Taking Time to Reflect Makes People More Productive “Trainees at a business-process-outsourcing company in India increased their performance by an average of 22.8% over the course of a month by spending the last 15 minutes of each day reflecting on and writing about lessons they had learned, Francesca Gino of Harvard Business School and Bradley Staats of the University of North Carolina write on HBR.org. Reflection prompts people to be more aware of their progress and gives them confidence to accomplish tasks and goals, the researchers say.”
My colleague, Deb Houden, recently shared this nugget with our group, knowing that we often engage our clients in thoughtful reflection as part of our consulting process.
For example, as a facilitator I regularly end meetings by asking participants to reflect on the time we spent together. Typical reflection questions might include the following:
“As you leave our meeting, what will you take with you and how will you apply it?”
“When you think about our meeting, what stands out?”
“Take a minute to reflect on the time we just spent together: Write down one word or phrase that captures a valuable nugget or insight. We’ll go around the table and briefly share before closing.”
Reflection doesn’t happen only at the end of meetings. If energy droops in the middle of the morning or late in the afternoon, you can take a short diversion from the planned agenda. Go around the table with a reflection question to focus and energize the proceedings, for example:
“What’s one of your unique skills or talents? How can you bring more of that to this meeting?”
“Think about leaving this room at the end of our meeting. What is the most important thing for us to accomplish? What action can you take — immediately — to help make it happen?”
It can be uncomfortable to ask a group to stop for reflection. I often have to weather some rolled eyeballs or other resistance. However, the discomfort is worth it! Meetings are invariably more productive, focused and enjoyable after even a very brief reflection break.
Have courage. Take the risk. Take steps to balance out the bias towards energetic forward motion. Use reflection as a tool to slow things down in order to ultimately be even more effective.
If you are already trying this approach, let us know how it’s going!
Does it matter if you use a Vision Statement when you meant to use a Mission Statement? The answer is yes. As research has shown the importance of a family business having a strategic plan, it is equally important for the plan to include both a clear Vision and Mission Statement. Both statements serve valuable roles as the core element of the strategic plan.
A Vision Statement defines what the business hopes to be in the future. It provides guidance for a five to ten year period. It is written succinctly and in an inspirational manner that is easy for all family members, employees, and customers to understand.
A Mission Statement defines the present purpose of the family business. It usually answers three questions: What it does, who it does it for, and the company’s values and priorities.
The Vision and Mission Statements can be marketing tools as well because it announces your goals and purposes to your employees, suppliers, and customers.
It is never too late for a family business to define its Vision and Mission. In fact, some even reinvent themselves through the strategic planning process, which always should include well defined Vision and Mission proclamations.
In order for a family business to survive beyond the current generation in today’s fast churning economy, a well-developed strategic plan would be greatly beneficial. Conceptually, a strategic plan is relatively long range, from three to five years on average.
The term Strategic Planning typically refers to the process of developing business goals and provides a detailed road map of how to achieve those goals. It facilitates communication among family owners, Board of Directors, management and employees.
Perhaps most importantly, strategic planning provides a framework to help guide decision making and how to make the business profitable and sustainable. It also challenges past business practices and opens the way for choosing new alternatives.
The result should be a well thought out written document that includes a business Vision and Mission Statement. It needs to include a time frame in which goals hope to be accomplished and designated individuals who will be responsible for meeting those goals.
Carlock and Ward (1) discuss the importance of having a parallel process. This means there should be a strategic plan for not only the business itself, but for the family members as well. This parallel planning will help unify the business and the family.
A strategic plan is not set in stone and should be revisited annually and revised according to current circumstances.
Strategic planning can be the key to unlocking the door to making a family business successful. Research has shown it to be one of the three most important factors of family business sustainability. The other two factors are holding regular family meetings and having a Board of Directors.
(1). Carlock and Ward (2001), Strategic Planning for the Family Business, Palgrave Macmillan.
Fear, Uncertainty, Doubt and/or Greed (FUDG) often play a major role in a family’s decision to keep or sell the family business. Managing these emotions in the decision can have a powerful impact on the success of the process.
Several steps can be taken to manage the first three elements of the FUDG factor to the extent needed to make an informed hold or fold decision. Educating family shareholders on the products, the competitive environment, and the challenges and opportunities of the business is a good starting point. Encouraging family members to be informed on business issues in general can also help those not in the business better understand the current and future business environment in which the company operates. If the company has embraced a comprehensive strategic planning process, management should be well aware of these subjects. The planning process should also clarify the company’s vision for the future and outline its plans to achieve that vision over time.
An outside board I worked with recently had a policy of asking shareholders to discuss and communicate to them their long-term vision for their ownership annually. This was done before the board reviewed and approved the annual revisions to the company’s strategic plan. Building value and growing the company were the focus for many years until the shareholders responded unanimously that they wanted to prepare the company for sale within a three to five year timeline. A successful, fully priced sale was accomplished in less than three years.
The Greed factor is a bit more problematic. There is a difference between greed and rational self-interest. The need for individual financial security may become a key driver in the decision process. The question that arises is “what is enough?” When that question cannot be answered rationally, an element of greed becomes suspect and may lead to conflict before, during and after a hold or fold decision is made.
Fear, Uncertainty, Doubt, and to some extent, Greed may always be present in one form or another in every hold or fold decision. The key to success, whether the decision is to hold or to fold, is to manage these factors effectively.
Most organizations with fiduciary boards have a tradition of management presenting a prepared strategic plan to the board for approval. Management’s role has been to complete the plan before discussing it with the board. There is a clear distinction (and needs to be) between providing oversight of the business and running the business.
At the same time, reaping meaningful value from your board is typically a function of how well they understand the business. And one way to enhance that understanding is by further engaging the board in the strategic process. Some boards will participate in an annual two or three day strategic retreat, where management has developed the core elements of the plan but discusses it with the board as a work in progress, rather than a fait accompli. This engages directors in important discussions about future growth, capital needs, resource allocations, and risk management. The discussions at this earlier stage help shape the plan, and further ferret out the implications of strategic options. There are other ways of getting directors more engaged around strategy, such as interim discussions with individual directors, whose specific expertise can help develop elements of the plan. This is a great board agenda item – if you think directors can add more value to strategic development, ask them how they feel they might do this moving forward, and develop a plan for their participation!
Family businesses tend to pursue incremental opportunities rather than radical new innovations. Growing by incremental innovation steps has proven to be more sustainable than giant leaps of change. This incremental approach is prevalent partly because family businesses are less prone (not adverse) to taking high risks and leveraging large amounts of debt.
One finding that stands out when reviewing Family Business research is that successful, long-lasting family firms exercise moderation. Typically, family firms do not over leverage, over risk, over plan, or over innovate. Seldom do we read about a family firm that has discovered or developed a groundbreaking new product, like the iPod or Viagra! These developments emerge from the heavily funded research and development departments of large public companies like Apple or Pfizer.
Whereas venture capital firms talk about burn-rate, the amount of cash a start-up venture plows through in the early stages, family businesses talk about less exciting things like self-funded developments or modifications to existing products. This moderate approach to business, while less exciting, has for the most part served family businesses well. The steady, moderate approach creates a more stable firm.
Unfortunately, at times this status quo climate can be the underpinning cause of the decline of a family business. When factors change and a family business does not adapt quick enough, there can be a noticeable drop in the value of the family business. The print media industry is one of those very visible industries, populated by many family-owned firms, that has faced rapid transformation mainly because of the delivery of content through channels very different from traditional printed formats. The digital age, specifically the internet, has changed this industry dramatically. Some have adapted. Some have not, and suffered for it.
While moderation in a family business may be admirable, is your family business adapting to new trends in today’s accelerating pace of change?
Research indicates that family firms take fewer risks compared to non-family firms. This lower risk-taking viewpoint has led to the myth that family firms are risk adverse. Another conclusion is that family businesses take “safer” risks that are closely associated with their core business. Since other studies indicate family firms show higher performance over the long run, it could be argued that family firms actually take more “high-probability” risks than non-family firms. While these risk are not as exciting as what venture firms and some publicly owned firms may take, the family firms’ conservative, calculated approach to risk-taking appears to deliver stronger value over the long term.
As the New Year gets under way, what are some risks that your family business is considering for 2014? Are you looking to expand your business? Add more employees? Develop new products? Acquire a business? Open a facility in another country? There are risks associated with each of these initiatives. The competition could introduce an advanced product just before you go to market with your new product or the country you plan to enter could fall into an economic slump. Regardless of these possible occurrences, family firms have a history of carefully selecting investment risk levels so they can endure these possible setbacks. Families do take risks. They are not adverse to risks. They simply take measured risks that have a high probability of providing a long-term return.
In reflecting further about this month’s Family Business Advisor article entitled, “Must the Prince Kill the King?” by Albert Jan Thomassen, I am struck by how easy it sounds to have the senior leader “set a date” for the final transition of leadership to the upcoming leader, and how very difficult it is for so many. Visions of total disconnection from the business certainly will produce anxiety for many senior leaders, and retrenchment is not uncommon.
A leadership transition is spread out over time (sometimes decades), as upcoming leaders cut their teeth and assume greater responsibility. Often a time period occurs when both upcoming and current leaders are capable of doing a great job. A discussion to set a date at that time is likely to cause frustration to both sides.
We see healthy senior/junior generation leaders build clear role descriptions, and then lay out a timeline for when a particular role is passed from one leader to the next. This allows both to see that the transition will take place over time, and may reduce the anxiety that both would otherwise feel about the pace of progress when it is left undefined. It also allows the junior leader to plan for the assumption of greater responsibility and authority, acquiring the experience needed to succeed in each newly acquired role. This clarity also allows both senior and junior leader to see the differences between the senior leader’s management roles, and ownership roles. [Note that typically management responsibilities and authorities are transitioned before ownership responsibilities and authorities.]
Setting a series of dates for transitioning roles will often create more progress than worrying about the final date of all authority transfer. In fact, if Thomassen’s recommendations are headed and the two leaders support and respect each other, the working relationship between the two leaders may be such that the final date becomes more of a celebration than a power shift. The power would have already been transferred by then.
Read the September issue of The Family Business Advisor. Click Here.
Planning for the business and family in an interrelated and systematic way can seem artificial and uncaring from a family perspective. Planning structures, decision processes, policies and procedures for family relationships in the way you would design business relationships may seem unnecessary and uncaring at first glance. However, when a family owns valuable assets together that benefit from a synergistic relationship, like a functioning enterprise, it is important to plan both family and business relationships.
The relationships within the family can have a powerful impact, positively or negatively, on the success of the business. Divisions within the family can lead to divided and even competing interests within the business. Likewise, differences that arise from business relationships can destroy family harmony. When families attempt to avoid these problems by disassociating their business and family they only make things worse. The business and the family that owns it are unavoidably linked.
For example, many business owning families pass ownership down through generations based upon family branches. This is a reasonable and logical way for parents to distribute their wealth among their children. However, if this is done without parallel planning on the family side it can have the unintended consequence of dividing the family. If family branches develop into voting blocks that elect “champions” to positions on the board of directors they may not feel a fiduciary responsibility to all shareholders. Similarly, family branches that are larger tend to have individual owners with smaller percentages of the voting or beneficial shares. This can create an atmosphere where members of a large family branch become disinterested because they do not have the same influence and benefit as members of smaller branches.
Good structures, policies and decision making processes for both the family and business can serve to strengthen family ties, support good business governance, and allow estate planning to benefit the family branches as businesses are passed successfully from generation to generation.
Recently, 2nd generation family business leaders weighed in on the family business issues that they find toughest to resolve. The top three on their list were: creating an effective board, addressing performance issues within the business, and infusing long-range thinking into their organization. On the surface, these three issues may seem distinct. However, when they elaborated on their concerns, the root causes come back to some common themes.
Let’s examine the desire to have an effective board. The participants in the survey were all aware that gaining independent insight into their business practices is widely regarded as a determinant of family business success. But, they were hesitant to put a board in place. The primary reason behind their hesitation came down to the fact that they felt like they were “going it alone”. While they would value the strategic insight that board members could bring, they didn’t feel their management team could support them in pulling together the information needed for the board and executing on ideas the board might suggest. In the same vein, they didn’t feel they could take the time away from the business to think about building a board. Finally, they were concerned about lack of buy-in by other family members, both 1st generation founders and 2nd generation peers, concerning the value of a board.
A similar set of concerns were expressed about long-range thinking. Again, all understood that a key determinant of business success, not just for family businesses, is strategic planning – which is the essence of long-range thinking within the business. Beyond a written strategic plan document, these leaders were concerned their business cultures did not promote making decisions with the long-term impact in mind. The roadblocks to long-term thinking mirrored those that get in the way of developing a board – namely the lack of management team members with a long term perspective who could participate in the planning process and execute on long-range plans; as well as the lack of resources to gather information and develop a plan and the lack of time to get it done. Again, these leaders were concerned about lack of family buy-in, particularly from 1st generation founders, about the value of long-term planning. And, they also had a fear that the process would force family members, both 1st and 2nd generation, to articulate their desires for the future – and they feared the Pandora’s box this could open as they knew consensus on long-term direction could be difficult to achieve.
Finally, the leaders admitted that they did not do an adequate job of addressing management performance issues. They knew that there were underperformers in their organizations but had avoided dealing with them.
They weren’t ready to deal with the disruption to the organization – the potential impact on employee morale, the conflict within the family if the manager was a favorite of another family member, or the guilt of letting go a long-term employee who had shown loyalty to the family. In this case, the similarity with other challenges was that they might not have family unity about the need to let go of a particular manager, or more broadly about the need to develop a culture of accountability, where performance is evaluated and performance issues are addressed.
A final central issue leaders faced in all these challenges was a need to change the culture of their business, from one that was predominantly entrepreneurial, short-term focused and based on relationships to one that was more structured, invited outside input, planned for the long-term and based success on objective measures. They needed to move out of their comfort zone with the status quo, and get willing to confront disagreement within the family to change the culture.
While these business leaders were concerned about how to enact these changes, all agreed that they were issues they needed to confront. The first step was to get buy-in from stakeholders that change was needed. In the case of some, that meant getting support from the founder generation. In others, it meant support from a sibling team. In still others, it meant support from a management team whose buy-in would be needed to implement change. As leaders, it was their responsibility to make the case for change and paint a picture of the future that helped these stakeholders to understand that the change would be worthwhile.
The second step was to enlist support in planning for and making changes. In many cases, they had to move beyond their management team and family members to find support in peers outside the business that could help them think through the changes needed. The confidence to move forward, however, came from the knowledge that it was their responsibility, as leaders, to acknowledge that the challenges were there and create a plan to address them.