In order to survive, family businesses must evolve and embrace the new world. Adapting to change requires leadership and management skills that are both innovative and traditional. Family business owners must intelligently manage the tension between traditional values and the demands of the market. A family’s strengths and unique advantages must be considered as they transform and adapt.
Succession planning, conflict resolution, and ownership structure are all interrelated and must be carefully considered. Family businesses thrive when these factors come together. They must carefully plan for the retirement of the current owners and the entry of the next generation. It is important to have a succession plan that addresses issues unique to family businesses. In particular, succession planning must consider the questions of who will control the business, and who will hold which positions in the organisational hierarchy.
Often, family business owners will decide to professionalize the business, which often means a shift from family to non-family management. However, in some cases, family members remain in management positions, even during the transition. It is essential that both the business leader and the family agree on the professionalization process.
The first step is identifying the core values of the business. Once the family has identified them, the next step is to develop a strategy that will maximize the benefits of change, while maintaining the essence of the business. In addition, it is important to develop good governance practices that will keep the family business competitive and relevant to the changing business environment. Finally, it is important to consider hiring outside help, such as a family business advisory board, to provide an external perspective. This will help ensure the business continues to thrive past the founders’ era.
Another key factor in the success of transformation is early engagement of the next generation. When children are young, there is an opportunity to introduce them to the business and make them aware of its unique opportunities and challenges. By involving them early, children can develop their career goals and develop other skills necessary to be a successful team member.
In many cases, family members are more capable of handling key responsibilities than non-family members. They may have an advantage over non-family employees and are able to reassure key stakeholders about the stability of the business. This helps preserve the loyalty and commitment of key stakeholders. In addition, family members are often excellent managers and leaders.
Having a clear vision for the future is critical to a family business’s success. Having a clear mission and a transparent dialogue between family members will foster a culture of commitment and success. Families should be able to set aside competing interests and make decisions as one. If family members have differences about what they want, they are more likely to make mistakes. In addition, it is vital to develop a succession plan that will ensure the continuation of the company.
One of the major challenges and opportunities for family businesses today is the impact of digitalization on the ecosystem of family organizations. It is important to view transformation from an ecosystem perspective and understand the speed at which it is happening. Today’s family businesses must deal with a much more informed and connected client base.