Six Dimensions of Enterprising Families

Let’s Really Play So Very Good. That is the mnemonic I created to remember the Six Dimensions of Enterprising Families, which I consider to be perhaps the most important set of rules for assuring long term continuity. 

A successful continuity plan for a healthy family enterprise needs a multi-faceted game plan. It’s like a 6 cylinder car. It needs to fire on all cylinders to run smoothly and efficiently. And if any of the cylinders malfunction, it needs a service call with a skilled technician to fix it.

A family enterprise works the same way. Except, unlike a car, most families do not know where to focus attention on to repair the damage to ensure it continues to run smoothly and efficiently. And unlike a car that can be replaced from time to time, you are stuck with your family, so you had better understand the mechanics to make your family enterprise run well.

So what are the essential six dimensions that enterprising families need to focus on for a healthy family enterprise, and to be prepared for passing the baton?

1. Leadership (choosing and grooming a leader) – there are many enterprises fortunate to have a strong CEO and management team.  But strong enterprises will outlive their CEOs and owners, and need to focus early on in defining the skills required to succeed the present incumbent, and devise the plan to find and groom the successor. It is said that the best leaders take the time early to plan and groom the next individual who will take their place.
2. Relationship (effective communication) – successful family enterprises must possess the communication policies and practices needed to nurture healthy relationships.  This may include a Family Constitution with codes of conduct, family meetings (giving everyone a voice), electing a Family Council for effective governance, and an independent Board of Directors.
3. Performance (critiquing homeostasis) – the most successful family enterprises continue down a path of wealth creation and regular performance measurement and evaluation.  This requires a disciplined attitude of performance orientation, and not resting on laurels.  It also means avoiding nepotism, and placing the best people in the jobs, even if they must come from outside the family.
4. Strategy (long term plan aligned to vision) – It is often said, “if you fail to plan, you plan to fail”.  A strategic plan is necessary to clarify the roadmap for the family enterprise.  It is a dynamic document that should change over time in response to strengths & weaknesses (internal reflective), opportunities & threats (external reflective).  By having a strategy document, active members of the family enterprise can understand the intended destination, action plan required to get their, and their respective roles.
5. Vision (formalized common vision) – A vision and values statement articulates the primary vision and values of the family enterprise, so that it can be used as a benchmark to develop the financial and non-financial (i.e. human/intellectual/spiritual/social (e.g. philanthropic)) emphasis over the next generations.  A vision statement is one of the central tenets of a Family Constitution document, so that family members can work together on a united front to support and contribute to the vision.
6. Governance (good governance) – Good governance systems are essential to build to ensure the family enterprise has the optimal foundation to survive and prosper over the long term, well beyond the lifespan of any individual family member.  Good governance systems are required in all 3 circles, including the Family, Business, and Ownership

The level of wealth created by the most successful family enterprises today is of such a magnitude to warrant investing the time and money to design systems to assure long term continuity.

It is only by recognizing there are 6 Dimensions of healthy enterprising families that fortunate families will understand the several core areas to focus on, to build the needed foundation for future generations.   As practitioners of the leading family enterprise continuity concepts, Family Enterprise Advisors are very well positioned to assist enterprising families to understand, build and implement the best practices to optimize a successful continuity plan.

Decision Tree Article: Engage an FEA Facilitator to Start the Conversation

Advice

At this stage the family should feel they are all on the same team running the same race preparing together for the passing of the proverbial baton. If not – start over.

On the Family advisor’s side, it is important to have someone keep the family accountable.  Don’t make this another encounter of all talk and no actions. Steps may seem small. An action plan must be set and followed with check points. There should also be flexibility to adapt to the ever-changing life cycle.