Entrepreneurial behaviour in family businesses can benefit from fresh input of ideas, expertise and contacts to open the door to new markets and greater growth potential. KPMG’s Eleanor Winton proposes that partnering with other organisations can broaden your family business’ potential for long term success and it is worth exploring how collaboration can deliver results.
Business collaboration is increasingly common practice in business across all sectors – but perhaps a more challenging concept for those family businesses who have previously thrived by using the skills and knowledge of employees with whom they have built a long term relationship.
Trust is a key component within family businesses, but to collaborate effectively you need to establish a relationship with a partner outside the core business and perhaps even with competitors.
This raises several questions that focus on the culture of your businesses. How much trust can you place in someone outside your business? How can you build a strong relationship knowing that it may only be for a few months or a couple of years? How do we maintain the culture and vision of our family business working alongside others?
Businesses who are third, fourth or fifth generation or more have often thrived by keeping their business information and future plans within the family and a close circle of key employees. This approach has worked across multiple generations before, so why is a different approach necessary?
The fact is we are operating in a different economic environment, and have to consider how best to grow our businesses in Volatile, Uncertain, Complex and Ambiguous (VUCA) markets.
By testing where they are today versus where they would like to be, it is often apparent that to keep pace with the changes in today’s business environment this approach is no longer sufficient.
To innovate may require diversification, technological advances or expansion and it is almost impossible for any organisation to have the right skills and resources within their business.
We can see evidence of market revolution and business model disruption in almost every industry, and innovation to meet these challenges requires new skills, insights and technological change. Examples are all around us – from complex data analytics analysis, new manufacturing techniques (3D printing, for example) to more straightforward business model disruption as with smaller operators from Europe and the once mighty supermarket competitors.
Family businesses should consider what are the sacred cows of their business. Where would (and wouldn’t) they be happy to share information, co-create a product or enter new markets?
Many successful businesses are increasingly focusing on innovation to ensure future success. Some of these examples might help to get you thinking!
Raising finance in new ways, through crowdfunding for example. This may not be appropriate for your business but consider the growth of large corporate peer-to-peer funding in the USA or the possibility of Family Businesses and Family Offices offering finance to your business – or vice versa. Not something that happens a lot at the moment but perhaps an avenue that should be explored;
Using your employees, customers and/or suppliers to foster open innovation. This involves putting your problems, questions and thoughts out there for others to consider, resolve and propose solutions. This is by no means ‘comfortable’ but there are lots of fantastic success stories out there; True collaboration is becoming increasingly common, and there are many great examples on the internet which can assist you with collaboration. You will have to consider what areas you can – and are willing – to collaborate in, but are you even considering this? If not, you should take time out to do so.
In summary, collaboration can unlock significant value for your business. Our experience has highlighted the benefit of having an independent challenge to a board’s strategic discussions, not least as history and institutional memory can hamper innovative thought, and we would be happy to collaborate with you to unlock that free-thinking that is so essential going forward!