Strategic Management Planning for the Successful Family Business

Abstract

ABSTRACT Perhaps the most critical factor associated with the continued operation or extended life of the family-owned is succession planning. Survival could be significantly increased if owners and members of the succeeding generation (family and non-family) had a clear understanding of the main issues related to organizational positioning and continuity in operational planning. This paper will present an alternative way of conceptualizing the strategic planning process that is particularly applicable to the small family-owned firm. Utilizing a matrix network that is based upon the two fundamental drivers of family businesses, their process technology and behavioral values, the author reviews the dynamics of positioning the firm and its leadership for long-term effective growth. In addition to developing several interrelated aspects of the model for explaining and predicting the efficiency and effectiveness of family-owned business, the paper provides a demonstration appendix illustrating the practical application of the conceptualizing technique. Seven distinct operational strategies are analyzed and policy positions are developed showing the most effective set of operation characteristics. Out of these seven strategies should flow a number of leadership planning and management decisions that represent action rather than mere reaction to economic growth and succession planning. INTRODUCTION The process of crafting a long-term plan for the leadership and management transition of a family-owned is among the most demanding and difficult challenges any family firm will ever have to face. Fewer than one in three family firms will survive transition from first generation to second; only half of that third will successfully experience the next succession. Unless owners and their families can meet the long-term challenges of developing shared understanding, open planning and communication, and thoughtful envisioning of the viability, the continuity of their family may be unsuccessful. In today's world of ever-increasing numbers of both family-owned firms and greater involvement of family members, the critical underlying need for strategic planning is premised upon a fundamental reexamination of organizational management approach (Robinson, 1983). Organizational theory has long acknowledged the necessary repositioning of the traditional planning and control functions to a more family-participative and employee-centered focus. This is based clearly upon the challenges of knowledge work and the knowledge worker (Reich, 1987). However, the classical management functions of organizing (or positioning for the family business) and family operational leadership approaches have received little direct attention in empirical studies. Much of the organizational effectiveness literature, like the planning literature, is principally devoted to large and manufacturing-centered organizations. Research questions regarding the Best Mix of leadership style and organizational effectiveness, at best, demonstrate minor implications for the small family-owned firm (Hornaday & Wheatley, 1986). One a super-positioning model, developed by Dr. David H. Maister of the Cox Consulting Group, is based upon the recognition of observable categories between business and (Lewis, 1988). Dr. Maister believes that a trade-off between family organizational values and the work delivery technology of the firm can lead to the proper alignment or positioning for success. When viewing the family firm, one approach that has proven particularly beneficial centers on the relationship between family issues and objectives (Rosenblatt, Mik, Anderson & Johnson, 1985). Professors Longnecker and Moore observe that while family dynamics and practice exist for separate reasons, there is clearly an overlap between the nurturing drives of human development within the family and the economic value goals which must be considered for a profitable enterprise (Longnecker & Moore, 1991). …