Redesign your family business for agility in the digital age
Many family businesses are born of the practice of merely “doing something,” like tackling a problem or seizing an opportunity. It’s often a matter of an entrepreneur spotting a gap and taking it. From there, the business often seems to grow from one level to the next, not necessarily without issues or teething problems, and before you know it, it’s passed from one generation to the next. The problem with this kind of organic growth is the fact that although the business appears to grow and attain success, it might be lacking some of the fundamentals of business design. Corporate businesses benefit from the expertise and know-how of its external ownership, leadership and guidance, resulting in smoother processes and more streamlined business design. With family businesses, however, it’s the family members who tend to have the final say, even when external management is brought on board. The result is often a lack of organisational transformation, which can affect the business on various levels, this is where agile strategy and a digital family office can have the most impact.
There are several reasons why family businesses should look into redesigning the different stables that make up their business. Perhaps it is something that has always been neglected, or maybe a shift is happening as the next generation gears up to enter or take over the family business. Another possibility is that, like most organizations operating in our current digital climate, you’ve found that the old structured business approach is no longer relevant and are now looking at introducing a more agile strategy and maybe implementing by means of a digital family office. Whatever your reasons may be, these are the most important things you should consider.
In many family-run businesses, decisions more often than not are made on gut feel. When a company is enjoying a certain amount of success, one can’t necessarily fault this approach, yet it can become problematic to sustain in our current turbulent business environment, or when a next generation takes the reins. The use of specific an agile strategy will, therefore, help the family to both understand the decisions that need to be made and actively participate in them.
The first step to making better, more informed decisions is to have a clearly defined common vision. This will enable the business owners to support each other in making decisions that will grow the business.
A level of stress usually accompanies any process of change, and this rings true in family businesses as well. So go ahead and talk about the elephant in the room. After all, good communication is what keeps family businesses together, just like dinner-time conversations around the kitchen table keep families together. Try to involve as many of the stakeholders as possible, even if it is to varying degrees. Some may only be asked their opinion about an idea, whereas others may be tasked with the actions required to see it come to fruition. A future proofed or digital family office may play a key role in assisting with such conversations.
Despite the current trend of equipping ourselves as generalists instead of experts, an enormous amount of value can still be unlocked when family businesses decide to bring outsiders with experience in this specific field on board. External perspectives can assist with anything from reorganizing the financial planning of the business to building or improving the company’s reputation and enhancing employee engagement to helping you redesign a agile strategy that will move you into the future from the ground up.
When evaluating potential partners, it is essential to look beyond the big names and instead focus on the skills they bring to the table, to determine whether the chosen consultants are the right fit for your company culture. Start with a research-focused strategy company that can help your organization explore what’s happening within your area of business. A thorough understanding of the current climate and its challenges, informed by an independent analysis of your situation, will not only inspire the team involved in the redesign but will also help guide the organization through this process.
Once the foresight stage is complete it’s crucial to make sense of any important findings and apply them to your organization . Family businesses are notoriously bad at defining their unique assets and articulating the specific traits that set them apart from their competitors in the minds of consumers. To successfully do this, it is absolutely crucial to look at what the business, and also the family, does exceptionally well. A good digital family office should have key insights into the family business and so to be able to assist with this process. Translating this into a suitable agile strategy framework is the first step to clearly positioning the business.
The purpose of a clear positioning is twofold: internally it defines the paths to innovation, and externally it creates top-of-mind awareness when innovators in specific areas start looking for partners, funding, etc.
Risks are inherent in any business, but with families there are specific risks that require particular attention. These range from financial and performance risks, to reputational and safety risks, and can affect anything from the family or business’ reputation or public image to its bottom line and future success.
The first step to negating risks is to identify what they might be. Once businesses are aware of these possible pitfalls, they can effectively structure shareholders’ agreements, business strategies, contingency projects and even communication plans to mitigate them. All of which will come up in the process of formulating a agile strategy.
But rather than following the “ostrich approach” and burying your head in the sand, open up and be inspired by the changes that are happening faster than ever before. We are living in exciting times and the future holds limitless potential.