As we start the new year, I consider this article an important reminder for families who have invested time and resources into formulating a family constitution, yet failed to implement the agreements they worked hard to create. Family businesses are often built on legacies, relationships, and dreams, serving as the foundation for multi-generational success. Yet, one recurring pitfall threatens to undo all that hard work: drafting a family constitution only to let it gather dust on the proverbial “top shelf.” I call this phenomenon Constitution on the Top Shelf (COTS). 

Over the decades, I’ve seen this pattern again and again, and it remains one of the most frustrating dynamics I encounter when coaching family businesses.

The Alarming Reality: A 60% Failure Rate

Across the ASEAN region, research paints a sobering picture: 6 out of 10 family constitutions fail, not because they are poorly drafted, but because they are never implemented. These well-intended documents, which could be the key to smoother governance and lasting family harmony, often end up forgotten or ignored.

Take the story of Family A, a third-generation manufacturing empire. Faced with escalating tensions among cousins, they engaged a consultant and spent three days drafting a family constitution during a retreat. Optimism was high, with the belief that this document would be the solution to their internal conflicts and pave the way for future growth.

Yet, within a year, the constitution had been all but forgotten. Disagreements continued to fester, roles and responsibilities remained ambiguous, and decision-making stagnated as rivalries grew unresolved. The family realized too late that the document had been treated as a ceremonial achievement—something to mark a significant occasion—rather than a practical, living document meant to guide them through the difficult times ahead.

This is not an isolated case. During a recent seminar, one participant shared their frustration: "Professor, we poured our hearts into creating a family constitution five years ago, but nothing has changed. It feels like we wasted all that effort." This sentiment underscores a harsh truth: without activation and compliance, a family constitution is merely an idea on paper, without any real impact.

Why Do Family Constitutions Fail?

There are several key reasons why family constitutions fail to achieve their intended goals:

Unrealistic Expectations: Many families enter the process with the belief that the constitution will be a quick fix for long-standing issues. They underestimate the amount of ongoing effort and commitment required to make it truly effective.

Lack of Leadership Buy-In: For a family constitution to work, senior family members must actively champion it and lead by example. Without their full engagement, the document is unlikely to gain traction.

Day-to-Day Operational Pressures: The demands of running a business often overshadow the more strategic and long-term need for strong governance. Operational pressures can make it difficult to prioritize family governance.

Conflict Avoidance: Families may avoid tough conversations about succession, ownership, and roles. These uncomfortable discussions are often postponed or ignored, making it difficult for the constitution to have any meaningful impact.

Cynicism from Past Failures: Previous attempts at governance may have failed, leading to a lack of trust in new initiatives. If families have experienced failures in the past, they may approach a new constitution with skepticism.

No Enforcement Mechanism: A family constitution without a shareholders’ agreement is like a recipe without ingredients—it lacks the legal teeth to enforce its provisions. This makes it easy for family members to ignore the rules laid out in the constitution.

Resource Gaps: Effective governance takes time, effort, and often funding. Many families fail to allocate the necessary resources, leaving the constitution to gather dust instead of being put into action.