Family businesses have the reputation of being small, insular, hide-bound and stable, if not practically lifeless. Family business executives, too, are frequently portrayed as unimaginative, backwards and mired in the past. It’s as if the typical family business’s executive offices were occupied by zombies rather than living, breathing leaders.
Reality differs from perception, however. Some of the world’s largest, most dynamic corporations are family-led firms, including the likes of Ford, Walmart and Cargill. These firms have clearly had no problem encouraging new thinking and implementing new ideas, despite being family-led. How do they do it? Certainly, it helps to have the multi-billion-dollar resources of a multi-national. But any family business, no matter how small, can chase the zombies from its C-suite and grow the business with innovation and energy.
One of the best ways to encourage innovation and spur growth is to encourage or require family employees to get significant experience working for other firms. This introduces ideas from other companies and reduces the not-invented-here obstructionism that can hamper creativity. The mechanism is similar to what works in plant and animal husbandry, where “hybrid vigor” describes the way offspring resulting from cross-breeding tend to be healthier than purebred strains. Family members who work elsewhere cross-pollinate the family firm with new thinking when they return, to the benefit of all.
Bringing in outside advisors is another way to help a family firm look beyond its own box and see new ways of doing things. In much the same way that family members who work elsewhere can transplant good ideas back to the family business, outside advisors have seen what other companies do and, where appropriate, can help implement those practices in their clients’ enterprises. Because outside advisors such as consultants, accountants and lawyers have typically been exposed to the practices of a large number of clients, they may have even more ideas than a family business member with some outside work experience.
One of the special characteristics of family business is the unique relationship between family business members who work in the business, and family members who have ownership interests but don’t work in the business. This situation often leads to tension between working family members who resent what they see as meddling from non-working family members, and non-working family members who feel the input they are entitled to as part owners as well as relatives is being ignored. This tension not uncommonly contributes to the dysfunction and eventual breakup of family businesses. When the two groups can’t agree on the goals and direction of the business, they may squabble until they finally agree to sell their interests and part ways.
But non-working family’s desire for input is often beneficial. Family business leaders can ease tension and help the business survive and grow by inviting input from non-employee family. Often, because of their one-of-a-kind perspective as insiders who aren’t directly part of the daily decision-making process, non-employee family members have useful insights into how the business is managed more effectively. A wise family business leader recognizes the value in these insights. Equally important, the leader makes non-working family members feel heard. So, even when their ideas are not feasible, non-employee family members don’t feel forced to seek more drastic measures.
The image of zombies in the C-suite is unfortunately often not far off-target when describing the leadership style of some family businesses. But by seeking outside input from family employees, outside advisors and non-working family members, you can chase the living dead out of your own company and grow it like the vital entity it is.