Transforming Your Family-Owned Business Toward High Performance.

By: DOUG VERLEY (Read all my articles HERE.)

Executive Summary.

In the ever-evolving landscape of business, companies need to adapt and transform themselves to remain competitive. Family-owned businesses, in particular, face unique challenges during this process. The family-business founder, often synonymous with the company's leadership, may be reluctant to embrace change, share power, or plan for succession. The journey of transformation within a family business is further complicated as it encompasses not only the business but also family dynamics. In this article I explore the process of transforming family-owned businesses and I offer a roadmap for success.

The Challenge of Transformation in Family Businesses.

Family businesses often revolve around a central figure – the founder. This leader plays a pivotal role in both the family and business aspects of the company. Transformation can be challenging for such individuals, as it forces them to address their own mortality, let go of what they've built, and share power. Initiating change and embracing transformation can be an unsettling experience for both the business and family leader.

Understanding the Difference: Change vs. Transition.

It's essential to distinguish between change and transition in the context of family business transformation. Change involves external factors like policies, practices, and structures, while transition is internal, involving the psychological adaptation to change.

Transition requires people to undergo three challenging processes:

1. Saying Goodbye: Letting go of the past.
2. Shifting into Neutral: Adapting to a new way of working, communicating, and decision-making.
3. Moving Forward: Adopting new attitudes and behaviours.

Business leaders may need assistance in making these transitions. To support this process:

• Clearly describe the change and its necessity.
• Plan change details meticulously.
• Help people let go of the past respectfully.
• Continually communicate the change's purpose, goals, plan, and everyone's role.
• Articulate the new attitudes and behaviours required for success.

Leading Change: The Kotter Model.

John P. Kotter provides an eight-step guide in his book "Leading Change" for achieving transformation. These steps are valuable for family businesses:

1. Establishing a Level of Urgency: Creating a sense of urgency is crucial to overcome complacency and motivate change. Crises, such as the death of a business founder, naturally induce urgency.
2. Creating a Team Focus: Transformations require collaborative leadership rather than relying solely on a single prominent individual.
3. Develop a Vision and Strategy: A compelling vision and clear strategy clarify the direction of change, motivate people, and coordinate their actions.
4. Communicating the Change Vision: Success depends on achieving a shared understanding of the vision among employees, motivating them to act in alignment with the desired future.
5. Empowering Employees for Broad-Based Action: Transformation requires the active involvement of many individuals. Empowerment means removing barriers, providing training and information, aligning systems with the vision, and addressing obstructive elements.
6. Generate Short-Term Wins: Celebrating early successes maintains motivation and builds momentum for the broader transformation effort.
7. Consolidate Gains and Produce More Change: Use credibility gained from short-term wins to drive larger change projects, expanding participation where needed.
8. Anchoring New Approaches in the Culture: Change becomes permanent by making cultural adjustments after demonstrating success. This may involve personnel changes, rewards alignment, and ongoing support.

Recommendations for Transformation Success.

1. Establish Clarity: Clearly articulate the need for change and its importance.
2. Embrace Team Leadership: Promote a team approach for effective transformation.
3. Develop a Compelling Vision: Create and communicate a vision that guides the transformation process.
4. Foster Understanding: Ensure everyone in the organisation comprehends and commits to the new direction.
5. Empower Employees: Remove barriers, provide training, and align systems to enable broad-based action.
6. Celebrate Success: Highlight early achievements to maintain momentum.
7. Consolidate and Expand: Build on successes and tackle larger change projects.
8. Anchor in Culture: Ensure that new approaches become deeply ingrained in the organisation's culture.

Transforming a family-owned business is undoubtedly challenging, but these steps and recommendations can guide the journey toward high performance and long-term success. In a world of constant change, businesses that adapt and innovate are the ones that thrive and prosper.

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DOUG VERLEY? (DipBusMan, BCom(Hons), HDipCoLaw, GAICD, ExecMBA.)

Business & Life Coach, Business Advisor & Strategist

[email protected]

0405 122 345

“Good fortune & happiness favours the well-informed”.