The Accidental Autocrat: How Family Businesses Can Make It To The Top
7th January 2019
Reading time: 2.5 minutes
I’d guess maybe a third of my clients are family businesses, so I’m by no means a specialist. But if I were to list my favourite five clients of all time, I think they’d all be family ones. There’s a buzz about a great family business, a sense of warmth, of welcome, of familiarity.
There’s also a responsiveness: I’ve often listened to an owner, offered my advice, and within a few days, seen things starting to change. In contrast, I can wait weeks, sometimes months, to see the effect within a more complex corporate culture. It’s easy to work with one or two individuals who have that level of control, who can make changes and get things done, but it’s a double-edged sword and quite often, it’s the single biggest constraint on a family business’s growth.
Who makes it to the top?
Every year the IFB publishes a state of the nation report, and every year shows a similar pattern. As the bands of businesses increase in size: ‘up to 50’; ‘up to 250’; and ‘250 or more’ employees, the portion of family business in each group drops dramatically: from 60%, to 50%, to around 10% of the largest business category. It’s not easy for any business to go from mid-sized to large, and there are plenty of great family businesses who do make the cut, but the statistics don’t lie – there are far, far fewer than there should be in that top bracket.
I was first introduced to one of my favourite family businesses in 2014. The first-generation owner explained how, over 18 years, he’d grown the business from scratch to almost £30m, and though that growth had plateaued of late, he wanted to make it to £50m over the next couple of years before thinking about handing over. “I’ve never worked in a £50m business,” he said, “Hell, I’d never worked in a £30m business before last year. So, I just want your thoughts on what needs to change for us to get there.”
One of the questions I asked him was, “If I asked each of your management team to describe the strategy for the business, would they all be able to?”
“I think so,” he replied, “I’d like to think they’d be fairly consistent.” He was right, they were very consistent. Almost to an individual they said they had no idea, but that the owner knew. It was all in his head, they explained; always had been, and he’d not put a foot wrong yet. All of them had been in the business for years, some from the very start, and all had faith in two things: that the owner knew where the business was going, and that they didn’t have to worry about it.
As I got to know them better, it became obvious that they were lovely, loyal people, but there was barely a professional manager among them. They tended to micro-manage their teams, got lost in the minutiae, and worked “within their box” – they did what was asked of them, looked after their team, and didn’t look beyond that.
The biggest feature on any organogram is the white space between the boxes, so when everyone in the organisation is working purely within their box, it leaves an awful lot of white space for the boss to cover. Resolving conflicts, coming up with ideas, interviewing new recruits, making the big decisions, and so forth. He was the nicest guy you could meet, and an entirely unintentional autocrat. Everyone looked to him, everything flowed through him, and the potential of the business was increasingly being constrained by him: his time, his ideas, his focus.
The challenge and how to address it
My advice to him could have been summed up in a single word: leadership. Developing it in some of the bright young stars hidden beneath those long-serving heads; recruiting it into senior roles to help professionalise the culture; and above all, demonstrating and nurturing it, by opening up the strategic conversation, bringing the team into the fold, getting them to think outside their boxes, to look outside of the organisation and to share the leadership load. Within a week I could already see the seeds of change.
Since that engagement, I’ve noticed again and again, that when entrepreneur-owned or family-run businesses get stuck on a plateau, when growth stalls, I’ll invariably find those same unconscious traits: promoting on length of service instead of leadership potential; not regularly and openly discussing strategies and plans to get fresh perspectives; not challenging managers to step up and lead beyond their departmental boxes.
That plateau tends to hit between about £5m and £50m, it often coincides with number of employees approaching the 100 mark, and it partly explains that dramatic drop in family businesses at the larger end of the scale. It’s fairly predictable, but it’s also entirely avoidable.
If your top team meetings are a series of bi-lateral conversations, if your direct reports can’t talk clearly and eloquently about the strategy outside of their own box, if they’re not constantly pushing you to improve your own leadership, it’s probably because you’ve become an accidental autocrat. In which case, don’t be surprised if your growth starts to plateau.
The good news though, is that autocrats have the power to change those things surprisingly quickly.
Martyn Drake is the founder of Binley Drake Consulting. His clients range from global brands like Weight Watchers and Walgreen Boots, through family businesses like Advance Group, Alstons and Joules, to non-profits like the National Autistic Society and Parkinson’s UK. He helps them to grow, innovate and change, to improve performance and lead their markets, to set more ambitious goals and to surpass them. Prior to consulting, Martyn spent 20 years in senior roles within private equity hospitality and global retail businesses. He lives in Nottingham with his wife, two children and an ever-growing menagerie of pets.