Families in Business: Navigating Strategy with Business GPS

Unifying Vision and Strategy

I’m old enough to remember maps. Yes, physical, paper maps that you bought at gas stations or got for free from the AAA office. Once unfolded, they never went back to the original, uniform formation. A well-used map actually had worn spots at complicated intersections. Then came GPS which changed my life and eliminated at least 80% of the U-turns that were the hallmark of my trips.

As with travel, a good ‘Business GPS’ can eliminate detours and set your strategy on a more direct path by identifying (1) a well-defined starting point, (2) an exact destination, and (3) the preferred route.  This applies to all business types but is particularly relevant for family businesses, which can bring added complexity and opportunity for conflict. The most significant source of conflict for family businesses is when there is misalignment on the following questions: Where are we now? Where do we want to be? How should we get there?

The Dangers of a Misaligned GPS

In a recent meeting with a multi-generational family in business, the five family members talked about their recent strategic planning meetings, their investigation into a potential acquisition, the success of their lean implementation, and the uptick in sales after a new advertising campaign. When I asked if they were all aligned on the business plan, they nodded in unison with enthusiasm, quick sideways glances, and confident grins.

Maybe the sideways glances tipped me off that something was out of alignment and made me dig deeper. They finally admitted that, like many families in business, theirs had diverse opinions and levels of commitment. They disagreed on growth goals, the risk associated with the acquisition, the investment in automation, and several other critical topics. They continued to defend individual positions on each decision. Although they were discussing tactics, it became clear that alignment was desperately needed.

So, I gave each of them the ‘Why and Where Grid’ (pictured below) and asked the GPS questions. Why do you have this business now? What do you want from it in the future? What are your guidelines for getting there?

The ‘Why and Where Grid’

The grid has two critical components for family business GPS:

• What is your commitment to keeping the business as family-owned?
• What are you willing to invest in the business?

These two components influence every decision within the business.

Navigating the ‘Why and Where Grid’

The first family member described his interest in building the value of the business with the hope they would be noticed and acquired. Another member adamantly defended continuing family ownership of the business, remaining an anchor in the community, and protecting the legacy for the future. A third talked about the need for the family’s senior members to be able to rely on a steady stream of dividend income for their retirement. The fourth expressed his concern about the future of the industry and his desire to diversify and redeploy the resources into a different business. One member wanted to keep all options open.

Their GPS systems were not synchronized! The family’s grid below shows clearly that the family vision for the business was not in alignment!

Proceed To the Highlighted Route

The rich conversation that followed brought clarity. Although the acquisition was a great way to increase the company value and make it an attractive acquisition target, the required debt would significantly reduce dividends for the foreseeable future. Automation would increase cash flow but would dramatically decrease the number of jobs in their community. They realized that their tactical positions reflected their individual why and where. Reaching alignment on the tactics would only happen with alignment of the family vision.

For your family in business, ask each person the following GPS questions:

• What do I want from this business now?
• What do I want from this business in the future?
• What am I willing to invest to get there?
• What factors could change my mind?

Use the ‘Why and Where Grid’ to plot where each person is now and their future direction. How aligned is your family? What will it take to better align and reach the same business objectives?

Family-owned businesses must set each member’s GPS in the same direction in order to succeed!

We think you’ll also like:

1. Tips for Creating an Effective Family Business Charter
2. 6 Ways to Make Your Family Legacy (and Wealth) Bulletproof
3. How Ownership Structure Influences Your Exit

[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can listen to at your leisure, and each includes a comprehensive customer PowerPoint about the topic):

1. Understanding Risk Management Basics for Business Owners
2. The Very Basics: Forming the Business
3. Turning an Idea or Product Into a Business

This is an updated version of an article originally published on June 27, 2018 and updated on February 5, 2021. This article was most recently updated by the Financial Poise Editors.] 

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