Assessing the Long-term Viability and Sustainability of Family-led Businesses
Entrepreneurs, like all other people, must focus on what they do best Entrepreneurship, which is about "renewal and agility linked strategies", and they should ensure that there is a senior leadership team that is aligned to the long-term vision of growth. "Sustain and operational strategies" must be driven by empowered management teams that focus on growth and sustenance of the enterprise in the markets and segments in which they operate.
This essentially required family-led businesses and entrepreneur-driven firms to work in establishing strategies as soon as they have established sustenance of their firms and established their original ideas in the market. This can be achieved when organisations;
1. Establish overarching and far-reaching long-term vision and values architecture
2. Establish family governance and charters that take care of wealth distribution systems. Also, clear articulation of criterion for family members entering the business
The establishment of strategies pertaining to long-term vision and non-negotiable value systems acts as a guiding light. To drive the organization, this must focus on an alignment of the three forces – sustainability, renewability and agility. These three forces must function as a mutually intertwined and interdependent system, ensuring that there is synergy between all of them. Execution is required for the success of any enterprise, and if any of the forces is looked at in isolation, the chances of its success are limited.
As a next step, it is important to align organizational strategies that would ensure continuous enterprise success. In doing so, the organization needs seven strategies that would ensure operational excellence and a continuous renew and agile focus (Figure 2).
1. Ecosystem and Vision Alignment
Align the organization's vision to the ecosystem and social-economic scenario of markets and society. This requires the vision to be socially and economically-relevant, as both play an important role in ensuring longevity of the enterprise.
2. Vision and Strategy Alignment
Align market and product led strategies to the vision. While short-term requirements may desire a deviation at times, a continuous focus on vision is the key to longevity. For enterprise success, all agility linked strategies also need to be aligned to the vision and ecosystem.
3. Leadership Commitment
For family-led businesses, commitment to having a close-knit leadership team within the family. For entrepreneurs, commitment to the vision and long-term success rather than short-term gains and management of resources. Leadership commitment is a crucial strategic requirement, as it is a key driver of operational success of any organizational strategies.
4. Relentless Renewal Focus
Renewal is important to evolution, and it is equally critical for the enterprise. As we focus on renewability, organizations have to focus continuously on next generation products and services. This requires people in the organization to be continuously and positively dissatisfied with the current products and services. This is a dilemma, as organizations thrive on repeatability of tasks and on employee satisfaction in sustaining the tasks. However, dissatisfaction is essential to growth, and hunger in the cadres is vital to renewal focus.
5. Culture of Innovation, Collaboration and Trust
Enterprises may easily slip into silos, which are the single most counter-productive system in managing organizations, as they harm both the sustainability and agility of the organization. This is highly relevant in a family-led business as the growth requires buying talent from outside as the internal talent pool is not large enough to pick up new roles. Entrepreneurs and leaders continuously have to focus on ensuring collaboration, trust and innovation supported by sufficient mechanisms to reward these behaviors.
6. Middle Management Capability to Lead
Middle management is accountable for supervising and ensuring execution. However, in the volatile and ambiguous environment in which today's enterprises live, the most important aspects that the middle management is responsible for begins with taking accountability for implementing change. It is important for the them to be able to see the big picture and be able to coach others to achieve the vision. Their role is not 'command and control' as is usually perceived. It is extremely critical that they are always completely clued in to the big picture and implement change relentlessly.
7. Engaged and Striving Workforce
People's actions determine enterprise success and an engaged workforce is crucial for this success. Aon Hewitt's engagement studies suggest a direct and positive correlation between the two. It is critical to focus continuously on employee engagement as a critical strategic pillar to ensuring high commitment by the people across organization levels.In a nutshell, family and entrepreneur-led businesses must focus on capability enhancement strategies early enough to ensure longevity. In a rapid growth phase of the organization's lifecycle, it is fundamentally difficult to create capabilities that result in growth slowdown and stagnation.
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