“First recognize that for any group or organisation to be successful it needs to be led, managed and governed well” John A Davis,PhD Harvard Business School
Most family businesses fail because they lack the discipline, governance structure and leadership to handle all of the challenges they are going to face. They mishandle or fail to plan for succession transitions. They do not communicate effectively in both family and business. They ignore the need for innovation in a fast-moving world.
John A Davis has written a series of articles for Harvard Business School on the importance of leadership in family businesses. While our initial thinking may be on the business leadership, he points out the importance of the role of leaders in the family group as well as the leaders in the ownership group.
Strong and effective leadership in these other two areas cannot be overlooked as they are so strongly linked to the performance on the family business.
Having one person initially lead the business, ownership and the family is the natural choice for family businesses around the world (the “parent-founder-business leader-controlling owner”). However as they grow in size and complexity, identifying others to share leadership roles is critical to their sustainability.
But what are the red flags for when it is time to structure and allocate new leadership roles in your family business?
1. If you are approaching the cousin consortium stage. It is guaranteed that your family and business is too complex to be managed by one individual.
2. When your business has diversified and there are manager/leaders across the systems. You need collaboration to remain united.
3. If the leader, even at the founder stage, finds themselves bogged downin family and ownership issues. This will happen and there are only so many hours in a day.
These three short videos from our free family business video catalogue will provide some great tips on leadership in your family business.
First though, why not find out how cohesive your leadership is with our 10 question interactive quiz.
- Identifying and Developing Leaders - The families that ... become more astute in leadership understand that the business leadership may not be the same as the family leadership...Different skill set, different ability, different style of leadership. Kathryn McCarthy, Family Business Advisor
- Four Tips for Embracing Leadership in Your Family Business: Next Gen - “It is very important for sons and daughters of business families to understand that if they aspire to positions of leadership in the family enterprise they will be tested” Ivan Landsberg, Academic Director, Kellogg School of Management.
- Transitioning Ownership and Leadership - “The big issues that we have in family business is that people like me who start the business are entrepreneurs, they’re type A’s, they’re accustomed to controlling their own destinies, and the purpose of life is learning how to let go a little bit. And that’s not easy for someone who has the power.” Philippe de Gaspe Beaubien II, Family business founder