I was interviewed recently and I felt I am duty-bound to share critical information related to how family-run and managed businesses are coping amidst this unfolding and disruptive event. Question: After 4 months into the crisis, what can you say about family owning businesses that heeded your advice about a future "Black Swan" event and on the other hand for business leaders who are still "living in the past" and unwilling to embrace change?
No family business can be fully prepared for a "black Swan" event or uncertainty of the future, much less identify a vicious enemy that is invisible to the naked eye yet having a devastating impact on economies, organizations, and individuals. This pandemic has transformed into a global economic crisis never before experienced in our lifetimes and the rising levels of risks on businesses are unprecedented. No organization was fully prepared for the threat of COVID-19 but the severity and the magnitude of this pandemic have overwhelmed practically everybody. This disruptive event clearly brought to light fundamental questions on whether family-owned businesses are really prepared to navigate future VUCA events.
On a positive note, it is worth mentioning that for some of our clients in Asia, those who were agile and flexible enough were able to quickly adjust and adapt to the turbulent markets. The initiatives they rolled out as a result of their state of readiness gave them a distinct advantage. COVID-19 put forward an opportunity for these family businesses to regroup, plan, align, and implement programs with speed. What even made it remarkable and I can say the family’s defining moment was their united stand on critical decisions, their compassion towards their workforce, and the velocity in getting things done without compromising their values. Being their family business advisor with a front-row seat and tasked to join high-level sessions (crisis planning, board meetings, family, or business councils), I am most proud of their achievements as they displayed a deeper sense of purpose and unity over adversity. As the crisis continues to ravage economies all over the world, successful family businesses have pivoted from the initial shock to a methodical implementation of game plans from technology upgrades to the retooling of the workforce all the way to opportunity-seeking investments.
When Owners refuse to change
My biggest frustration in my work is when key business leaders refuse to heed my advice and worse refuse to take action even when markets are being impacted. I refer to this mindset as a mentality of inertia. Failure to react properly to change can be an outgrowth of the firm’s history of past successes. The key leader(s) looked backward instead of forward. When myopia or the lack of foresight engulfs family members, especially the leader, it is courting danger. When indecisiveness and an extraordinary event collide, it will be the beginning of the end for the enterprise.
For business owners that continue to show unwillingness to embrace change, I want to share this quote from a fellow family governance colleague, Prof Dennis Jaffe,
"today’s pandemic crisis is turning everyone’s world upside-down in ways that couldn’t have been anticipated just a short time ago. After a half-century of observing and sometimes resisting the increasing pace of change and the many innovations disrupting our behavior, we are now encountering a situation that makes it impossible not to change. He further added that "every business, large and small, is feeling threatened, and every family faces deep challenges just to stay afloat. That uncertainty and inability to control make us anxious. And when we’re anxious, we can do impulsive, short-sighted things."
For short-sighted founders and leaders, it is important to recognize what Jaffe said. The world has transformed in ways that nobody would have imagined so whatever accomplishments you have achieved in the past, it must now be subsumed by a greater force of incredible change.
Join me on July 16, 2020, Thursday at 10 AM to 12 NN in a private international webinar entitled, LEADING THE FAMILY BUSINESS IN EXTRAORDINARY TIMES: What it takes to be a United Family. I have been invited as the resource speaker and it is my task to articulate the significant roles of the various stakeholders during and after the Covid-19 crisis. I will also demonstrate how a united family can effectively navigate this crisis, align business plans as well as clarify roles of each and every family member. This is very timely as it will highlight economic challenges as well as important tools that key business leaders can use while leading the family enterprise through this difficult period. For inquiries, you may reach Caiz Aquino through 09175091735/ 0929 313 1225 or send an email to firstname.lastname@example.org. Philippine Slots are limited.