The term “family business” conjures up a mom-and-pop store, perhaps a small factory or farm, where teens spend their summers working and all the executives are related. But beyond their ownership structures, successful family businesses are learning to move past their roots while keeping their values. Max spoke with experts at the Business Families Centre at the University of British Columbia’s Sauder School of Business in Vancouver about how families jumpstart innovation within enterprises.

 

Max:  What are the top 3 issues facing successful family businesses today?

Chira Perla, Program Director: Every family enterprise is unique, so this is actually a challenging question to answer.  I think the two overarching issues facing successful family enterprises remain transitions (and by this, I mean everything from succession or sale to the changing roles of family members within the management and ownership of the business) and governance (formal or informal, in the business, among the owners, and in the family).  These issues seem to be common and constant, regardless of the size of the organization, stage of ownership, or level of complexity.

 

What differences are you seeing in terms of second-generation family executives today compared to a generation ago?

Wendy Sage-Hayward, adjunct professor and family-business consultant: Automation.  Next-generation leaders are very comfortable with technology and therefore are using it in various ways to bring their family businesses into the 21st century (accounting systems, outsourcing warehousing and shipping, sales, customer relationship management software). They are also using social media for marketing and sales.

There are different areas of innovation that family businesses are taking advantage of.

Products/services: Families are funding peripheral start-up businesses for next generational family members. This is promoting entrepreneurialism as well as growing the family’s social and financial capital.

Family governance: Some families I work with are using Skype, Google Hangout or the like to hold family meetings when geographical distances keep them apart.

Technology: one family business I know is using 3D printers to create model products for their clients to view prior to manufacturing.

 

What are some new trends you’re seeing in family businesses, in terms of how they’re managing their enterprises or handling succession?

Perla: Initially, most of the families that accessed the BFC’s programming and resources were simply trying to develop a common vocabulary and understand the unique dynamics at play.  Many of these families were starting to consider the transition of the business, and realized that they needed tools and strategies to effectively deal with the intersecting roles of the family, the business, and ownership.

Now, as more business families are educating themselves and becoming quite savvy on family enterprise basics, we’re finding that they are seeking our help and support on more complex topics, such as advanced issues in governance, improving business acumen to better engage with professional advisors, intrapreneurship, and legacy building through family philanthropy.   On the whole, there is considerable buzz in the space on the topic of next (or rising) generation leadership, with much more attention being paid towards that generation’s identification, role, and training.  Finally, I’d say that today’s family firms generally recognize that succession is a process rather than an event, and are planning accordingly,