Aligning Shared Purpose and Strategy
Aligning Shared Purpose and Strategy
When so much of the business world’s discussion space is filled with hot topics such as “unicorns,” “disruptors,” “private equity,” and “exits,” it is easy to see why family business owners may feel out of step with trends in business strategy. These trends come and go (think: matrixed organization, vertical integration, synergy, virtual corporation), but for at least some family business owners, the sense of disconnection is perpetual.
The reason: Shared Purpose drives strategy.
For many family business owners, their Shared Purpose isn’t simply to maximize profits, accelerate growth, and have a successful exit. They often have much more complex and longstanding connections with their enterprise, which may well be the foundation of their family legacy.
It is the Owners’ prerogative—and their responsibility—to determine their vision for the future, and the purposes for which their capital will be used. The Board and Management then have the responsibility to develop a business strategy that will achieve that future in keeping with the Shared Purpose.
Shared Purpose is the answer to the question: “Why do we want to be owners of this business together?”
No two business-owning families answer in the same way, and the possible reasons are infinite, intimate, and specific. Some elements of Shared Purpose might be:
- Creating a legacy to pass to the next generation.
- Preserving and stewarding a legacy that has been inherited.
- Creating an industry-leading or world-changing enterprise.
- Creating career opportunities for family members.
- Being a major employer in the local community.
- Giving back through civic involvement and/or charitable giving.
- Being a great place to work.
- Finding a way to remain connected as a family, as individuals grow up and grow apart.
- Generating capital to fund family ventures beyond the business.
Articulating your shared purpose is just the beginning.
Business owners who have done the work of articulating their Shared Purpose—a challenging exercise requiring trust, openness, reflection, and consensus-building—may be dismayed when they realize that merely articulating their Shared Purpose is no guarantee that it will be carried out. This is especially true when their Board includes independent directors, or the business is managed by non-family members. In these situations, the Owners will need to work with the Board, spelling out their Shared Purpose, and helping the Board understand its implications.
Directors and non-family management bring their own assumptions to their work, and it is unlikely that those assumptions will just happen to align with the Owners’ Shared Purpose. Independent directors or managers who have worked in public companies often assume that family business owners want to maximize profit. Independent directors or managers who have been involved in so-called “fast companies” often assume that family business owners want accelerated growth, followed by a successful exit.
But the Owners’ Shared Purpose may mandate a very different strategy. A family that has been in business for generations and sees their family legacy as part of their Shared Purpose is likely to be in it for the long haul—the Owners will have little appetite for fast growth, followed by a quick sale. Profit is important—after all, it is a business—but the Shared Purpose may limit profitability. (Think of Chick Fil-A’s refusal to open on Sundays.) Likewise, Owners who see their business as serving their community will push back against efforts to move the business, even if location is hampering growth.
What can you, as family business Owners, do to ensure that your Shared Purpose will be translated into business strategy?
- Take the time to articulate your Shared Purpose, ensuring that you as a group of Owners agree about what’s important, and are aligned in your priorities. (For help, check out these tools.) [link to Engagedownership.com – Engagement Toolkit]
- Present your Shared Purpose to the Board of Directors, and talk with them about the implications. Listen, too. The Board may raise concerns, inconsistencies, or tradeoffs that are worthy of serious discussion.
- Come to an agreement with the Board that they will consult with you before they finalize a strategic plan for the business.
- Recognize that you may not have the right board composition. A board that could oversee a growing public company, or oversee a startup, may not be right for a business that spans generations, no matter how talented its members. Be sure to consider your own business’s unique and specific needs.
- Don’t be too deferential. Stick to your Shared Purpose! In the end, it represents the strength of your family and your business.
Just because you’re a family-owned business doesn’t mean that you won’t be a disruptor, bring in private equity, or ultimately exit your business. What it does mean is that your Shared Purpose—the reasons you as Owners are in business together—will drive those.