“If it ain’t broke, don’t fix it.”
That may be sound wisdom for kitchen sinks and brake pads, but does it work in business? Sure… if you want your company to peter out.
Family-owned or not, companies and businesses that last for generations share one thing in common: a commitment to innovation. Studies show that a slim 12% of family-owned businesses last beyond the second generation.
As specialists in business continuity and succession, we can attest that the companies who survive are those who think creatively about the future. They’re the ones who never stop looking for ways to evolve so that they can meet the demands of a changing marketplace.
This isn’t exactly startling information. Still, while most owners “believe” in innovation, the research shows that only 40% of them are actually willing to risk the status quo.
The Owner Sets the Tone
According to the Journal of Family Business Strategy, the outgoing owner’s commitment to supporting innovation is of decisive importance to the company’s transition into the next generation of leadership.
If you’re going to set an innovative tone, you’re going to have to engage in intentional conversations with your successor(s) and key stakeholders. The latter need to be willing to support the former as he or she leads the company forward.
As you talk, here are a few specific items to consider:
- How to honor the old while introducing the new.
- How to fix a business that isn’t obviously broken.
- How much risk the organization is willing to tolerate.
- How to identify areas and elements that will not be changed.
Buy-in is crucial for company-wide innovation. With enough clarity on the front-end, you can create an atmosphere in which innovation is not only expected but welcome. What will your successor do to help the business innovate its way into the future?
Without the right buy-in, the status quo will win the day. Even if your successor wants to innovate, they cannot do it alone. Resistance from longstanding employees may make it close to impossible.
Before I forget, for help starting and sustaining the innovation conversation in a productive way, this conversation guide from a psychologist lays it all out.