The Covid-19 pandemic has disrupted family businesses in unexpected ways. Many are dealing with anxious investors, a diminishing number of customers, and the challenges that come with managing newly remote teams. For many family-business leaders, managing this crisis has been overwhelming, as they’re grappling with stressed supply chains, plummeting employee morale, and loss of revenue.
A further complication for family businesses — more than other enterprises — is family dynamics. In these trying times, family tensions can often expose underlying stress fractures and exacerbate conflict in relationships, which may lead to more divisiveness.
But sometimes, challenging times can rally those in a family business to unify and overcome adversity.
To successfully navigate volatile, uncertain, complex and ambiguous (VUCA) challenges like Covid-19, family business leaders can look to best practices from another organization that specializes in VUCA situations — the U.S. military’s Special Operations Forces (SOF). The military has a saying that soldiers see the battle differently depending on their foxhole’s vantage point. Likewise, clients, employees, and other members of a family-business network have unique views of the threats and opportunities posed by Covid-19 and other crises. Although this pandemic presents an existential crisis for many family businesses, it also offers an opportunity for leaders and organizations to take stock of themselves and consider new ways to adapt and become more resilient.
Based on our research of more than 2,500 family businesses, and our collective experience as family-business consultants, we’ve found that the following strategies can help family businesses adapt to the current Covid-19 crisis and position themselves for success when faced with future VUCA challenges:
Orient the family business to a fast-changing, dynamic environment.
General Peter Schoomaker, former commander of all U.S. Special Operations Forces (SOF), taught his key leaders to orient their organizations toward a crisis in the most realistic terms possible, given the information at hand. He recommended that leaders plan their missions based on the current reality of a given situation, not the way they would like it to be or imagine it to be. Agile managers plan and pivot operations grounded in the situation as it is. Orienting in a VUCA climate means business leaders should be humble about what they do not know and should build a reliable “human sensor” network of diverse sources of perspectives and expertise.
We worked with a family whose inclusiveness of its second generation led to a highly touted market shift in the automobile industry. The daughter of the patriarch (who was not an engineer, but an interior designer) once asked board members when they would produce a car that a woman would like to drive. This eventually led to the development of a highly profitable new line of automobiles. Building a diverse network combined with the leadership’s willingness to pay attention to new ideas, market trends, and emerging patterns, can generate innovative solutions in turbulent times.
Appreciate the contextual difference between chaos and business as usual.
SOF units often form crisis-action teams to respond quickly to immediate threats and opportunities. Likewise, family business leaders should identify a select team and dedicate resources to act on pressing issues. Family business leaders should ensure that they balance the “firefighting” resources needed for urgent priorities with what is on the horizon.
We have seen agile family businesses do this well by reconfiguring capabilities, instituting clear constraints, and building redundancies to respond quickly to emerging opportunities. They take a proactive approach to address both immediate concerns and emerging threats and opportunities by allocating personnel and resources to each effort.
Exercise adaptive leadership.
Family business leaders must respond quickly to VUCA challenges given current information, and then pivot as they learn what works and what doesn’t. In combat, SOF leaders articulate a clear mission and the leader’s intent so everyone in the network knows the criteria for success. Situational awareness coupled with a common mission can help employees adapt quickly to changing circumstances.
SOF leaders take this a step further with empowered execution. General Stanley McChrystal pushed resources and decision-making authority to those closest to the challenge in Iraq to maximize impact and generate agility. A shared purpose combined with empowered execution optimized the balance between alignment and autonomy.
Family businesses can become more agile by defining mission parameters and articulating who has what decision-making authorities. The top-performing family businesses we have engaged align the “why” (shared purpose) with the “what” (clear goals and tasks with defined criteria for success). They connect top-down guidance and resources with bottom-up solutions by providing their employees the autonomy to figure out how they are going to accomplish the mission. Coupled with ongoing feedback loops to collectively assess what is working and what needs to improve, a family business can become much more nimble in a dynamic environment.
Organize the family business to operate in VUCA environments.
In Afghanistan, SOF units hosted daily video teleconferences so that teams in the field, diverse stakeholders, and strategic partners across the country could share best practices and address emerging needs remotely. They constantly shared what was and wasn’t working in support of their overarching goals and objectives. Together, they formed a fast-moving and connected network with key leaders and constituents, who quickly shared critical information and tackled complex challenges in real time.
Family businesses can do the same by kicking off their meetings with a situational update on what is happening in their particular business environment with inputs from across their diverse network, so participants can develop a shared context upon which to make better decisions. They may also consider updating their meeting rhythm to adjust to the current environment with specific forums focused on immediate problems to tackle, mid-term operational concerns, and long-term strategic issues. Conducting daily “stand-up” briefs that are short, concise, and that quickly align key priorities is another beneficial practice in light of changing circumstances.
Foster a growth mindset.
During chaotic times, employees watch how the family-business leadership responds to unprecedented challenges. In the ancient battle at Thermopylae, soldiers were afraid of the size of the invading force; it was so numerous that, when their archers fired their volleys, the mass of arrows blocked out the sun. “Good,” declared Dienekes, the Spartans’ commander. “Then we’ll have our battle in the shade.” Facing Covid-19 and similar threats, family business leaders must show by action that they are committed to working through the crisis alongside their employees. Like successful SOF leaders, they must share risk and hardship with their teams and remain cool under pressure.
Even in austere and chaotic environments like Iraq and Afghanistan, SOF units make mental and physical fitness a priority, even building makeshift gyms. They also manage their energy expenditure by ensuring specific teams are ready to deploy at a moment’s notice, while other teams recover and conduct maintenance. Likewise, family business leaders need to recharge their batteries regularly and ensure that their employees do not suffer from burnout during uncertain times. The current situation is akin to an ultramarathon, not a sprint, so employees need to build and sustain their stamina accordingly. To do so, everyone should establish a regular routine for exercise, rest, healthy eating, and mental breaks. Leaders need to set the example with their behavior and advocate a wellness and recovery regimen. This shows everyone that taking care of themselves is a healthy and acceptable norm within the business, especially in turbulent times.
Special operators often say to each other, “I have your six,” meaning they can count on each other’s competence and commitments (the “six” refers to the 6 o’clock position, meaning, “I have your back”). When lives are in the balance, trust is a vital factor. In this current crisis, many family businesses are facing severe economic challenges, and livelihoods are at risk. People in family companies talk about having a shared purpose and set of values. Now is the time for them to make good on that commitment.
The top-performing family companies we have consulted avidly communicate in a two-way manner with increased frequency during chaotic times. They also maintain an upbeat mood with their teams and clients, in spite of inevitable obstacles and setbacks. Empathetic family business leaders also create a “safe container” so their employees can voice their fears and frustrations. Reliable leaders respond to these employee needs in a timely fashion and address concerns with clear action.
Even though Covid-19 presents unprecedented challenges for many family businesses, it also offers an opportunity for leaders to adapt themselves and their organizations to become more agile and resilient. Like SOF units tested in combat, family businesses can apply new ways to sense and adapt to a VUCA environment and ultimately prevail. A shared orientation stems from a common purpose, flat decision-making protocols, and a network of diverse human sensors. Family-business leaders empower execution of their noble purpose when they embody trust, give clear guidance on what needs to be achieved and why, and then provide the latitude that allows teams to accomplish their assigned tasks in innovative ways. Resource fluidity and redundant systems also galvanize this agile approach. By integrating and aligning these components, family business leaders can anticipate the emerging future more thoughtfully and act more decisively in the midst of turbulence. Not only does this flexible approach empower family businesses to navigate these uncertain times far more effectively, it also enables them to adjust and rebuild to become more resilient in the post-pandemic future.