Advice for CEOs

In the first part of this article, I addressed five key areas that require attention when running a family owned business. Another area of focus for family businesses should be the issue of succession.

If your family owns a business, the share of it that you and other family members own may be your and their most valuable asset. It is also possibly the biggest legacy for future generations. You and they probably take pride in the business’s history and the goodwill it has earned from its customers and in its community. Go to any town in America and you will find family-owned stores and businesses that enjoy the kind of customer loyalty that newer companies will need years to develop.

In the first part of this article, I discussed why creating a culture of leadership is critical for a company looking to scale their business. Coaching, mentoring and teaching are the development activities that help employees translate strategy into action. Empowered teams understand how their role contributes to the company’s competitive advantage and success in the marketplace. They are a great source of leverage to drive growth in profits faster than growth in revenue. Despite what “process engineering” and IT consultants will typically tell you, most process glitches and production bottlenecks are individual choke points - not system errors or the result of inadequate IT. Scale is not a production issue, a technology issue, or a money issue. It is a leadership issue.

Each time Newport Board Group helps companies create alignment around the Four M’s (Market, Management, Model, and Money), we revisit the basic principle that Management begins with leadership from the top. Companies trying to move up the growth curve face complex transitions and organization development challenges. One of the most important transitions is creating leadership that can scale - to drive the organization to its next plateau, without the cost, disruption and potential risk of bringing in a new CEO or other member of the top team.