New generation makes change urgent

17 September 2018

17 September 2018

Why change when things are going well? Dirk Harm Eijssen and Léon Peters, partners at consulting firm Gwynt, hear it often from owners of family businesses. ‘Developments such as digitization, new technologies and other competitors follow each other in rapid succession and come from surprising angles.’

They fend for themselves, take pride, provide continuity, employment and connection in local communities. Dirk Harm and Léon regularly visit wonderful Dutch family businesses that have successfully developed a product or service in the past that they still firmly believe in and that they think can last for years to come. ‘A first or second generation director-owner often says to us, ‘we have a great product or service, don’t we? We’ve been running well for years, why should we change anything?” Dirk Harm likes to quote Johan Cruijff at that point. ‘You don’t see it until you realize it. Knowing that you are not in as good a position as you had hoped and thought, that the competition is hot on your heels, is a prerequisite for making strides.’


Dirk Harm and Léon provide insight into where the product or service really stands in the life cycle. ‘An owner often thinks they are still in spring or summer, but often the situation is less rosy and they have arrived in autumn or winter. There is insufficient connection to the current and especially the future market. If they want to survive, something has to change quickly.’ Owners do not always realize that digitalization, the many new technologies and successful start-ups mean that developments and change are no longer a gradual process. Dirk Harm: “A machine factory ten years ago had a lead time of ten weeks, five years ago it was six weeks, now two weeks. In two years you may have to be able to produce in less than three days. To keep up with that, a different way of working is necessary. More automation, for example, is one way, but that has major consequences, also for logistics and the relationship with suppliers, for example.’

Teddy bear

Change often becomes especially urgent when a younger generation takes over, which happens in about 30 percent of family businesses. A son or daughter looks more critically at the company, the organization, the way they work and the products or services they provide. Does it still fit in these times?
At Gwynt, they advise the next generation to talk to customers and suppliers especially a lot, preferably before they actually get a role in management. Not just to carry over the relationships of the previous generation, but above all to listen keenly and understand what stage the products and services are in. Quietly taking the time to get to know the company better is no longer an issue. In many cases it is “all hands on deck” and adjustments will be needed in the future picture sooner than hoped and expected. That’s Gwynt’s experience. Seeking cooperation with other parties is important in this regard at this time. “This is often new to them, many family businesses have a somewhat closed culture that depends on the owner, often a person with a strong vision,” says Dirk Harm. There is sometimes even some fear of working with others; it is not in their genes. Dirk Harm: ‘I sometimes say, a family business is to the owners as a teddy bear is to a child: a part of yourself and your family members. Allowing outsiders into it is difficult.’ All the more important is to gain experiences outside the family business and to establish contacts with customers and suppliers yourself. It stretches the frame of reference and helps learn to see possibilities.

Saying goodbye

Because in many cases the director-owner sets all the lines and makes all the decisions, a wait-and-see, reactive organization has emerged – unconsciously – that looks mainly upward. ‘Employees work hard, are very loyal and implement the ideas of the director-owner. The director keeps the company running from intuition and needs only half a word to make decisions. A new generation lacks that knowledge; it is very difficult for them to make changes, innovate and run a company,” Dirk Harm believes. ‘If there is then also a critical father looking over your shoulder, that doesn’t help. Therefore, to break the echo from the past, it is sometimes wise if the owner takes a big step back after the transfer.’


Gwynt consultants also work with the management team on the company’s purpose or goal: what is their meaning? ‘Many family businesses not only have a financial motive, they also find it important to play a meaningful role for their employees and in society. For them this is self-evident, but they should propagate this much more because it is just special.’ Léon: ‘Family businesses make the Netherlands a more beautiful country.’ But the social function is sometimes also a pitfall: because several generations work in a company, changes have an impact on an entire community. ‘It is discussed in line at the bakery, so to speak. That’s not always easy, especially for new owners.’

Author: Miloe van Beek, freelance journalist for Het Financieele Dagblad and Sprout, among others