The sense and nonsense of strategy formation in the family business

8 November 2017

8 November 2017

Agility versus strategy

The success of many family and entrepreneurial businesses is often not the result of an elaborate long-term strategy and business plan. It is precisely responding to opportunities, being agile and doing business from intuition and decisiveness that have made these companies successful. Research has also shown that having a deliberate long-term strategy (“deliberate strategy”) does not necessarily lead to better results than a strategy that evolves over time (“emerging strategy”). Does this mean it does not make sense to spend time formulating strategy and sharing it with the organization? And how do you then ensure that the strategy does not remain a paper tiger, but actually adds value and provides traction in and for the business?

Linking strategy to values beyond numbers

Basically, a strategy is nothing more or less than a set of (end) goals, elaborated actions to achieve the goals, and freeing up the people and resources needed to implement the actions. In doing so, there are basically two flavors: doing what others are also doing, but cheaper or doing what others are not doing (yet). However, a strategy can also be seen as an attractive outline of the future. Linking the values of the family and the company to the strategy gives it much more appeal and solidity. At the same time, this makes it more relevant for employees to work at and for the company. An example: an important value for a company is craftsmanship. The challenge is to translate this value into strategy. What goals (and actions) can we set to actually make craftsmanship visible in practice to clients and employees? This can be made concrete, for example, by setting as a goal that the company be recognized as leading in a particular field by the market (customers and competitors), that therefore internal training and knowledge transfer take place between professionals, that craftsmanship is part of the assessment methodology and the degree of craftsmanship is made objective. Who wouldn’t want to work for such a company? And what customer doesn’t want to work with a company that is constantly learning and has skilled professionals. This still keeps the company agile and flexible because the strategy is not hard linked to a specific market or product, but to knowledge development and learning ability.

Practical Tips

A strategy is especially going to work for the company if it meets the following practical principles:

  • Start with family and business values. And translate these concretely into strategy.
  • A strategy that consists primarily of a revenue and profit target is never going to live and work. Employees are not going to work harder or better or smarter as a result.
  • What operational knobs should you turn to make strides toward strategy. Until you know what the middle management and/or the man on the floor needs to do differently you won’t make any real strides either.
  • Involve a (not too large) group of employees in developing the strategy. With that, the process may take a little longer, but it is much more likely to be acted upon.
  • Don’t be afraid that the organization will “run away” with the strategy. The challenge is precisely to make the intuitive strategy concrete and communicate it. Of course, if the family or entrepreneur sees new opportunities, it is still possible to change course. But as long as these outside opportunities do not arise, people work steadily on the strategy.