Keeping innovation alive in the Family Business
Two brothers owned and operated a manufacturing and distribution business. Each brother had specific areas of expertise, and together they successfully managed the operation for many years.
However, in the last few years their market share began to erode as technology challenges arose and additional competition moved into the market. The brothers acknowledged the arising issues yet could never seem to agree on a strategy on what to do to stay on top. The more the business eroded, the more the brothers argued about what to do. In the end, the brothers gave up trying to communicate and the business finally failed.
Insider every business, there is conflict. It is how that conflict either inspires or confines the business that foreshadows what is to come. Great innovation can come through conflict, yet what exactly is innovation?
Innovation is often defined as the application of a better solution to meet new requirements. My definition of innovation takes a slightly different slant. I believe innovation is learning to do old and new things in new ways even when not required. One of my favourite books is If it Ain’t Broke…Break It! by Robert Kreigel. It was written in the early 1980s with the concept that just because something works now does not mean it will always work.
The best companies and innovators are always working to improve or change the status quo. Family businesses, however, can find themselves stuck in the “we’ve always done it this way” mindset. Add conflict to the business or to the family and innovation flies out the window due to infighting and egos.
Are family businesses innovative by nature? Most family businesses start off with high levels of innovation to get off the ground and up and running. The founders of family businesses typically understand what it takes to be different, stand out, compete, and challenge the status quo. Challenges to innovation most often arrive with success, longevity, or the introduction of a second generation to the business.
With longevity, the family business becomes the means of financial support for multiple generations and multiple family units. The risk of innovation now has a huge price. But what is often not understood is the risk that a lack of innovation brings.
Any business that has innovation at its core also has a vision for the future and what that future will bring. When fear rules, taking chances becomes secondary. A business that is ruled by an attitude of fear, a fear of change, or a fear of disturbing the status quo will eventually flounder and cease to exit.
So how do you protect your family business and preserve a culture of innovation?
Maintain a mindset. Accept that failure is the most direct path to continued success. Allow failure and embrace it; just put parameters in place to minimize the damage from failure. If a product line is failing, stop it fast, and learn from it.
Spread out the risk. Most financial advisers will tell you not to put all your financial assets in one area, but instead to diversify with stocks, bonds, and moderate-growth and aggressive-growth options, etc. Take that same concept to your business decisions. And always have a budget for innovation that includes both time and money.
Create a culture that allows for mistakes. Innovation usually comes through trial and error. This flows well with Benjamin Franklin’s quote: “I didn’t fail the test, I found 100 ways to do it wrong.” It is through those 100 ways of doing it wrong that the greatest inventions and innovations in history took place.
Accept accountability. A LinkedIn group posed a question that a wife asked her spouse: “Do you want me to be the type of wife that supports you no matter what and is always encouraging? Or do you want the professional me that questions and challenges you?”
This is a great question. My recommendation is both. During business hours, I want to be the professional businesswoman who challenges and uses all of my talents to move the family business forward. When I get home, I enjoy being the encouraging wife. Women are strong enough to play both roles.
If we allow each other the opportunity to assume the roles that play to our strengths, then innovation will continue and everyone will be the best they can be, and the business will flourish as a result. How would you answer that question? Do you want the growth that comes with full accountability and the ability to challenge within the family business, or are you the spouse who does not want to hear criticism?
Make everyone responsible for innovation. The power of the family business lies in familiarity that family brings. The power of understanding those you work with can give leverage to the family business. Capitalize on that exponential power.
Have a regular time to get away and plan to innovate. Throw everything you are doing up in the air with the concept of someone else catching it and reviewing it with fresh eyes. A fresh take, combined with the familiarity within the family business, gives potential and new possibilities.
Conflict in the family business is not new. The most fascinating example of family conflict played out this summer at a longtime New England grocery chain called Market Basket. Its story shows the downsides of family conflict that went unresolved for decades, the power struggle between two cousins, and the eventual and unusual resolution. But the Market Basket drama actually demonstrates that even with family conflict, a strong company can be generated — strong enough that employees, vendors, and customers banded together to support one of the cousins who was ousted as president until he was reinstated.
If you want a case study (and it will be a Harvard business case study, just wait) of all the good and bad in a family business, with decades of conflict, read about Market Basket. The company managed to be hugely profitable even with the family discord, so it can be done. But what is lost is how much more of an impact there could have been without the discord. Even though there is now a buyout deal in place between the cousins, the family feud has caused delays in store expansion plans.
If innovation is critical to the long-term success of your family business, and conflict stands in the way, you have choices. Will you face it or wait until there is no turning back?
source: news.thomasnet.com