Last week I wrote about the critical necessity of innovation for multigenerational success in family businesses. Continuing on with this theme, here are some of the advantages enjoyed by businesses that have a culture of innovation, and some of the obstacles that block the way to this goal.
Advantages: Dexterity, flexibility and speed that comes from:
- Deep industry and business knowledge enabling leadership to seize opportunities on the fly
- Long-standing ties with business service professionals–bankers, accountants, attorneys–who can help with and support innovation efforts
- Shared values, vision, and definition of success among shareholders creating swift-moving consensus.
Obstacles: Resistance to change, risk aversion, lack of focus, indecision that comes from:
- Attachment of the family to current business structures and products
- Tension between the older, incumbent, generation and rising-generation family members
- Difficulties in juggling attention to the core business and attention to research, development and implementation of innovative ideas, products and services
- The need to keep shareholders happy by continuing to provide accustomed dividends, while redirecting funds for innovation.
In his 2014 book, Innovation in the Family Business, Succeeding Through Generations, Joe Schmeider of the Family Business Consulting Group puts it succinctly: “in the most basic terms innovation is change as well as a factor associated with multigenerational family business prosperity and longevity.”
For the sake of the business, obstacles to establishing a culture of innovation must be faced and overcome.