What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

5 Pesky Plights Hurt a Family Business (Part 2): The Strategy Freeze

PolarBearsFightingInnovate and grow or maintain the status quo?

The process of making this basic strategic choice can be an exciting journey forward, or a source of conflict in a family-owned company.

Why? What causes a family company to be frozen in its tracks over this fundamental question? And what can be done to thaw the ice, or better yet, prevent the business from becoming Stuck in the Moment?

You may be thinking…’Conflict among the shareholders of a private company over strategic direction is common and good.’ You’re right! Debate over the best go-forward strategies and tactics can be healthy and productive. In companies that are not family owned, the conflict tends to resolve itself in a timely and orderly way. This is especially true in companies with outside institutional investors who don’t tolerate indecision for extended periods of time.

In some family-owned companies, the strategic discord festers and lingers. A ‘strategic fog’ permeates the boardroom, family gatherings and the company’s hallways and cubicles. Critical decisions are delayed and significant opportunities ignored. The disagreement can go dormant but then suddenly explode. This can be debilitating to the business and to the shareholders.

What has always intrigued me is not the presence of a rift over the strategic direction of a family business. My question is why the conflict becomes so pervasive and common.

My experience points to 10 ingredients:

  1. History and nostalgia
  2. Personality traits of the family shareholders
  3. Knowledge disparity
  4. Background noise
  5. Breakfast table scrambled eggs
  6. Cash (see Part 1 of this series – The SeeSaw)
  7. Mood of the day: comfort, fear, fatigue, ambivalence
  8. Age
  9. Lack of trust
  10. The family stew – a simmering salmagundi of any of the above

P.S. #’s 8 and 9 are smokescreens [Read more…]

What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

5 Pesky Plights Hurt A Family Business (Part 1): The Seesaw

SeesawFamily-owned companies are plentiful in number and unique in character. Like any other type of company, these businesses are not immune to being infiltrated by the 9Stucks. In fact, a family business is fertile breeding ground for a unique 9Stucks mix that is often configured with a twist and a flair for the dramatic.

One blog post can’t do justice to these ‘pesky plights’ so I’ve created a 5-part series. Each post describes one misstep of family business leadership that can exacerbate the 9Stucks.

  1. Family needs vs. business needs: They are strikingly out of balance. (This is Part 1: The Seesaw)
  2. Strategic direction is stymied: Conflict over growth vs. maintaining the status quo freezes the business in its tracks. (Part 2: The Strategy Freeze)
  3. Transition/succession plan is non-existent: The owners can’t or won’t let go. (Part 3: The Handoff)
  4. Governance and decision-making at the top is concentrated and insulated: There is a weak independent board of directors/advisors, or one doesn’t exist. (Part 4: The Bubble)
  5. Sacred cows graze in the company’s organizational pasture: Top leadership spots are based on birthright or longterm ‘family favorite’ status rather than skills. These sacred cows crowd out talented non-family leaders. (Part 5: The Sacred Cows)

One caveat: This series is not intended to be a detailed discussion of all the intricacies and nuances related to management of a family owned business. There is considerable published content focused on all aspects of the family business: research, writing, business groups, websites, and magazines.

I simply want to help identify and evaluate these 5 disabling conditions – and suggest ways to get rid of them.

[Read more…]

What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

Part 3: Logjams and the 80/20 Rule

StorageCo’s most pressing issues

The second post in The 9Stucks Boot Camp Series (‘An Eyeful and an Earful’) called out a number of StorageCo’s challenging issues (a real Stuck Salmagundi). Typically, there are problems that stand out and dominate all the others. StorageCo’s 2 biggest issues were:

  1. a business model that generated unnecessary complexity, added costs and caused tension throughout the company and the leadership team
  2. plants, equipment, and processes that were old and inefficient (this will be covered in the fourth/next post ‘Go with the Flow(charting)’)

Questions for you to consider are:

  • What is a business model?
  • Why is StorageCo’s business too complex?
  • What can be done to fix their business model?

The Business Model

A business model (i.e. the ‘guts of the business’) is the combination of operating entities, plants/locations, products or services, distribution channels, customers and the associated operational policies that support this unique mix. StorageCo had 2 plants and 4 product lines. For purposes of this discussion let’s call the product lines 1) Specialty, 2) Plain Vanilla, 3) Logjam (hint), and 4) Industrial. Summary product line sales, customer data and order data are highlighted in the chart below.

What makes StorageCo’s business model too complex?

[Read more…]