For family businesses, continuous improvement is not just a goal—it’s essential for sustaining long-term success. While identifying strengths is crucial, acknowledging areas for growth is equally important. The Family Council Canvas, our upcoming strategic tool designed specifically for Family Offices, is being developed to facilitate the creation of effective, long-term strategies. This tool will guide families through introspection, encouraging them to explore their strengths and areas for improvement, ultimately driving actionable change.

Tackling Problems as a Group

For many family businesses, tackling challenges collectively is essential for maintaining unity and ensuring that decisions reflect the interests of all members. However, this can be challenging, especially when disagreements arise or certain members dominate the decision-making process.

Research highlights the importance of collaborative problem-solving in family businesses, noting that when families address issues together, they are more likely to arrive at well-rounded solutions that consider multiple perspectives (Leenders & Waarts, 2003). This approach also promotes a sense of shared responsibility, reinforcing the family’s commitment to the business’s success.

Best Practices:

  • Foster Open Communication: Encourage open dialogue during family meetings by allowing every member to express their concerns and ideas.
  • Promote Inclusivity: Ensure that all family members, regardless of their role or seniority, are involved in problem-solving discussions.
  • Set Clear Decision-Making Processes: Establish clear protocols for how decisions will be made, and ensure that the process is fair and transparent.

Identifying Weaknesses and Room for Growth

Exceptional families understand that acknowledging weaknesses is the first step toward improvement. The Family Council Canvas prompts families to ask questions that encourage family members to confront areas of complacency or underperformance. Different types of family businesses possess different advantages and disadvantages that allow families to tailor their strategies based on their unique orientation, be it more family-oriented, business-oriented, or a balance of both. Recognising where a family business stands in this spectrum can provide valuable insights into potential areas for growth and the development of targeted improvement strategies.

Best Practices:

  • Conduct Regular Performance Reviews: Schedule routine check-ins with key family members and business managers to discuss the current state of the business. Use KPIs (Key Performance Indicators) like profitability, efficiency, customer satisfaction, and employee turnover to identify areas that may not be performing optimally. Having a clear, consistent schedule for reviews helps ensure ongoing evaluation.
  • Benchmarking: Compare your business performance against industry standards and competitors to identify where you may be lagging. Benchmarking helps provide context for your weaknesses and informs strategic decisions to bring the business up to industry levels.
  • Use Feedback Mechanisms: Encourage open communication within the family business and create channels where employees and family members can provide honest feedback. Anonymous surveys, suggestion boxes, or one-on-one meetings can reveal areas of improvement that might otherwise go unnoticed. Actively seeking feedback helps uncover weaknesses before they grow into larger problems.
  • Leverage External Audits: Engage third-party consultants or auditors to provide an unbiased review of your business operations. These experts can offer objective insights and highlight weaknesses that internal teams might overlook due to familiarity or emotional attachment to certain aspects of the business. This can also be an opportunity to enrich the business with Total Quality Management Systems, such as the EFQM (European Foundation for Quality Management) System.
  • Conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats): Regularly perform a SWOT analysis to formally identify weaknesses in the business. Engage the entire family or key stakeholders in this process, as their input can provide different perspectives. Once weaknesses are identified, prioritise them and devise actionable plans to address each.
  • Create Accountability Structures: Assign responsibility to specific individuals or teams for addressing areas of underperformance. Ensure that every identified weakness has a designated owner, clear action steps, and a timeline for resolution. Hold regular follow-up meetings to assess progress.

Avoiding Complacency

Complacency can often creep in unnoticed, leading to stagnation if not actively addressed, becoming a common pitfall in family businesses, especially those with a long history of success. Leenders and Waarts (2003) argue that businesses tend to naturally strengthen their business orientation over time, yet this shift might cause a weakened focus on family cohesion and values. The Family Council Canvas encourages families to reflect on whether they have become complacent in any area. By asking the right questions families can identify where they might have settled into comfort zones that no longer serve their long-term interests.

Best Practices:

  • Implement a Continuous Learning Culture: Encourage family members and employees to stay current with industry trends and improve their skills. Offer training programs or support professional development initiatives. This can help address skill gaps that may be contributing to underperformance. Implement a Kaizen approach, which encourages incremental improvements in all areas of the business.
  • Track Progress with SMART Goals: Once problem points are identified, set SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound) to address them. Breaking down issues into smaller, actionable steps makes the process of overcoming challenges more manageable and trackable.
  • Foster a Growth Mindset: Encourage family members and employees to adopt a mindset focused on learning and improvement. Regularly challenge assumptions, question the status quo, and explore new ideas. Promote the belief that every mistake is an opportunity for growth, and ensure that innovation is rewarded and celebrated.
  • Set Stretch Goals: While it’s important to set realistic goals, including “stretch” targets that challenge the family business to go beyond its current limits can help avoid complacency. These targets push the organisation to innovate, improve performance, and find creative ways to achieve growth.
  • Regularly Review and Update Strategies: Schedule annual or bi-annual strategy reviews where you critically assess your Family Council Canvas, market position, and growth opportunities. Make it a habit to revisit and revise strategies based on performance data, industry shifts, and technological advancements.
  • Seek Outside Perspectives: Outside perspectives from advisors and mentors help prevent groupthink and ensure that your business is constantly evolving.
  • Encourage Intrapreneurship: Giving family members the freedom and resources to experiment with new projects fosters innovation and provides growth opportunities.
  • Celebrate Progress: Recognise and celebrate even small achievements to maintain momentum and morale within the family business.

Learning from the Past

One of the most powerful ways to learn and grow is to reflect past decisions. The Family Council Canvas questions prompt families to analyse past choices and consider how different approaches might have led to better outcomes. This reflection not only aids in avoiding past mistakes but also in shaping more informed future strategies.

Leenders and Waarts (2003) emphasise that family businesses are not governed by a single set of success factors, but rather by the specific strengths and weaknesses that evolve over time. This variability underscores the importance of reflection in crafting strategies that are tailored to the unique needs and contexts of the family business.

Best Practices:

  • Conduct Post-Mortems: After major decisions or projects, gather the family to discuss what went well, what didn’t, and what could be improved.
  • Look Back and Analyse Past Decisions: Explore the history of your family business, and use past experiences as a learning tool to inform future decisions.

Conclusion

Exceptional families create successful strategies by embracing a mindset of continuous improvement. By regularly assessing areas for growth, avoiding complacency, and learning from past experiences, exceptional families build a solid foundation for long-term success. The Family Council Canvas provides a structured approach to identifying and addressing weaknesses, ensuring that every member of the family contributes to a strategy that promotes resilience and prosperity.

Reference:

Leenders, M., & Waarts, E. (2003). Competitiveness and Evolution of Family Businesses: The Role of Family and Business Orientation. European Management Journal, 21(6), 686-697. https://doi.org/10.1016/j.emj.2003.09.012.