Learning And Leading In A Family Business

 As a business owner or leader, if you learn to learn, other members of your family and business will emulate you.


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The challenges that family business leaders face, not present in non-family firms, can be daunting. The creativity with which they are met is often impressive. In the Information Age, one obvious challenge cited confronts all firms: the quantity and availability of data from inside and outside the business, the competitive advantage of accessing, analyzing and using it and the greater risk in not doing so. One related difficulty is less recognized.

The core difference of family firms being kept in the family may limit the information and ideas reaching the company, its management and especially the CEO. Unaddressed, this lessens employees’ opportunities to learn, the CEO’s ability to lead and the business’ chances to succeed.

There are many factors that create this condition:

• The pool from which family business leaders are chosen is often small.

• Among non-family executives, job change is more common, while family executives may have worked only in the family firm.

• Cross-pollination of ideas among companies, competitors and industries is less.

• Tasks are more likely to be performed as they always have been.

• Given family traditions, sometimes verging on ritual, change may be harder to create.

• Non-family executives who possess outside experience may be difficult to hire, as they may perceive upward mobility in family firms to be limited.

• Because the boss is also a parent, challenging traditional thinking may be more difficult for the second generation than it is for mid-level managers at non-family firms.

• Because the boss is also a parent, he or she may feel greater pressure to have all the answers, be less willing to reveal uncertainty, and fail to seek advice.

Unless addressed, these issues may have serious long-term consequences, yet go unrecognized when family business leaders have no outside frame of reference.

Here is a list of things a family business can do—simple, inexpensive, obvious or otherwise—to improve learning and leadership.

Read the "Wall Street Journal," "New York Times" business section, "Forbes," "Fortune," "Business Week" and local business publications. These publications reveal the context in which all businesses operate, provide perspective on the business world at large and may enable early recognition of outside forces heading your way. Many have daily "top story" e-mails on specific topics and free content on the Web.

Read the "Harvard Business Review." Many small company executives believe that anything published at Harvard can’t possibly apply to them. But the "Review" is easily accessible and the best readable source to learn how recent business practices and processes are helping other companies succeed. Most of the techniques it describes can be applied at any firm.

Read books about business. Ask owners or executives you respect to recommend books or choose one from the "New York Times" or "Business Week" business book list.

Learn and practice business planning. Business experts rank strategic planning as the number one job of top management. It’s what you learn during planning—about business, customers, non-customers, competition and sustained competitive advantage—that will create success.

Require that each family member spend at least 3 years in a business that has a learning culture before joining the family firm. The new ideas and processes a business acquires in this way can prove invaluable to its success. The perspectives and frames of reference that second-generation family employees gain will benefit them and the family firm.

Have the second-generation family employees get an MBA. Some second-generation family employees rush into the family business. However, the learning to be gained from a great MBA program, combined with work experience outside the family firm, should return the investment many times over. It is only irrelevant to your business if you want to stay small.

Create a Board of Directors or Board of Advisors comprised of the best outside experts you can find. This can be an incredibly effective (and cost effective) way to gain the insight and answers needed. Some business owners resist forming an outside board because they don’t want to reveal their weakness. Most who have created boards wonder how they survived before them.

Join a CEO roundtable. "The only ones who can really understand your situation and issues are other CEOs," says T.D. Hughes, former CEO and member of the Goering Center. "The people who give you the best answers are those who have successfully overcome similar problems before."

Hire operations, planning, sales and marketing executives with extensive experience from outside the company. Then let them put their knowledge to use and learn from them.

Offer or require employee and management training. Many companies spend heavily to train employees to comply with OSHA regulations to meet continuing education legal or health care requirements, or to operate heavy machinery. Advancements that affect sales, management and other areas throughout the past decade have been remarkable. Periodic knowledge and skills updating is a key to many businesses’ growth.

Create learning and change charts. Make a chart of the things you need to or want to learn and how they might relate to your personal performance or that of your business. Review it in 3 months. If you have not learned any or all of these things, figure out why. If you have learned some or all of them, add a second category to the chart called "the resulting changes in your business." If there have been few or no changes, ask yourself whether you actually learned anything new, or simply learned about something new.

As a business owner or leader, if you learn to learn, other members of your family and business will emulate you. They will read what you read, particularly if it will help them improve in some concrete way. If you encourage them to draw attention to the value of learning and mastering a particular subject and how it relates to their performance—and if you do it yourself—they will follow your lead.