Up until March 2020, family business transformation would have been a major programme of change, mapped out well in advance and considered carefully by the leadership team. After all, it is defined it as a strategic change made to respond to an exceptional event and my team label it a "high-risk" corporate activity.
And then came the pandemic. It accelerated some trends at a pace we couldn’t have imagined—volatility and speed of market change is causing the creation and disappearance of business models faster than ever.
At our virtual family business event, Mastering a Comeback, we discussed how through the pandemic there has been, and will doubtless continue to be, a seismic degree of change in family businesses, being undertaken at unprecedented speed, to ensure they stay relevant and competitive.
Transformation is being driven by eight key factors:
Digital and data
Sense of purpose
ESG and regulation
Family business leaders at our event told us that changing customer behaviour is currently the top driver of transformation.
How are family businesses transforming?
Stakeholder management: There is even greater focus on the breadth of stakeholders both internal and external, from colleagues and suppliers through to regulators and pressure groups. Family business are paying more attention to their needs before, through and after the change.
Intergenerational collaboration: More than ever before, teamwork across the generations is making change happen. Even in businesses without active family management, we see the influence of the family securing alignment between those involved. It’s making a real difference.
ESG (Environmental, social and governance): The increased focus on how businesses operate plays to the strength of so many family businesses—their link to social purpose. The questions of what is created for society and how that relates to the business plan and the transformation agenda, do, though, still need special attention.
Leadership: Authentic leadership and demonstrable care for stakeholders is sought more than ever during times of change. Leaders have needed to up their profile, especially in terms of looking after their own workforce.
External talent: There is more willingness to bring in external talent, in part to deliver on transformation designed to exploit the opportunities offered by digital and data investment.
I’ll leave you with our insight on what is required for a successful transformation at the speed of the pandemic. Our experience in supporting businesses through such change programmes has found that four factors must be present before March 2020, through the pandemic and almost certainly the current period of uncertainty:
- A burning platform—it is critical that the organisation understands why transformation is required
- Alignment (the coalition of the willing)—a leadership team in agreement about the change is key. They must sponsor what’s about to happen
- Why, what, how—the people within the organisation need to understand the changes and how to measure success
- Transformation requires organisational capability and capacity to make it happen, otherwise it’s in danger of fizzling out…