Family business is unique in a plethora of areas with one of the more critical being strategic thinking and decision making horizons. In conventional business (corporate, not for profit etc) these horizons are typically in three segments being;
- Strategic – Three to five years
- Business planning – One to three years
- Implementation – Daily to one year
The above holds true for all levels of the traditional business, with the possible exception of large multi-national corporates that might do some “over the horizon” scenario thinking at the Board and senior executive level. This scenario planning might look out 10 and potentially 15 years on a conceptual basis only.
Family businesses have significantly more complexities due to multi-generational members whom may or may not hold shares or work within the business. It is not feasible or practical to attempt documentation of the raft of decision variations however this framework will highlight the increased number of horizons family businesses take into account when undertaking strategic and operational planning.
- Macro long term horizon – 25 to 40 years – Predominantly family focused
- Across generations – Planning for future generations
- Wealth creation including retirement and personal wealth creation
- Legacy leveraging via evolution and forward visioning
- Preparing future generations for productive involvement
- Long term horizon – 15 to 25 years – Predominantly family focused
- Current generation preparation – Into the business, education and development
- Succession planning and retirement planning
- Debt and capital raising for long term business development, business growth and personal wealth creation
- Long term infrastructure development for the business or personal diversification
- Medium to long term horizon – 7 to 15 years – Business and family focused
- Hyper-long term strategic planning for the business
- Succession plan and retirement plan first stage implementation
- Senior and strategic workforce planning
- Debt and capital raising for standard business development, business growth and personal wealth creation
- Infrastructure development for the business or personal diversification
- Medium term horizon – 3 to 7 years – Predominantly business with strong family focus
- Medium and long term strategic planning for the business
- Succession plan and retirement plan implementation
- Longer term business planning for the business
- Strategic workforce planning
- Debt and capital raising for operational business functions and operational infrastructure development for the business
- Short term horizon – 1 to 3 years – Predominantly business focused
- Business and operational plan implementation
- Debt and capital funds access for operational and tactical purposes
- Workforce management and development
- Minor infrastructure development including funding arrangements
- Immediate horizon – 0 to 1 year – Predominantly business focused
- Operational and tactical implementation
- Workforce management and development
The above is a short summary of the six strategic thinking and decision making horizons every successful family business adopts whether it is conscious or sub-conscious. As stated earlier in the article it is not the intent to provide an in-depth analysis of the “why’s and wherefor’s” or provide a comprehensive list of areas within each segment. Rather the purpose was to highlight the longitudinal extent and complexities of the horizons families in business adopt when planning and operating their businesses.
A critical driver of the thinking and decision process is the multiple generations within the family that hold true and commit to the family’s values and legacy. In addition, this six segment horizon facilitates the understanding of stewardship and custodianship within the family business. All of these areas, while unique to family business, are common across cultures and countries.
It is important for all family members to understand these horizons however it is absolutely critical for external stakeholders, professional service providers and advisers to the family business to be acute aware of them so they can understand what is driving the culture, performance and dynamics of the family in business.
Lloyd Russell is a 4th generation family business member and an accredited family business advisor who is based in Brisbane while servicing clients throughout Australia and internationally. Lloyd is a specialist in family business strategy and governance with a particular focus on inter-generational transfer. He has more than 30 years’ experience in senior management and is an accredited neuroscience practitioner.