Strategic direction can become a crucial issue in times of transition across generations. What worked well during the incumbent's generation may have outlived its purpose and a fresh perspective of business strategy may become necessary. Current leadership may be unwilling, unable and unenthusiastic to lead the process of change and this can many a times lead to disastrous consequences.
Next generation members may be aware of the situation but may not be in a position to do much as their parents are still in control and they may resistant to change. Some of next gen leaders may also be too preoccupied with their own current operational responsibilities to look into the future. Sometimes differences between them on strategic issues may be unaddressed.
Such scenario can create a vacuum in strategic leadership and lead to a drift in business, its management
and employees. To avoid such a situation it is recommended that next generation members come together early during the process of generational transition in order to achieve a consensus on the strategic direction.
Once an agreement on strategy is reached the same is to be communicated to the top management for presenting it to the board for approval.
While the next generation gets together for a discussion on strategic direction their conversation should be guided by the following questions. It would be ideal if they can prepare their response to the questions before
- The most fundamental question is "Are we committed to continuing our family business together?
- Are we satisfied with our current strategy?
- What are our business strategies strengths and weaknesses?
- Are we satisfied with our rate of growth?
- What is our orientation towards risk?
- Will availability of capital constrain our strategic choice?
- How patient are we with our capital?
- What are our expectations about liquidity?
- Are there any strategic alternatives precluded by our family values?
- What does our family history tell us about the outcome of how we handled strategic initiatives in the past?
It is important to encourage the next generation of family business owners to engage sincerely in the complicated and time-consuming discussion required to reach consensus on direction. The next generation must speak on this crucial subject with one voice to each other, to the board, to management and, someday, to their own children.