The Driving Force of Family Businesses
Thanks to this week’s blogger, Luke Simmering, for his focus on the “driving force” in family business. There are many elements in a company’s strategic plan, but the “driving force” may frequently be overlooked. See below for Luke’s thoughts on how to pursue this aspect of the strategic planning process with your clients.
When working with family businesses, we often help facilitate discussions around the future of the business and what the owners foresee as possibilities and opportunities. We, at Legasus, use the term ‘strategic thinking’ to define this process and lean on some of the work presented by Michel Robert in his 2005 book, The New Strategic Thinking. As part of this process we posit a key question to the family owners, “What is the driving force that will enable your business to succeed in the future?” The investigation and dissection of this question can be a lengthy process, but is pivotal to clearly understanding the filter for making decisions in the business.
Robert provides a helpful description of common driving forces that businesses lean on to define their place in the market. A few of the driving forces are listed below:
- Product/Service Driven: focus efforts on a particular line of products or services
- Customer/Market Driven: restrict strategy to a describable group of people
- Production/Operations Driven: investment in production capabilities
- Distribution Driven: rely upon a unique approach or channel for delivering products
It is vital for family owners to pin down the driving forces. When having this discussion, it’s important to focus on what would promote success in the future, rather than what is making the business successful currently. This is a subtle but often difficult mental shift for family owners to make. Changing course from what made the business successful can be a difficult pill to swallow, so it’s important to build out profiles and scenarios for what the business could look like in 10-15 years if pursuing any one of the given driving forces.
For example, let’s say a manufacturing company has been successful for 50 years creating and distributing one product. The family owners enter into the strategic thinking process and begin to determine what their driving force should be. They know that their products have been the core of the business but need to address what threats, opportunities or possibilities may exist in the future. They may come to terms with the fact that their product may be less relevant in 10 years and their customer base may dry up.
Therefore, they shift from a Product Driving Force to a Customer/Market Driving Force to adapt products to the needs of their core customers. This determination by the owners and/or business leaders instills clarity for the long-term direction of the company while also informing the short-term strategic plan. Of course, this is just one question in the strategic thinking process, but is something to continually address to ensure clarity in the organization’s direction. Further, understanding the driving force aids discussion with family owners on what their family values and mission are that can support this long-term direction.
About the contributor
Luke Simmering is a family business advisor with Legasus Group LC in Wichita, KS. He brings knowledge and experience working with business leaders to unearth both individual and organizational capabilities. Luke can be reached at [email protected].