Hard Times Ahead – Do not shoot the messenger in your family business!

Some of the longest standings businesses across the globe are family businesses. They are the the epitome of resilience. However just like any other business, family businesses need to deal with a volatile, uncertain and complex business environment, where the past success doesn’t guarantee future success. Once, someone I look up to taught me, that in business you are always as good as your last show.

So if anyone is trying hard to pass on the message that your family business needs drastic changes, please do yourself a favour and do not shoot the messenger. At EMCS, we have built a model against which we can test and analyse the business health of a family business. This is built on the below outlined building blocks:-

Therefore, my question is – Does your family business allow enough space for anyone drawing your attention to the fact that any or several of the above building blocks need to be setup/straightened or do you often shoot the messenger? Research shows that companies that have high levels of diversity and inclusion are almost twice as likely to be innovation leaders in their market and more likely to outperform the competition.

Family businesses might have the advantage of a deep connection to their history mission and value. They might also be able to rest on the strong leadership by one or more family members. However in a very rapidly changing environment, becoming too insular can hinder the ability to see early warning signals in the market or changes in customer profiles, and it becomes too easy to believe that past success will almost guarantee future success. An echo chamber can be created with the same perspectives and ideas being too common in the business.

So the next obvious questions is – How can family business create an atmosphere where diverse opinions and constructive dissent be allowed to be heard whilst also maintaining a healthy connection to the family business mission? Below are some pointers:

Create Psychological safety: This is a prerequisite for diverse ideas and opinions to flourish in any business. To create psychological safety in a family business, it’s important that everyone is able to admit mistakes. Psychological safety starts when everyone, including family members leading or working in the business are able to admit they made a mistake When admitting mistakes, don’t dwell on explaining the various reasons why it happened or who is to blame. It is far better focusing ones energy as to what needs to be done to rectify the mistake.

Set Communication Boundaries: Psychological safety is increased when clear distinctions are made about when and how the business and any ensuing dissent are discussed. Family dinner is not a time for new product development or to quarrel on hot work related issues. After a difficult business discussion, please take time to debrief to ensure that no hard feelings carry over into family time.

Encourage a diversity of perspectives and voices: Sharing diverse perspectives within a family business can be fraught with challenges. However, family business leaders would instead do well to explore constructive dissent by explaining why decisions were made, being curious about concerns and having a conversation about the reasoning and data behind decisions. This demonstrates a genuine interest in hearing different voices. Often when different ideas and different types of data are presented, one view or solution is not completely right and the other is not completely wrong. Each may be incomplete or have biases. The key is to not dig in, defending one position to the complete disregard of the other. How can a mixture of ideas create a better final decision? Adopting such a mindset can result in decisions that prove to be more sound over time.

Utilise a consistent decision-making process. To achieve a consistent decision process it is advisable that decisions, especially the most difficult and strategic ones, are always based on data, to eliminate as much as possible any bias from principals, beneficiaries or third parties. Data-based decision-making needs to become a culture within the business as opposed to having decisions forced through a dictatorial culture, shutting down any future conversations

The challenges family businesses face and will be facing will be more complex and difficult than in the past. No single person in the business will have ALL the solutions for these challenges. It will likely be a mixture of experience together with a culture of constructive dissent that will enable a family business to proactively solve thorny issues, increase the effectiveness of their decision-making and open the door for growth & innovation.

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