Family Businesses Need
Entrepreneurs for Long-Run Success
Families that want to stay in business for
generations don't have a choice but to encourage entrepreneurship in and out of
their family company, sayMichael Roberts and John Davis.
In
the world of family business, the entrepreneurs we celebrate are usually
founders of companies. These clever, hardworking individuals identify a good
business opportunity, scrape together some money and loyal employees, and start
a company that takes off. The heirs of the founder and later generations of the
family are supposed to take care of and grow the founder's creation; they are
not expected to be entrepreneurs themselves. Even attempting to reinvent the
family company can be seen as disloyal by the family.
This
constraint often kills the family business.
We
think it is time to reassess the importance of entrepreneurs for not only the
continuation of the family company, but for the continued success of the family
itself.
Managers inside your
core business who think like entrepreneurs (we call them intrapreneurs)
can identify opportunities that move your family company into new lines of
business, rejuvenate the founder's legacy, and put the enterprise on a new
growth path. Entrepreneurs (typically family members)
working outside the business but with family financial support can
keep
Families
that want to stay in business for another generation don't have a choice except
to encourage entrepreneurship in and out of their company. There are business
reasons and family reasons why we think this is true.
THE BUSINESS REASONS
In
today's competitive environment of rapid technological change and quickly
evolving industries, it doesn't pay to become too attached to current lines of business
or methods for serving customer needs. You need to regularly change what you
make and sell, and probably how you make and sell it. You must be nimble and,
as certain lines of business wane, be able to identify growth opportunities in
and out of the core industry and pursue them in experimental, cost-effective
ways. For that, you need the risk-taking, resourceful attitude of an
entrepreneur.
Entrepreneurs
are good at identifying commercial opportunities and getting new products and
services off the ground, even when they don't control the people and resources
needed to do it. They know how to attract talent to help them when their idea
is unproven, borrow resources they can't afford to buy, and build buyers'
interest in their activity. Others may see them as risk takers, but good
entrepreneurs are actually good at getting other folks to take risks. You need
some people like this in your family company and in your family.
THE FAMILY REASONS
We've
spent a lot of time studying why some families stay financially successful over
generations and others don't. (Actually, most don't.) There are three reasons
why families succeed.
First,
successful families see important changes in their industry and adapt by
diversifying into new activities that can grow. Simply put, successful families
are entrepreneurial.
Second,
families succeed because they invest in productive activities (including the
development of the next generation), emphasize growing assets, and consume
relatively little of their wealth. These families maintain a culture that
encourages family members to create things of lasting value. It's not
surprising that these families encourage entrepreneurs.
Third,
successful families remain reasonably united, keeping supportive members loyal
to one another and to the family's mission. Over generations, as families
become more diverse, it is likely that only a few relatives per generation will
directly work in the business. Outside-the-business members might still support
family philanthropic efforts or social activities, and sometimes that level of
involvement is enough to maintain family unity. But investing in family
entrepreneurs can also keep talented members contributing to the broader
family's wealth and mission. (The new Millennial generation—ages 15 to 30—seems
especially interested in being entrepreneurs.)
Investing
in family entrepreneurs has to be done objectively based on the feasibility of
their business plans, and also fairly within the family. Even if some
entrepreneurial projects don't succeed, these investments will help you spot
talent to keep your business growing. And you are sending an important message:
this family is committed to creating value.
by
Michael J. Roberts and John A. Davis
http://hbswk.hbs.edu/item/7598.html
No comments:
Post a Comment