FAMILY BUSINESS STRATEGY
You would think a profitable growing second or third generation family business would have engaged in strategic planning along the way. It is more common than many think to encounter a family business with a 30, 40 or 50-year history facing changing conditions that prompt its leadership to consider developing a strategic plan for the first time.
Research shows that over two-thirds of family businesses reported not having a written strategic plan.
Changes that motivate a family business to consider developing its first strategic plan may be internal - related to ownership succession, management succession, a cluster of legacy employees approaching retirement at once, a product line facing future irrelevance, innovation drying up, infrastructure become outdated, or a range of other conditions.
The motivational changes may also, or alternatively, be driven by external change - stemming from industry consolidation, technology developments, competitive disruption, regulatory conditions, supplier dynamics, economic outlook, or the political environment.
PARALLEL PLANNING PROCESS
Family members can be either a great strength or a potential weakness for the family business. Ignoring them, however inevitably weakens the business. Family businesses that overemphasis the business system, and consequently diminish attention to the family system, often end up with families that do not relate to each other and psychologically complete with the business.
A major challenge of maintaining family ownership is the ability to plan objectively to achieve a shared future by the family and the business.
An effective family business planning process is concerned about improving business performance, addressing family expectations and sustaining trust.
IMPROVING BUSINESS PERFORMANCE
The essence of planning is setting goals and describing actions to achieve those goals. Businesses need to change and develop new strategies if they are to remain healthy and financially viable.
ADDRESSING FAMILY EXPECTATIONS
As the family grows and matures, planning is crucial for accommodating changing family relationships and changing agendas. Negotiating life transitions in families is more difficult than managing business change.
Trust is a special form of business capital that is critical to all organisational relationships. The difficulty in building and maintaining trust can make it a unique competitive advantage for family businesses.
To support a successful planning process, business families must use an organised framework of systematic inquiry to help direct and control the destiny of both company and family. Parallel planning means that both family and management are simultaneously exploring critical questions from their distinct perspectives.
INTEGRATING & BALANCING THINKING & ACTIONS
It is very important for a family business to develop a business strategy that is shaped by the concerns of the family. The parallel planning process for family business becomes a tool for integrating and balancing family and business thinking and action.
Family values and business philosophy are the foundation for the planning process.
Strategic thinking has implications for the family as well as for the management team.
Successful families and businesses are driven by a Shared Future Vision.
Long-term family business success requires formulating family and business plans.
USING THE PARALLEL PLANNING PROCESS
The goal of the Parallel Planning Process is to identify family and business plans that are mutually supportive of their respective needs and goals. This is accomplished by considering business strategies in the context of both the family and business expectations.
The Parallel Planning Process uses a series of planning activities that lead the family and management to a business strategy that matches the family's interests and the business's potential. Strategic thinking by the family and management teams leads to their mutual commitment to a Shared Future Vision.
Based on this shared vision, both systems begin their respective planning activities leading to the development of the Family Business Continuity Plan and Business Strategy Plan. The final choice of business strategy reflects the family owners' reinvestment decision.