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Create a Culture of Change

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The years ahead promise even faster and more fundamental change forfamily firms. Industry consolidation, shrinking strategic life cycles,e-commerce, global competition, and revolutions in supply-chainmanagement and logistics are just some of the well-known forces.

Rapid change threatens family-owned firms more than other companiesfor several reasons:

  • Family firms have deeply entrenched traditions.
  • Leaders typically serve long terms.
  • Family firms often profess cultures of loyalty, stability, and paternalism.
  • Longtime owners tend to be risk averse.
  • Successors are reluctant to challenge predecessors' philosophies and ways.

More than any business skill, future leaders of family firmswill need to be leaders of change - without sacrificing the family'svalues or the reputations of previous family leaders. No texts onleading change address this dilemma of protecting the past but changingthe future. The key idea is to recast or reinterpret the past toemphasize that historic success was more a result of embracing changethan it was the fruit of any particular strategies. To do so, somefamily firms have adopted and preached mottoes celebrating change. A few examples:

  • Our tradition is change.
  • Innovation is our tradition.
  • Tradition is eternity, not history.
  • We believe in new ideas and old ideals.

Once the firm's tradition is portrayed as a culture of change, thenthat culture needs to be reinforced for the future. Ideas for doing soinclude the following:

  • Celebrate new ideas, even more so than loyalty and tenure.
  • Stress dissatisfaction with the status quo.
  • Tinker constantly with management systems and practices.
  • Charge an independent board of directors with the responsibility tochallenge strategic assumptions.
  • Share financial information with as many managers as possible.

Finally, leaders of family firms need to reassure the organizationthat the future will be exciting. Emphasizing an inspiring vision and acompelling philosophy of management gives employees confidence thatchange is possible, will lead to a better tomorrow, and is worth takingrisks to accomplish.

John L. Ward is a professor at Northwestern University's Kellogg Graduate School of Management, in Evanston, Ill.

Copyright 1999 Family Business Publishing Co. All rights reserved.

Last updated: Oct 1, 1999




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