Let’s start with, what is innovation anyway? According to the Business Dictionary.com, innovation in business is:
“The process of translating an idea or invention into a good or service that creates value or for which customers will pay. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. Innovation involves deliberate application of information, imagination and initiative in deriving greater or different values from resources, and includes all processes by which new ideas are generated and converted into useful products. In business, innovation often results when ideas are applied by the company in order to further satisfy the needs and expectations of the customers.”
In a family business innovation can be pretty difficult to accomplish even though innovation makes a big difference to the success of a family business. According to PWC’s Global Family Business Survey, 64% of respondents feel innovation is a major concern and further, ambitious and openly communicating family businesses outperformed others in terms of successfully bringing innovative products to market. Note the ambitious and openly communicating requirements!
Barriers to Innovation in a Family Business
Stuff that gets in the way of innovation in family businesses includes;
- their lack of willingness to accept external ideas
- their lack of desire to take risks and because “we’re family”
- they spend way too much time arguing about family related junk and not enough time on being innovative and willing to embrace change
- the founding generation still wanting to do it their way and the company has totally outgrown that approach
- visions for the company that are not in sync between the controlling generation and the up and coming generation
- in fighting and lack of support between family members working in the business
- an inability to forgive and forget stuff that happened in the past
- arguments over money and who earns what
- arguments over what’s fair and what’s not fair
…. Believe me the list is as long as the number of family owned organizations in the world.
It’s kind of ironic too. Family businesses should be WAY more innovative since they can change course and make decisions quickly, are more willing to invest time to let ideas play out and they make decisions based on legacy and what’s good for the company – not just to make a profit.
To gain an innovation edge, family owned entities need to use their “F-Suite” (as in Family Suite) advantages which include;
- the long term vision and strategy they tend to naturally have given the time horizon is generations not decades
- their community engagement and purpose
- their focus on legacy
- family values
In the world of family business these F-Suite advantages have the potential to translate into outcomes like faster decision making, a more nimble organization embracing and even seeking change, patience to realize the ROI, and a drive for growth because it makes sense for the family, the company and the broader community it all operates in.
So from where I sit, it seems crazy that so many family owned entities struggle every day to achieve their full potential, when they have so much working in their favor. Sometimes I really don’t get it. What could be better than creating, building and growing an organization with the people in the world who mean the most to you, and who you love the most too? Funny how we so often miss the real value of something we have when emotions get in the way?
A founding member of Business Consulting Resources, Jean brings over 35 years of experience to Hawaii corporations in organizational development, strategic planning and market strategies, human resources, executive coaching, team building and leadership development. Jean is an expert in workplace behaviors and in job-to-skillset matching. She regularly assists clients in employee selection, team building, training and development, motivation and incentives, internal communication structures and conflict resolution. Her experience in executive coaching includes assisting top executives in team building, personal and team performance improvement, and overall business strategy building and strategy implementation processes.
Jean embodies the entrepreneurial spirit, and knows that business people care not only about bottom-line results but how they are achieved; she learned early on that objectivity is the key to helping her clients to thrive in the marketplace. By instilling this characteristic in Business Consulting Resources clients, she shows them how to navigate any trend, obstacle, or roadblock to success they may face.
BCR has extensive experience in working with many family-owned businesses in all of our areas of services. If you have any questions or need advice regarding your family-owned business, please give us a call at (808)545-4111. Or reach out via our Contact Us page.