Family businesses with entrepreneurial culture innovate better

Family businesses do not focus enough on innovating products, services and their own organizational culture. They are also often too dependent on their founder for new ideas. Ensuring an entrepreneurial culture within the organization seems to be the best bridge to innovating differently, but more importantly, better.

Speaking to Financieele Dagblad recently, Dirk Harm Eijssen, founder and partner at Gwynt, a family business consulting firm, his take on why family businesses struggle with innovation. One reason he gave was that during a business succession process, it is difficult to change an organization’s strategy. Often the DGA is very dominant and core values are deeply rooted within the family business. Eijssen: “It’s very difficult for a son or daughter to innovate with their organization if the founder has been dominant.”

Another reason is that the DGA has usually left his or her mark on a family business, making it difficult to change the way he or she leads, since the founder has manifested himself or herself as a heavyweight. And when a successor is finally found, the new generation struggles to implement innovations.

Waiting culture

Another factor is that the generally wait-and-see culture within family businesses often hinders innovation. Employees are primarily “implementers,” the ideas coming from the founder or owner. If that person quits or becomes ill, the organization is left adrift and confused. After all, employees are not used to having to take charge themselves.

As in other industries, innovation is essential for family businesses, including staying ahead of the competition, developing new products/services for customers and honing current services and operations. Only innovative family businesses will continue to operate successfully in the current economic era of rapid change and even disruption.

Eijssen indicates that in order to become more innovative, the first solution lies in making the organization more entrepreneurial. Gwynt’s partner sees that companies at the forefront of innovations are setting up separate departments, sometimes even outside their own corporate walls. There, employees can let go of the habitual patterns of thinking and, often without direct interference from the owner, can develop the self-innovating ideas.