Family Business Quarterly
- How should strategic planning be carried out by family businesses?
- Is strategic planning different for family businesses than for companies that are not family owned?
- What can family-business leaders do to ensure that they are planning effectively?
Dr. John Ward–the Ralph Marotta Professor of Private Enterprise at Loyola University, Chicago–addressed these and other essential questions during a recent Full-Day members’ Forum on “Perpetuating the Family Business: The Ultimate Management Challenge.” He presented five key steps for stimulating innovation in well-established family companies that may have grown resistant to change.
- Make perpetual strategic planning a number-one priority. “The minute we develop a strategic concept, we must challenge it and create a new one,” he said. Continual changes in technology, new sources of competition, shorter product life cycles and a variety of other factors force us to keep redefining our strategies and goals.
- Constant planning is especially important for family business owners, he added, because their companies are often closely identified with one or more very specific products. But as product life cycles are compressed, consumer demand for “older” products may wane and eventually die out. Despite the high emotional cost that can be associated with weaning a family business from its original flagship products, a reinvention of the business may be crucial to its very survival, Ward said.
- Be innovative and willing to adapt. Family businesses with inventive owners and managers enjoy a competitive edge, according to Ward. But staying creative can be particularly challenging.”The more successful a business is for a longer period of time, the more convinced you become that what you are doing is the right way to do it. You and your colleagues become very homogeneous. This makes it hard to change and to see the necessity of change,” he said.
- A solution for keeping a business inventive is to make “tough” staffing choices, Ward noted. “Decide whom you want to keep in the business for life. Base tenure decisions on whether your colleagues have the capacity to grow and learn as fast as they need to. Evaluate your managers when they are in their thirties or early forties.”
- Reinvest strategically