SINGAPORE-I am back in Singapore to continue facilitating a strategic planning session for a family-owned enterprise with 7,000 employees. It is managed by second generation family members and engaged in several businesses (agriculture, real estate, investments and food). Just like any startup business with limited capital, the business that was started 40 years ago initially ventured into the trading of commodities like rice, sugar and corn.
Throughout its 40 years of existence, the patriarch has expressed his desire to retire. When he engaged my services as family business coach, he intimated two things as a pre-condition before he steps down–he wants to know where the business is heading (vision) and whether his children are capable of assuming a bigger role in managing the business (governance). I am on my third year as board advisor and this year’s thrust is to expand to Vietnam.
Before I was tapped by W+B to advise the enterprise, the patriarch admitted that these two questions keep him awake on some nights. Now he looks forward to a gameplan covering an expansion mode in ASEAN that he never thought was possible. After three years, his function is purely under an oversight mode now minus the day to day involvement.
Family constitution is a game changer
After helping the family craft a family charter (Constitution) which took a little more than a year to complete, the family and business relationships have been harmonized. Of course, there are occasional bumps on the compliance side but the governance process put in place plus the defined roles of the family members has dramatically eased the tension experienced prior to the constitution.
What has made the family members more focused now is due to the activation of the constitution into several councils (family and business councils), where I periodically attend and observe how the next generation family members behave during meetings and how they adhere to the governance policies enshrined in the agreement.
For now everybody’s gearing up to take the business to the next stage: ASEAN growth.
Your growth strategy must be competitive and relevant
A personal favorite that I use in most of my family strategic sessions is Harvard Prof. Michael Porter’s three “generic competitive strategies”. These are cost leadership, differentiation and focus.
Cost leadership strategy-a strategy of achieving leadership in an industry or line of business by offering products or services at a lower cost than your competitors.
Porter’s Cost leadership strategy requires a focus on efficiency, tight cost and overhead internal controls, and relentless cost minimization programs.
Differentiation strategy-a strategy of achieving leadership by creating a product/service that is perceived throughout the industry as unique. A differentiation strategy may take the form of design, brand image, technology, features, service, or other dimensions. Ideally, the company will differentiate itself along multiple dimensions. A focus on quality could be a key differentiator.
Focus strategy-a strategy of achieving leadership within a particular target market by serving that market more effectively or efficiently than competitors. This may enable the focused strategy firm to have cost leadership or differentiation within a tightly focused target market, or both.
What is your competitive and compelling strategy?
Your business growth requires a clear strategy. Your strategy could be based on cost leadership, differentiation or focus. So in my strategic growth sessions (which lasts two to three days) with family members and executives, I usually challenge them to get some pre work done and create a strategy go-to team to formulate and come up with a clear competitive strategy with a vision and an action plan that will cover the whole of 2017.
Family business leaders and professionals must not delay the strategic planning exercise. As what I highlighted in my previous article, everything you do now is meant for the future of your family business.