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. But, GPS changed my life and eliminated at least 80% of the U-turns that were the hallmark of my trips. And for families in business, a good GPS eliminates those detours and sets business strategy on a more direct path.
Is your family business still using maps? Making U-turns? Or, are you using a family business GPS to ensure that your family business objectives go down the same path?
The key elements of GPS navigation are:
The biggest source of conflict for family businesses is when the individuals are not aligned on these three elements:
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 the new advertising campaign. When I asked if they were all aligned on the business plans, they nodded in unison with enthusiasm, quick sideways glances and confident grins.
Maybe it was the sideways glances that 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. Growth goals, the risk associated with the acquisition, the investment in automation and several other key decisions were disagreed upon. They continued to defend individual positions on each decision. Although they were discussing tactics, it became clear that they were not aligned on their vision for the future of the business.
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 grid has two critical components for family business GPS:
These two components influence every decision within the business.
The first family member to speak quickly 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 senior members of the family 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. And, one member wanted to keep all options open.
Their GPS systems were not synchronized! The family’s “Why and Where Grid” below shows clearly that the family vision for the business was not in alignment!
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 greatly reduce dividends for the foreseeable future. Automation would increase cash flow but would significantly decrease the number of jobs in their community. They realized that their tactical positions were a reflection of their individual why and where. Reaching alignment on the tactics would not happen without alignment on the family vision.
For your family in business, ask each person the following GPS questions:
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 be better aligned and reach the same business objectives?
Family-owned businesses must set each member’s GPS in the same direction!
©All Rights Reserved. February, 2021. DailyDACTM, LLC d/b/a/ Financial PoiseTM
Stephanie Olexa is an independent director and a governance professional with experience as a board chair and on audit and finance, strategy, compensation, risk management, and nominating/governance committees. As a business advisor, she has helped family-owned businesses build stewardship for sustainability. Stephanie is the Founder and President of Lead to the Future, LLC. In addition…
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