Turning the family business into business family by Daniel Doni Sundjojo

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Turning the family business into business family by Daniel Doni Sundjojo

  1. 1. Turning the Family Business into Business Family : 20 things that make Family Business going mad and how to avoid it to make your company growth. Daniel Doni Sundjojo Individual Human Resources & Organizational Development Consultant Abstract Most of the company, even in the world is the family business, at least in their beginning. Many company can make superb growth to conquer the market, be National pride, but more of company had been stagnant, downsized or the worst : going bankruptcy. Why many family business fail in order to seize their goal? Why many of family business doesn’t growth even they had hired professional or even consultant? The problem is the term of family business itself. Family Business term can mean family first, and then, let’s talk business. So many practices in family business paradigm going mad : unprofessional practices, lack of trust, management that doesn’t have objective because all of objective controlled by one superstar and so on. How we can avoid it and make our company sustainable : transform the “Family Business” paradigm into “ Business Family” paradigm, it mean, put business before family when we are in business. In this paper, I will give you 20 reason that make family business going mad, and how to avoid it to turn your family business into business family. Key words: Family Bussiness, Bussiness Family 1. Introduction. and seize significant growth, since the family business is the important fundamental of The family business will be the beginning of business that make significant impact in each business. Most of giant company was Indonesia’s economic growth, create many beginning from small family business. But working opportunity to our citizen and can many more of family business has failed to make revealed Indonesia as the Giant Nation in seize their objective. They will be downsized, the world. takeover by bigger company or the worst scenario is going bankruptcy. My initial case 2. Research Questions study had found fact : most of them think that family business is family first, business after If we want answer how to make family that. So, many of family business with this business has sustainable growth and seize their condition will be sank in very demanding objective, we must dig into the problem of market environment. As they realized, they family business and how to solve it, so I begin to change their paradigm into new declare my research questions in this paper are: powerful paradigm : Business Family. It’s mean : put business before family whenever • What makes family business going mad? we talk business. After that, their performance • How to change family business into growth as their paradigm, culture and business family? management practices had change. In this paper, I will share 20 things that make family 3. Methodology business going mad, and how to avoid it to turn In this research, I used multiple case study to your family business into business family from find answer of research questions. Multiple practical perspective. I hope, it can help the case study means conduct single case study in family business, to make significant change different company and compiled them into one
  2. 2. multiple case study to conclude the research group discussion, brainstorming and so on, questions. Yin (1994, 45) had defined multiple only in the bad time. When productivity fall, case study as “a major insight to consider company just begin their learning activity. It is multiple cases as one would consider multiple completely wrong, and waste your time and experiments.” Multiple case study, like as money. How to avoid it : You must consider single case study had emphasizes in multiple that once your company growth, the business source of evidence to find information. In this environment will growth too, and the growth of paper, I use interview, data analysis and business environment can double, triple or observation to identifying what makes family even million billion times than your company’s business going mad and how to change family growth. So, never stop learning, the bigger of business into business family. your growth, the business environment will be more demanding than you imagine. 4. Result and Discussion In this section, I will describe 20 things 4.3. Reason #3 : Professional is only the dream that makes family business going mad and how When we look inside family business’ to avoid it to turn your family business into Human Resources Department. We can find business family that many of position, especially that had access to strategic, money, assets or so on 4.1.Reason #1 : Lack of Trust dominated by family members. Is it false? Most of family business owner had Absolutely not, if they are professional and problem with their trust. Most of them don’t expert in their field. Professional means they trust everyone but themselves. So, all of have expertise, attitude, behavior, knowledge decision making will be taken slower than and value for company as well as their job. expected since all of it must approved by the Many of family business have different owner. Meanwhile, the owner also control all standard and measurement to their family of process so they don’t have time to develop member and non family member. Even had the company. The worst if the owner had mistakes, if they are family member, they will mistakes by put their trust to the Devil, it mean be saved. So this will be dissemination a bad the wrong side. The Devil will make company culture of the company and make non family more pathetic than the owner can imagine. member employee that have expertise and How to avoid it : Delegate the trust. You can value will resign from your company once they delegate the trust and authorize by their level have opportunity. How to avoid it : Be and expertise. Declare your rules of the game, Professional. You must treat your family target and your hope of their commitment. member as same as your non family member Sometimes, you can control them to make sure whenever you talk about the business. All of that they have paid your trust or not. the treatment, facility, opportunity will be equal. If you want entertain your family 4.2Reason #2 : Learning is only in the bad member, you can do it not in your family time, time never ever in your business time. If you don’t This is the most devastating sin in your want sack your family member even they have company : satisfy with your company robbed you, open the social organization, not performance, and forget to learn in order to business organization. If you want your improve your company performance. Many of company business growth, you must create the family business only conduct the learning professional culture that makes your company program or activities such as continuous growth faster than you can imagine. improvement, training, benchmark, focus
  3. 3. 4.4. Reason #4 : Business Communication is data, a few of family business owners take going bad advantage with analyze and use the result to When I conduct audit business strengthen their strategy or conduct strategy communication in family business, I had found initiative to prevent the bad condition. If that business communication didn’t flow there’s mistakes about strategy, the family properly. Most of business communication is business owner feel there is mistakes on their centralized among family member and non intuition, faith or the worst, not realize it. How family member that have privileges as they to avoid it : Strengthen your strategic and have success to make owner put trust in them. analyze skills, and take advantage by analyze Dissemination information doesn’t clear and your company, business environment in valid right. So many case can rise because of and reliable manner to create the strategy or misunderstanding among company member decision based on it. After that, review and and further sources of problem is: Business analyze all of your strategy, system and Communication is going bad, and sometimes, process continually, and create strategy It will be cost as expensive as your luxury initiative whenever necessary to improve your property. How to avoid it: All information company. must be collected, manage and dissemination with the clear and right flow. The family 4.7 Reason #7: Monitoring and evaluation in member or whoever that have privileges to the wrong way access the information, must be the window of Many of family business didn’t conducted business information for others with the clear monitoring and evaluation properly. Many of and right manner. them conduct monitoring and evaluation with wrong way, it means wrong in every aspect 4.5 Reason #5 : There are no vision, or the such as indicator, measurement, process, worst : vision is only the statement system and so on. Many of family business Most of company has vision, but the owner don’t have positive attitude to know the questions is: Is it really a vision or only the truth behind result of monitoring and statement? Many of family business owner put evaluation process. Sometimes, they like to be their vision as company’s vision, but never lied as they prefer “good report” not “the right measure their expertise, company’s capability, report.” The worst, they also appointed business environment, consequences and the incompetence people to conduct it. So, the worst: sometimes, they never think about report doesn’t better than rubbish, and the strategy, target and action plan to seize their worst, you still don’t know about your vision. So the vision is only the statement that company’s true performance. How to avoid it: will be sank in the long term. How to avoid it: Do monitoring and evaluation with the right Create vision based on your expertise, thing, not good thing. If you want conduct company capability, business environment, monitoring and evaluation, first at all you must consequences for defined the vision, prepare your mentality to hear the right thing, accompany with strategy, target and action and not the good thing. Maybe you can plan. After that, be commit to fulfilled it. sleepless after that, but that’s reality. The most important is not about how good your company 4.6. Reason #6 Lack of strategic and analysis looks like, but how the real condition of your skills company. If the report indicates your company Many of family business owner is bad, mad or even going bankruptcy, it is not emphasized on their intuition than strategic and the end of the world. It is the warning signal. If analysis skills when running their company. you can fix all of problem and make The consequences is company can go to wrong improvement, your company will fly high. direction since sometimes, the intuition can Once you agree with it, you can create the wrong or not clear. When the company have system, indicator, rules of the games about
  4. 4. how to conduct and what will be monitored Imagine the football team. How they can and evaluated. Some pilot project can useful to win competition is their performance depend make sure all of system, indicator, rules of the solely on only one star? They will never ever games are right and applicable. After you win the high level competition. All of their finished it, appointed the expert team to enemy needs to win is simple : destroy the star. conduct it, and also to improve all of weakness Many family business is operate by the that rise in the report. Finally, Conduct superstar, not super team. Company depends monitoring process of improvement and on one superstar that can handle everything consistency in every process. Once your know everything, has initiative for everything. company achieve and excellent indicator, the The other member is only followers. Every new standard must be set, the new indicator decision need superstar to take care of it. If the must be set higher than before. superstar go to seminar, even only one hour, the superstar still take care incoming call, make 4.8. Reason #8 : System is more sporadic a phone or use their smart phone to handle than integrated. business, to make sure all of process run When we talk about the system, family properly. If your company like this, it will be business tend to set the system by sporadic mess. Once the superstar retired, resigned or way. When the problem rise, the owner assign the worst : dead, the company will finish. No the management team to design the system to superstar, no company, This is the simple rules. fix it, like the firefighting. If the problem How to avoid it : Delegate and Coach to the persist, the owner assign more expert team, right people. If you are superstar, you must sometimes from external, to do this job and so delegate your authority and responsibility to on until the problem can be solved. If the other the right people. You also must coach them problem - that different with the initial problem whenever necessary. You must build the super – rise, owner do the same way, create the other team to replace you as superstar. Sometimes system to fix this problem and so on. After you will suffer with the superstar post power that, we can realize that the system – even in syndrome, but it is the process. There is not the same cluster- doesn’t integrated one to superstar in team if you want your company another. That is ridiculous, there are system, will be sustainable. If you can built super team, but we still must do it in manual way. Imagine you will be the real superstar. if your computer can’t integrated all of the function, only can type but can’t save your 4.10. Reason #10 : Put the problem under data, what will you do? Absolutely, you must the desk be upset. How to avoid it : When we talk Family Business tend put the problem about system, we must have holistic - chopper under the desk since they tend to avoid the view in our mind. We must identify what we conflict between the family member. For non must accommodate all of the requirement in family member, they will be do it especially if the future and how the system can help us to do the owner perceived as the high temper person. it, in the simple and right way. After that, we So the business is run as usual but the problem must create blueprint of system as integrated still exist and wait for its time to blow your system, create manual system, database company away. How to avoid it : Use positive management system and flow of the system. attitude when the problem rise. Don’t looking Some pilot project can useful to make system for scapegoat for the problem. All of problem more applicable and complete. Finally, conduct must treat and fix with the professional way. If the socialization and training to do this system, all of organization member perceived it, so the and last but never least : consistency. problem that put under the desk can be minimized. 4.9. Reason #9 : Superstar syndrome
  5. 5. 4.11. Reason #11 : Lack of Risk behavior. The special value must be tailored by Management yourself and your team, not modified from Family Business tend to open or run other company, because someone who know company without risk management. They about the taste of your company is yourself. If didn’t measure the risk and create the strategy you can do it, you can have special value for to minimize it. So, after the company your company and it mean the sustainable established, the competition is rise, the enemy competitive advantage. exist from internal or external of company, and market environment became very demanding, 4.13. Reason #13 : Too late for Succession that effect to risk of company that they never Planning ever imagine before. Once family business Many of family business have a figure, owner involved in this situation, most of them and most of them is the superstar in their will suffer traumatic and have no idea what company. The common mistakes for family must they do in the market, sooner or later, business is always the same : Too late for your company will be erased from market. succession planning, especially for the top How to avoid it : You must realize that every management position. Most of family business step has its own risk. And in business term, the owner late to prepare their successor, the risk is high. Don’t be businessman if you want impact is : the successor have lack of avoid the risk. As the businessman, the risk competence, experience, attitude and can make always follow you, wherever you go. All of your company going bankruptcy faster than you must do is assess and minimize the risk by your prediction. How to avoid it : You must conduct the risk management. You can prepare your successor, at least 5 years before minimize the risk if you assess, anticipate and your retirement date. Maybe your successor – improve to minimize it whenever you decide to even your child – can’t match your set up business, develop your product and expectation, but give them opportunity, services or expand your business. For each of authority and trust to act as leader in your it, there are the risk. You must assess the risk. company. The perfect way is forced them to After you know about the risk and it work for other company, not your own acceptable, you must create the strategy to company, at least for 2 years. After they can minimize your risk and strategy initiative to seize at least lower management level, you can anticipate the worst scenario. hire them in your company. If you don’t want your child work for other company, you can 4.12. Reason #12 : Don’t have special value assign them to work in your company as your Many family business don’t have special employee. After 2 years, either your child work value. Many of them operate with same for you or the other company, you can train attribute, value, pace with their competitor. their leadership, sense of business, and other The worst, they tend to duplicate or follow ingredients for the future business leader. You their competitor or success company as their can design project assignment for them, and figure. It will work, but not everlasting. If your give a full authority to this project with the company doesn’t have any special value for clear target, rules of the games and guidelines. your customer, than your company can replace You can act as their limited advisor, only give easily. How to avoid it : Be the Special advices if necessary, but you can’t act as Company. You can looking through your eyes : decision making anymore. If the project loss, What is your company’s core value and you must treat it as the CEO trainee course expertise that you can promote it as the special investment, not loss for your company. Why? value that difficult to be duplicated. You must If they have full authority, they can make their improve all of your special value that makes own decision, not implement your decision. If your company different with your competitor they have failed, they can smell their failure as well as the change of your customer and how much cost of their failure. After that,
  6. 6. ask them to analyze the problem behind the want change culture, system, process, behavior failure, and how to improve in order to redeem it’s take time. If you can completed change their failure. After success in one project, you management project, it will be your can give them more big project or lead one investment. If you stop change management your business division and so on. So you can too fast, you are wasting your money and time. see they become more experience, mature, You must realize it. initiative than before. And the most important, your employee will respect to them, and you 4.15 Reason #15 : Plan is not a business plan can retired with happy face. Sometimes, family business doesn’t have business plan to run business. Sometimes, they 4.14. Reason #14 Change Management : only create plan based on past data or action ended to early and adjusted it by their mind. If the business Change management had give plan is wrong, all of action plan, analysis, phenomenon in business term. Many of target will be rubbish. How to avoid it : Create company adapt the change management business plan is not easy You must conduct concept, sometimes they hire an expensive business research before to identify what is high profile consultant to conduct it, they your customer needs and want; your invest an expensive system for the change competitor move, government regulation, your management purpose, but after that, the result development plan, your supply and demand is nothing at all. Why? Because the process is analysis, risk analysis, financial and investment never ended. Why? Because of your analysis, and many relevant analysis. After impatience or lack of self confidence of you to that, you must create grand strategy and your your company to implement it. I always heard company’s development. If you are set up new reason : It’s difficult to do this, not my business, you must learn about the business company’s class ; We had run this project for 6 environment and assess the potential value at months but don’t give impact to our least for 5 years. After its stages have organization and so on. That will be the end of completed, you must create action plan that the change management. How to do it : First : linked to strategy and business plan, and be You can change your company by yourself, committed for it. you even don’t need consultant to do it. You can discuss with your management team or 4.16 Reason# 16 : Exit Strategy : Put the change management committee to identify pride and honor first what is the problem in your company and how All of business had its cycle. If your to improve it. So you can identify in which business had decreased over time, be careful, sector your priority to conduct change perhaps your time in this business is over, you management and in which term : system, must think about exit strategy and choose other culture, process or even behavior. After that, business or conduct differentiation on your you can design project to change it, and how to business. Many of family business owner don’t conduct monitoring and evaluation your realize it. They put the pride and honor before project and the indicator when your change the cash flow that cost on their bankruptcy. management process expected to completed. How to avoid it : If you were pioneer in this Once you have it, you can dissemination, share business, and you lose control because of the your vision of change management to your market environment increase with very organizational member and ask them to demanding, radical and rapidly, you can learn commit and support until this project and improve to take your control again, but if accomplished. All you need to do when the the market is stagnant, the competition increase project running is one : patience. Why? You very radically, and your company had eaten by can change facility, tools, furniture in the easy competition, you must think about exit why as long as you have money, but if you strategy. Don’t be shy to say enough, and
  7. 7. transform your capital into your new business from them. As owner, all you have to do is to regain your pride. only set up strategy, target, rules of the games for them, and after that, monitoring and 4.17. Reason # 17 : Commitment? Whose evaluation them, that’s it. If your company Commitment? needs buy tissue and they must wait for your Strategy, system, process will be nothing approval, why you must hire the Manager? if there isn’t commitment to implement it with the right manner. The big company can going 4.19 Reason#19 : Going Personal bankruptcy only in few months if there isn’t The other mistakes in family business is commitment to seize their objective in the right going personal. Many of decision, policy or way. If your company member doesn’t have even strategy created influenced by personal commitment, watch out, maybe your company not professional. Sometimes, family business in the dangerous condition. How to avoid it : owner can offer crazy discount every time their Commitment is the soul of company. How to competitor cut their price. This decision manage the commitment? To do it, you must doesn’t created by research and analysis but convinced them about the company value and based on rivalry between two owner, in their how it link to them. You can’t take personal life. Sometimes, family business sack commitment by employee if they perceived their best talent because of have problem with that they are only employee, that’s it. If they one of their family member, even in the feel that they are nothing and can be fired business meeting and many unprofessional whenever you want, you can’t expect decision had made because of you can’t commitment from them. You must involved separate your personal life from your business them as if they are your partner to seize the culture. If your company had culture like this, same objective, not as employee. You must prepare for landing of your ambition, since treat them as well as you treat your family. your company will be crashed faster than you You must have credible to gain their respect. can predicted. How to avoid it : If you talk If you can do this, you’ll gain their about business , don’t be personal. You must commitment. If there’s only you that have based all of your strategy, policy and decision commitment in your company, your company based on valid and reliable research, analysis will move forward one step closer to glory. If and measurement. You must create right you can take commitment from 1000 employee decision no good decision. Even the whole in your company, your company will move company is yours, but you must remember that forward 1000 step closer to glory. the company and you not always have same mind, same soul and same personality, so 4.18. Reason #18 : Management that doesn’t never ever going personal even in your own have objective company if you want your company fly high. In the family business ,especially if they have superstar, management doesn’t have 4.20. Reason#20 : Use same way even the objective. If you feel that your management world have changed team only wait for your instruction, idea and Many founder has same mistakes : run initiative, your company is in burnout situation. their company with the same way when they How to avoid it : If you recruit management had build this company. The generation had team, you must believe in them. You had paid changed, the business environment had change manager level, but in the reality, you only take and the whole world had change, but you still result as if they are staff or operator since you use the old fashioned strategy, policy, system must handle all of strategy, policy and process and process to run your company, as if you run by yourself. Poor you! They will be overpaid your company many years ago when you since you paid them with the manager level or established it. How you avoid it : You must salary, but you gain value as well as staff level realize, nothing can do with the same way, all
  8. 8. over years. Everything can change, sometimes • Implement it with the commitment, with radical and rapid way. If you never learn persistent and consistent. The about what had done in the world and improve transformation is never easy, since you your company to compete in very demanding had to transform culture, process, business environment, your company will be attitude, behavior. It can be over. If you can learn and improve your complicated. Maybe you can company faster than the change of very frustration, but if you can stand and demanding business environment, you can take accomplished it, you will be rewarded advantage it. You can promote the way you by the performance of your company. had improved your company in order to You will gain success for you and anticipate the change of business environment, your company. and make money even in the crisis time, slow • Finally : Don’t ever satisfy with your economics period and when the other had fall. achievement. Once you had succeed to improve in your company and take 4.21. What next? Let’s action! excellent result, you must improve What must you do after all of previous your standard. You must re-enter to section of this paper? What must you do to your zero condition, set up new transform your “Family Business” paradigm standard and always improve. The into “Business Family” paradigm and take improvement will never ever end. advantage from it? Let’s action. You have known your company, yourself, your expectation more than everyone in the world, 5. Conclusion even the best consultant in the world. So, the perfect way is you do it by yourself and your The family business can improve to be continuous improvement committee. If you giant company, conquer the market and don’t have any idea about what must you do, became the National pride only if they have you can try to appoint them, but , you must managed in the right way. Sometimes, many involved in all of process by yourself. In the family business owner operate their company simple way, you can follow this stages : like their run their family. They tend use their • Assess yourself and your organization. heart, not their brain. Maybe the company can What mistakes that you had done? growth but not in the optimal pace and can’t be sustainable. Once competition rise, or • What do you want to change? If you economic slowdown, you will be lost. If you can’t change the whole of your want your business growth in the maximum organization in the same times, choose pace and create sustainable competitive one sector to be improve. After that, you must create indicator in the initial advantage in very demanding business condition. environment, you must change everything you need to compete the market. You must • What condition that you want to be? transform your “Family Business” paradigm How far the improvement that you into “Business Family” paradigm. Sometimes want. You can create the indicator as it can be hurt for you and family. Sometimes it you expected. will be complicated and make you frustrated, • Create the timetable covered the area but believe it, you can do it, you will be that you want improve, person in rewarded by your profitable company that you charge to every process, initial and deserved it. final indicator that you expected, deadline, target and how to monitoring and evaluation the process.
  9. 9. References Senge, P. (1990), : “The Fifth Discipline : The Art and Practice of Learning Organization,” London : Nicholas Brealey Publishing Limited. Yin, R.K., (1994), : “Case Study Research : Design and Methods.” California : Sage Publications, Inc.

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