Achieving Innovation In Your Family Business By Inspiring Your People
3rd June 2015
Family businesses succeed through multiple generations by striving to be the best. As the world around us changes at an ever faster rate it’s important to inspire management teams to innovate to grow. KPMG’s People Powered Performance specialist Ingrid Waterfield joins up with Dominic Mahony of Lane4 to bring a deeper understanding of what it takes for family businesses to create a high performance environment.
When coaching Family Businesses in innovation, the ultimate challenge is in achieving the balance between the traditions of the family’s business with innovative ideas and business practices that will enhance the growth, profit and sustainability of the family’s business. To develop a successful family business innovation programme, mind sets of both management and family members will need to be addressed and challenged.
Employee motivation – the difference between ‘emotion’ versus ‘reason’. In non-family businesses the business model is based on ‘rational problems’ and ‘rational solutions’. In family businesses you have ‘rational problems’ and ‘emotional solutions’. In many family businesses decisions are not based on what is best for the business but what is best for the family or a member of the family.
Envisioning Capabilities – the difference between “what you wish/want” versus “what is”. Being able to honestly and accurately assess the strengths and weaknesses of your family's business is the starting point.
Today’s ‘Generation Y’ expect to have potentially 15-16 different employers during the length of their career. This means that the family business of the future will be influenced by the need for increased flexibility across the workplace and the changing demands of both employees and family members.
The organisational responses will be:
- The organisations of the future will operate with a new set of principles. Future organisations that are purely driven by profit will always put money ahead of people, organisations that are driven by prosperity will put people ahead of wealth.
- Companies will need to brand and position the business and talent ecosystem in ways that can attract the best talent and engage them to participate, whether that talent resides within or outside the enterprise. It will also be key to be attractive to next generation family members.
- Organisational purpose is important – it is not just about what and how but why we do things. The issue is not whether a company has articulated its purpose, visions or values – but rather - how motivating and invigorating are they? How much are they actually lived and breathed by those within the business? How do family members who are leading the business demonstrate this purpose in action?
- The future organisation enables innovation to come from anywhere and at any time, and it sees learning from failure as a strength. Innovation can come from five places: employees, customers, partners, the general public or from competitors.
- An intrapreneur is an employee of a corporation allowed to exercise some independent entrepreneurial initiative. In the future, organisations will need to allow its employees to innovate, exercise creative thought and contribute to the shape of the business.
A number of myths surround innovation which can lead us to underestimate the role of good management and leadership in making innovation happen. For example, there are actually two sides to innovation: exploration of ideas and the execution of those ideas.
So what are the barriers, enablers and misconceptions that impede innovation in terms of the ideas and the execution? What can individuals, teams and leaders do to allow innovation to flourish?
The leader’s role in innovation is often overlooked; with the emphasis on creative, entrepreneurial types simply making innovation happen. But the reality is that innovation is unlikely to succeed if not managed effectively. For instance, depending on the nature and scope of innovation, the exploration and execution phases might be carried out by separate teams. Strong leadership is needed to ensure true collaboration between the team tasked with generating the ideas and the team responsible for implementing them.
Leaders also need to manage the tension between innovation and core business. Often, radical innovation should be separated from business as usual (BAU). This protects core business from the inevitable uncertainty of radical innovation. At the same time, you maintain strong discipline around the process of testing innovative concepts, rigorously reviewing outcomes and making explicit decisions on when to stop, continue and whether to integrate into business as usual. Trials don’t end up merging into BAU without proper testing.
If you don’t practice asking questions you are going to fear change. If you are comfortable questioning, experimenting, connecting things then change becomes an adventure. Warren Berger, journalist and innovation expert, noticed a pattern in many people’s problem solving:
- A person encounters a situation that is less than ideal. They ask the question – ‘why?’
- The person begins to come up with possibilities for possible improvements/solutions – these ideas surface in the form of ‘what if’ possibilities
- The person takes one of these possibilities and tries to implement it to make it real. This mostly involves figuring out ‘How’.