towards the accomplishment of the business family goal. For example, in a manufacturing plant of a big textile family-owned business producing fire-retardant fibres, they are justifiably proud of their contribution to saving lives. It’s not just about the fibres: it’s a matter of life and death. The appeal of such a message to current and future members is clear.

2. It shapes how family members respond to ever-changing, unique circumstances.

It guides their actions without constraining their autonomy — as formal rules or micromanagement practices might do. For example, at a family-owned business we work with, we hold that ‘family members come first’, that ‘relationships matter’; that we must ‘manage compassionately’ while ‘demanding excellence’; and that our difference must be resolved in ‘open, honest and constructive’ ways.

3. It aligns family members’ efforts, orienting them towards a shared goal.

The immediate result is that the family mission remedies the bane of resource allocation trade-offs — a huge benefit to any business, family-owned or otherwise. One of those we work with, for example, has agreed to negotiate conflict through this cultural prism: what will best allow us to ‘preserve family wealth, keep the family bond and deliver value for all stakeholders’.

Which sounds like a goal we can all agree on. And perhaps we can agree on this, too: that conscious culture is a tremendous asset in achieving such a goal. And that as we have shown here, it need not be mysterious and is accessible to all family-owned businesses.

Summary

We described how the brain generates consciousness which emerges from other-than-conscious processes which are in constant dialogue with conscious states.

Culture is a social construct that like consciousness itself, is an emergent property arising from dynamic social processes. But the conscious awareness of culture often is fragmented in our conscious awareness with implicit and explicit parts. Implicit parts can be brought into conscious awareness and thus, changed.

We highlighted the importance of culture in a business family context and what tremendous impact it has for the success of mutigenerational wealth creation and preservation expressed in socio-emotional and financial terms. By the same token, culture can contribute to the demise of business families if it is unconscious, inhibiting system evolution and risking turbulent changes that result into chaos.

Culture can be a real catalyst for success and at the same time — a recipe for disaster. So, it’s better be consciously aware of the culture you have created and to be able to change it in the interest of socio-emotional and financial wealth preservation. This is essential for the legacy of the business family, specifically for all current family members (typically 3 generations) and for all future generations. But culture only prevails when it changes. For

[1] The Systems View of Life, Fritjof Capra, Pier Luigi Luisi, Oxford University Press

[2] Conscious Business, Fred Kofman

[3]Compare Brain-Mind, Paul Thagard, Oxford

[4] Compare Brain-Mind, Paul Thagard, Oxford

[5] Compare Brain-Mind, Paul Thagard, Oxford

[6] Brain-Mind, Paul Thagard, Oxford

[7] Compare https://en.wikipedia.org/wiki/Niklas_Luhmann

[8] Brain-Mind, Paul Thagard, Oxford

[9] https://en.wikipedia.org/wiki/Paul_Watzlawick

[10] Illusions of Human Thinking, Gabriel Vacariu, Springer

[11] Embracing Complexity, Jean G. Boulton, Oxford

[12]More on the discussion on mindsets: https://en.wikipedia.org/wiki/Carol_Dweck