Issue link: https://www.e-digitaleditions.com/i/571132
18 FEDA News & Views Motivations that were homogeneous in the previous generation can differ markedly among members of the next generation. These matters and the liquidity issues that may ensue should be worked through. 1. The most basic and fundamental question confront- ing each successive generation of family owners is this: Are we committed to continuing our family business together? While basic, the question is not simple. Different family members may have different answers. Some may wish to cash out. Others participation may be conditional ("I'm in, but only if I have a top management job.") Some may dream of their own children inheriting the business. Others may not have chil- dren. Motivations that were homogeneous in the previous generation can differ mark- edly among members of the next genera- tion. These matters and the liquidity issues that may ensue should be worked through. 2. Next question: Are we satisfied with our current strat- egy? This is actually a very complicated question. To answer it, participants in the discussion must know and understand the current strategy and must be able to assess its effectiveness. That knowledge usually requires some rather in-depth discus- sions with the business's leadership and board of directors. Sometimes the conclusion is that the strategy is not clear, that it is inadequately effective or that it is good but poorly executed. All of which warrant many more questions. Among the many issues that confront family businesses in times of generational transition, strategic direction is crucial. The strategy that provided direction for businesses during the incumbent generation's watch may be faltering or tired or largely completed. As a result, modifications, or even a reinvention, may be required with an aging leadership that may be unwilling or unable to lead the process of change. Next-generation managers may recognize the problem but be in a poor position to do much about it. Their elders, still in control, may resist change and the risks that change implies. Some simply may not wish to challenge established practices, while others may fear being seen as lacking in answers or the power to lead. Next-generation managers also can have their own difficulties. With heavy operational responsibilities, they may be focused on the present with no time to consider the future. When you are fighting off alligators, it's easy to forget that the job is to figure out how to drain the swamp. Perhaps they've fought for change and lost their battles. Or maybe the strategic differences among members of the next generation have not been addressed. The result of any of these problems may be a lack of strategic leadership, which can leave a business, its management and employees adrift. To avoid these missteps, the next generation of family business owners should come together early in the process of generational transition in order to achieve consensus on strategic direction. Below are a number of questions that should guide the process. Individual members of the group should spend time in advance thinking about these questions so that each will be prepared to make effective progress toward the goal of being able to articulate strategic direc- tion. 10 STRATEGIC QUESTIONS FOR Motivations that were homogeneous in the previous generation can differ markedly among members of the next generation. These matters and the liquidity issues that may ensue should be worked 1. The most basic and fundamental question confront ing each successive generation of family owners is this: Are we committed to continuing our family business together? While basic, the question is not simple. Different family members may have different answers. Some may wish to cash out. Others participation may be conditional ("I'm in, but only if I have a top management job.") Some tion. These matters and the liquidity issues that may ensue should be worked through. 2. Next question: Are we satisfied with our current strat egy? This is actually a very complicated question. To answer it, participants in the discussion must know and understand the current strategy and must be able to assess its effectiveness. That knowledge usually requires some rather in-depth discus sions with the business's leadership and board of directors. Sometimes the conclusion is that the strategy is not clear, that it members of the next generation have not been addressed. The result of any of these problems may be a lack of strategic leadership, which can leave a business, its management and employees adrift. To avoid these missteps, the next generation of family business owners should come together early in the process of generational transition in order to achieve consensus on strategic direction. Below are a number of questions that should guide the process. Individual members of the group should spend time in advance thinking about these questions so that each will be prepared to make effective progress toward the goal of being able to articulate strategic direc tion.