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Strategic Planning for Family Businesses

by Jane Hilburt-Davis

What is strategic planning?

Simply put, strategic planning is creating a plan of action. Originally from the Greek roots, STER, to spread out, usually in a military sense, and AG to drive or to lead, the word strategy conjures up images of preparing for battle, or competition.

It's different from 'vision' which is a future imagined, a hope of how things can be in the farther into future, 10-20 years from now. A strategic plan describes how you can get there. It's about making decisions in the present for the future and usually involves a 3-5 year time frame.

  • It is not just a plan but also a driving force infused into the family and firm.
  • It is both written and lived. It cannot be pieces of paper stuck in a drawer and forgotten, but must be thought through carefully, dynamic and reflect a flexibility and readiness to whatever the future may bring.

The strategic plan should include:

  • Where are going? What are our goals?

  • How are we going to get there?

  • Who is responsible for what?

  • What are the time lines?

  • When and how do we evaluate our progress or lack of it?

  • What do we do if the unexpected happens?
    In spite of the best efforts, a plan may have to be tossed when the unexpected happens. How many plans of the airlines and travel agencies' plans had to be scrapped after 9/11? What happened to Encyclopedia Britannica's plans, as the internet became the world's source of information? But as Margaret Wheatley says, "We don't have to know the future to plan for it." A company I've been working with has great leadership, good employees, excellent products but are now having to go back to the drawing board since the overseas' cheaper labor will put them out of business unless they are able to create new products and ways of doing business. Sometimes called 'emergent strategies', these changes in the plans emerge as both internal and external environment changes unexpectedly.

  • The strategic plan should answer these questions:
    • How does this fit with our vision for the family and the business?
    • Have we done our homework and are working with accurate information?
    • Are our products approaching obsolescence?
    • Are we diversified enough?
    • Are we growing enough, not too fast, not too slowly?
    • What do we see over the horizon that will affect us?
    • Have we taken into account the needs of the family and the business?

Second, is it important to have a strategic plan?


  • An article in 2001 Organization Science noted that family firms that employed practices including strategic planning performed better financially than those who didn't.

  • In another interesting study published in Family Business Review, Malone found that good succession planning was positively related to strategic planning. An interpretation may be that the family that plans together stays together and vice versa. (In the same study, the author also found that the amount of continuity planning was related to the degree "of internal focus of control". A person with an internal locus of control believes that eh or she has considerable control over his or her destiny. If the locus of control is felt to be external, the person feels that he or she has little control over what happens.)

  • Astrachan and Kolenko's 1994 study, also published in the Family Business Review, suggests a positive relationship between good human resource management practices and both gross revenues and the CEO/owner's personal income. Among the 'good human resource management practices' is planning strategically and for succession.

  • It is a reminder of the larger goals that can help family and business to find their way out of everyday struggles and soar to higher levels of working and living together. I remind clients constantly of the larger goals spelled out in their strategic plan.

If… we know they're important to longevity but only with the following considerations:

  • If they are values-based and shared throughout.

  • If everyone is on board and working toward the same goals. Implementers and planners must be the same people; privilege and responsibility must go together.

  • If they are based on accurate information and data. A SWOT analysis is often a good way to start. Ask your planning team what are the:
    • S = strengths
    • W = weaknesses
    • O = opportunities
    • T = threats - of both the family and the business. (For more information on this, see Consulting to Family Businesses, by Hilburt-Davis and Dyer, 2003)

  • If they are responsive to dynamic environment. It's the companies that are the most flexible and nimble that can quickly readjust to ever changing events inside and outside their companies that are the most successful. What creates this ability to be adaptable is the commitment of the family and business to work together, tackle problems directly, and to share the responsibility for carrying out the plan

    As one of my clients states, "I am not dependent on a typical customer but am always looking for new applications of our ideas and products. When we see an opportunity and we're always looking, we can quickly jump on it. The family has created the plan and all work toward it. We can adjust and adapt."

A word about trial and error and survival of the fittest….

Collins and Porras in their book, Built to Last: Successful Habits of Visionary Companies, describe 'visionary companies' as making some of their best moves by "experimentation, trial and error, opportunism, and quite literally by accident". Gerber baby food empire was started in the kitchen of the Gerbers who realized that straining peas for their infant son was a great way of creating simple and nutritious meals, in an age when most infants were only given liquids for the first year.

What looks like, in retrospect, brilliant foresight and preplanning was often the result of "Let's just try a lot of stuff and keep what works." Collins and Porras "found the concepts in Darwin's Origin of the Species to be more helpful… than any text book on strategic planning." What they mean is that companies evolve and adapted if they are to survive. Like my client faced with competition from overseas cheap labor, the family owners must find a creative way to evolve the company into a competitive position. The publishing companies that have not moved into software have died. It truly is the survival of the fittest.

How to you create a good strategic plan? Where do I start? How do we do it?

In spite of all the evidence that plans are a good thing, only 37% of the family businesses studied in the 2003 Mass Mutual and Raymond Institute study have a written strategic plan. I think this is due to the fact that most families see strategic planning as either a waste of time or too daunting.

First step:
Schedule a meeting with the critical stakeholders. (Remember this may take several meetings.)

Agenda for the Meeting:

  • Introduction
    • Remind people of the company's vision.
    • Establish ground rules for the meetings.
    • Set timetable for the meetings and stick to it

  • Identify critical issues
    • Ask the strategic questions (for example, 'how', 'what would it take' 'how can we think of this differently', 'what do we want to achieve'), to encourage creativity, question the status quo, and lead to action.
    • Avoid 'tunnel vision'-short-term goals (quarterly earnings, putting out fires, and think longer term, usually 3-5, but sometime longer, ensuring a successful future)
    • Make sure everyone's views are on the table

  • Set goals
    • Be clear and concise
    • Write them down

  • Develop strategies
    • Brainstorm ideas. Remember what Albert Einstein said, "If an idea is not absurd enough, then, there is no hope for it."
    • Practice the 'what ifs?'
    • Ensure a commitment of resources, both people and financial.

  • Implement
    • Infuse in the company and make sure all understand and agree to it.
    • Be persistent and consistent; compare each move with the plan's initiatives.
    • Leadership lives it and communicates it constantly
    • Have check-in points at board meetings, executive team meetings, and family retreats.

  • Re-evaluate
    • Set a time, usually 6 months and, then, in 12 months to re-evaluate and make any mid-course corrections
    • Be ready to adapt and move quickly in case of any unexpected changes, internally or externally, for example, a death in the family or a downturn in the economy or rapid technological change that was not predicted.

How can we Increase the Chances for Implementation?

  • The leadership is engaged
  • There is an open agreement on how the plan will be put into action, operationalized
  • The plan includes both a family and business focus
  • It is not too detailed
  • It is user friendly
  • It can also be used as a management tool.
  • It includes mechanisms for review and adjustments.

Tips: for consultants and advisors:

  • Strategic planning is more complicated and challenging in family businesses since both the family and the business must be considered in the planning.

  • Take a whole systems point of view when helping with strategic planning;
    • Look at not only the financial, legal or business issues but consider the family dynamics also.
    • Help your clients avoid blind spots, always questioning assumptions; always checking the competition trends.
    • Ensure adequate capital, build earnings.



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