TNJ - July/August 2002 - Feature Story - Laying a Strategy for Your Family Business By Rachel Mickelson

July/August 2002

Laying a Strategy for Your Family Business

One gallery owner and two black women artists are making strides in bringing ethnic art creations to both black and mainstream communities.

By Rachel Mickelson

The tragedy of September 11 and the continuing aftermath of those events have driven home some hard lessons about the dangers of complacency and the inevitability of change. Even if your family and business were fortunate enough not to be touched directly, those lessons should not be lost for any family business.
In spite of these lofty goals, there are compelling concerns about a lack of adequate storage area because vendors have to take their wares home with them after work.
“The storage might be a problem but we are looking forward to having a container so that the vendors can store their items in their booths at night,” said Hastick.

Family businesses that survive and thrive over generations are those willing to discard old paradigms and transform themselves in the face of adversity. They craft strategies that reflect changes in business and social environments to serve their customers better.
Family firms are the backbone of a free society. How then do family firms continue to sustain themselves for the long run and play a role in American society? The answer is to create a sound business strategy.

According to experts, strategy is defined as a firm’s unique and valuable position in the external environment created by the alignment of organizational activities

By definition then, a family business strategy must not only include a viable market for its products and services, but it must also offer something of value to its customers relative to the other key players in the marketplace. Further, the organization’s systems, processes and structure must fit together, operating harmoniously so that value is created for the stake-holders. This is no easy task, but clearly worth the effort, as strategic planning has been shown time and again to be a key success factor for business sustainability and continuity.

What is a family firm’s strategy? Unfortunately, it often resides in the founder’s or current leader’s head. Family firms should be asking such critical questions as: What is our strategy? Is it documented? Where are we in the implementation process? How do we know it is working? When was the last time we revised it? Who is involved in creating it?
Making the strategic plan formal is the first place to start. Write it down, communicate it, get feedback on it, test it by gathering good industry and company data, benchmark yourselves against the competition and be open to changing it.

At its core, strategy is about choices. What business could we be in? Who could be our customers? What products and/or services could we offer? How could we deliver them? A strategic plan that people understand, commit to and implement allows everyone to be on the same page regarding the choice of strategic direction, with clear roles and responsibilities and a detailed road map for the future.

Steps in crafting and implementing a strategy. The following is a list of strategic planning activities, based on work with numerous family firms, in their creation and implementation of strategies, and on research on strategy and organizational change.

• Start with shareholder goals. At its most basic level a business exists to serve the needs of its shareholders. A sound strategic plan begins by assessing the goals of each shareholder and agreeing on a set of goals, expectations and assumptions that will guide strategic decisions. The shareholder group includes family shareholders—both those who work in the businesses and those who don’t, including partners and adult children—and any nonfamily shareholders. This is a critical, and often difficult first step, where the counsel and facilitation of a strategic family business advisor can add significant value. After this step, the rest of the strategic planning process should involve the business leaders and organization members.

• Conduct a comprehensive strategic analysis. Firms often base their strategy on incomplete or out-of-date information. It is essential that family business leaders undertake a thorough analysis of their market size and profitability, their market position, their competitors and their strategies, as well as industry key success factors. Internally, the company must analyze how well its current strategy is working and understand its core competencies, cost structure and vulnerable spots.

• Create a powerful vision of the future. The family firm needs a clear picture of the future. What will the company be making, selling, delivering in three to five years? Who will their customers be? How many locations will there be? What successes will they have achieved? Get all stake-holders involved to help form a clear view of the future. This focus can help leadership create passion in the people and mobilize them to action.

• Craft a strategy to achieve the vision. Once the future has been envisioned, leaders should craft key, quantifiable goals and develop strategic initiatives to be achieved within a three-to-five-year time frame.

• Design the optimum organization to implement the strategy. When a strategy fails, lack of implementation is usually to blame. The family firm must take a hard look at their current situation, based on the findings from the strategic analysis and compare it to where they want to go. The key question is: What must we do well to implement the strategy? Key actions include designing appropriate systems, processes and structure, and then assembling a leadership team to implement the strategy.

• Manage the change effectively. The ability to change is a competitive advantage in itself. Family firms are especially known for their flexibility, nimbleness and loyalty among employees. A family firm can move toward its vision when leadership talks the talk, communicates frequently and maintains a strong, committed culture. Strategic planning is like succession; it is not an event, it’s a process. The strategic plan, therefore, must be revisited regularly and changes made accordingly (and there will be changes). If there is no clear strategy driving the family business, start crafting one. If you have not revised your strategy in the last six months, begin talking about it today. Complacency is not an option.

Rachel Mickelson is a partner with DoudHausnerVistar, an organization devoted to helping entrepreneurial families achieve business prosperity. Her e-mail is: (rmickelson@dhvadvisors.com).

Send a Network Journal Greeting Card With Music to a loved one or friend. In preparing to celebrate Black History Month (February) here in America, the theme of our greeting cards for the next two months will feature famous people of color from the last century.

The music to accompany the cards are Motown and Reggae songs.