2021 provides us with the opportunity to asses our circumstance and to re-define our priorities. The magnitude and ubiquity of the change all around us has refreshed our alarm at the ‘complex’ world in which we live and at what may happen next. We usually overestimate short-term impacts while under-estimating those of a longer-term. Our scope is limited and short.
As we move to some certainty on our future ability to recover from Covid, now is the time for you as successor to think on the possible long-term impacts of recent events. Once grasped ask yourself, what are my emerging and evident possibilities?
During the final quarter of 2020, I had the opportunity to assess the impact of recent experience on families-in-business. I listened to them elaborate on their experience of Covid, their current priorities and their ‘best-guess’ as to the longer-term impact on markets and businesses.
As I worked with clients and participated in gatherings of families-in-business, a number of themes emerged. These I list and discuss below. Some are known to you, others you might find surprising. My hope is that these will prompt you to identify those long-term impacts relevant to you. Secondly, for you to find the confidence to ask – and answer – what your contribution will be to addressing these issues.
Experts and appointed gurus point to a wave of ‘complexity’ as inexorable and inevitable as the virus which precedes it. Erratic relationships of cause and effect, that are unpredictable and have varying (at times catastrophic) impact.
Many families have responded quickly to the crisis. Resource allocation, employee furloughs, investment and capacity decisions have all been tackled with urgency.
And so, your possibility.
For you as successor, there is more. One response to the commercial reality has been the requirement to be more ‘customer centric’. In the pre-Covid rush to governance and process perhaps some businesses had lost sight of this. A look back at the changes wrought by the financial crisis in 2008 for our business, shows a demand for a total and absolute focus on the customer. Now this repeats, with new requirements for changed products, new routes to market and quick decisions on ongoing scale of committed and sunk resources.
And then the perfect storm: we are never going to be ‘less digital’. Successors (i.e. you) are regularly tipped as a potential (and available) resource to ‘solve’ the digital challenge. While this may be exciting and gratifying, tread carefully. To successfully transform a business to one based for and around technology is one of the most difficult undertakings a manager can attempt. Before you sign up for such a task, remember results will be measured over years (not months), you will need senior and committed support (read ‘those family members with ownership’) and such an ‘opportunity’ will not be possible until you are suitably informed, qualified and empowered. Your card has been marked.
Evidence from the past nine months shows acceleration in family decision making. Disruption produced commercial opportunities not in evidence before. Family surveys indicate the re-evaluation and assessment of constitutions previously consigned to the shelf. With uncertainty comes the need to talk, always preferable to excessive ‘written’ governance. As one family defined it: ‘having the right conversations at the right time with the right people in the (now virtual) room.’
And so, your possibility.
As a Successor your task is to decide on the suitability (or not) of the ‘system’ of governance you have been relying on heretofore, developed to plan succession, define a strategy or agree on how to work together. Evident falling-out – depleted trust or a unwillingness to discuss – is a sign that these agreements no-longer answer. If during the crisis, family are not talking or are at cross purposes, time for a judicious re-think. Your call.
If this sounds familiar, your decision as successor is where and how you contribute to move the family to re-visit past questions. One family who recently undertook a re-assessment took the comparator approach. They studied the governance structures and processes of other families, identifying where their governance still ‘did well’ for them. In turn they continued with that which worked, while adopting the example of others to re-design for evident shortcomings.
A longer term opportunity for you is provided by tired governance. Whether you are in a position of authority (Director, Family Council Head) or one of influence (family or Family Council Member), your task is to assess the suitability of your current governance to take you forward together as a family.
One thing is certain; you are not on your own. Should you choose, there are peer-support organisations of families-in-business whose purpose is to help you get to where you want to go to. If you have not come across these, my advice is to seek them out. Advice and guidance are free, usually unvarnished and plumbed from the depths of experience to be willingly shared. No ‘off-the-shelf’ solutions here.
Covid has driven us all into our living-rooms to network online from afar. How we will network after the worst is over, is less clear. As you work to identify and effect long-term change, continued access to peer-support will be important if not essential.
And so, your possibility.
A suggested priority for you is to identify and articulate how such networks are to remain of value as we exit the maelstrom. Some online elements have enhanced the learning experience, eradicating the need to travel, enabled a sharper transfer of knowledge when chaired well and permitted an efficient link-up with those of direct and present interest. The task – once we are free – will be to strike that balance between the efficiencies identified above and the need to cement relationships based on trust.
We are all owners now – or soon will be. Whereas prior emphasis was on effective development of successors (possibly you) as managers, attention has now shifted to what it means to be an owner and how one can be prepared to be one. Research now illustrates the preoccupation by families’ with education, engagement and ownership. Indeed this is inevitable as families’ grow (not as fast as companies, mind) and some of the businesses they own achieve a success and scale only guessed at by those who set them up.
The example and work of two families to address this issue recently caught my attention. To cultivate successors both as owners and as possible managers, needs clarity of intent and a structure to carry it out. One family achieved this with a ‘funnel of activities’ to provide a step-wise programme designed to involve, commit and prepare successors. Preparation not only to cover the economics and folklore, but to include positions and skills for effective governance, and a step-wise path to these positions. From education to preparation to contribution.
That of the second family was simpler, but involved a considerable amount of work. Motivated by a commitment to ‘our truth’, this family actively captured and recorded the story of the business and that of the family as validation and illustration of their values. An autobiography for everyone at age 60, a ‘what it means to be us’ book and finally newsletters on family activities and future plans. It will come as no surprise to learn that they are now in their 6th generation of ownership…
And so, your possibility.
The longer-term implications for you as successor are plain. Do you take the time to prepare your relatives (and co-owners) even as you work and develop a career? This is work which is important but not urgent and is carried out in the shadows. Recent events to test governance serve to illustrate the value in prepared and committed owners. Owners, however, unlike families, do not grow on trees. To get them there with energy to spare requires generosity and invested-time. It is up to you to recognise this possibility for your family and to take the (hidden) steps to deliver real change.
Once you have overcome the war on the virus, you will – so the ‘experts’ tell us – be faced with the war for talent. Never, according to recent research, has this been as pressing as now and things are set to accelerate. Your business will grow if and when you are prepared to bring in suitably qualified ‘professionals’ to manage, develop and improve that which you own. While the experts on this imperative are coy if such incoming ‘talent’ includes family members, let’s assume for the moment that they are not speaking here with your cousins in mind.
What matters now is the ability of your family business to attract such non-family talent as is required from within the pool in which everyone else (read your competitors) are fishing. To do this effectively you as successor need to do two things.
And so, your possibility.
First, identify and communicate that which makes you different in the market. Why should candidates trust you and your company? You have comparators on your side; research indicates family businesses to be more ‘trusted’ than alternative forms of ownership (public, government). Use this to your advantage. Second, where are you going? Identify and frame a narrative (story) as to how you will emerge from the current crisis and – if you can stand over this – how you will be the stronger for so doing. An ‘emerging stronger’ narrative has to be a good bet and is certainly more positive than anything we are being forced to hear at present.
As successor, you have the opportunity to contribute to and shape both these stories. If re-framing and backing purpose is not one of your priorities as an owner, who else will take up this work?
As a close follow on to the reputation of the family employment brand, that for what your business stands for and contributes to the wider world matters. Purpose has been called upon to stretch to almost everything, which while worthy, must necessarily raise questions as to efficiency and impact. Again, recent research indicates a wholesale review by families-in-business of shared purpose in the face of the ‘Environment, Social and Governance’ (ESG) imperative. ‘Do good and do well’.
And so, your possibility.
As a Successor, where do you allocate time and effort, even as demands increase and possibilities present? Hearing from one famous family on their approach, highlighted for me the potential for dissipation of effort and limited impact. The lessons from this family are worth consideration. First, decide on which sand boxes you are going to ‘play’ in: charity, philanthropy, ESG and/or impact investing. Second, take the time (read, years) to learn the structure, nuances and resources for impact within each area. Third, choose your partners well: beware hot air and promises. Who is actively deciding, doing and delivering? Hitch your wagon to these partners. Finally, get your head around your capacity (or not) to have an impact and decide on how you will measure your success.
These are considerations, actions and (one hopes) results of a longer-term horizon and effort. As a successor they should of course be high on your families’ agenda. Before charging in, ensure that you have some of your other bases covered, that you are not diverted from your core-responsibilities as owners. Finally beware the temptation to ‘sieve the desert’ where a lesser ‘box of sand’ is a realistic place to start, will provide valuable learning and may deliver more impact for the effort needed.
7. Contribution: start with ‘Why?’
A new year presents opportunity for you to assess and re-define your value to the family enterprise. Now – in anticipation of the ‘post-Covid era’ – is the time to do this; 50% of families surveyed indicate a willingness for ‘more involvement’ by the next generation of successors. With crisis comes opportunity. You can define how and where this ‘involvement’ should be.
Start with ‘Why?’ Why am I here, what is my contribution? As others fret and manage the short-term, your possibilities lie in those shifts and openings to follow.
You cannot do it all. My advice is pick two or three areas from the opportunities identified above and choose where you can make a difference. Decide on your priorities and modes of engagement.
Once done, test your identified priorities with someone you trust, such as a coach or (if you are lucky) an independent Director of your business. If you can explain your path and chosen priorities clearly and still have their interest and belief, you are on to something.
Your contribution will come from the path you take and the choices you make. Your ‘role’ as successor is to work on those areas which no-one else can tackle and to make them your own. As others sweat those short-term and evident impacts of the current crisis, your possibilities lie in the ‘what’s next?’ the ‘with whom?’ and the ‘Why?’. All stem from a conscious effort to re-design your possibilities and to re-think why you are there.
Jennifer Garvey Berger et al. (2015) Simple Habits for Complex Times: Powerful Practices for Leaders. Stanford. .
Babson College. Successful Transgenerational Entrepreneurship Practices.
Philip is a leadership coach and mentor for family business successors. He previously held positions as manager, Head of the Family Council and non-executive Family Director within his family business, over a 25 year period. He founded and ran FBN Ireland (www.fbnireland.ie), a network to support families-in-business transition effectively from one generation to the next. He is currently writing a book on successor talent development within business owning families.
Philip can add value to families-in-business in the following ways:
- As Coach or Mentor to family business successors;
- Advisor on Successor performance and Family Talent development;
- Facilitator for learning of family business management, ownership and leadership development.
For additional information please see his website www.philipmackeown.ie or his profile on LinkedIn https://www.linkedin.com/in/philipmackeown/ He can be contacted on email at firstname.lastname@example.org .