Future is Not a Stroke of Fate! Current Challenges in Strategic Planning for Medium-sized Family-run Businesses – A Guest Column by Prof. Dr. Arnold Weissman

Wednesday, 27. April 2016

Nothing is more constant than change. This is particularly true for the past 10 to 20 years. Our once analog world has changed to become more global, virtual, fast-paced, volatile, and networked. And in the future, the pace of change will increase even more. Keeping up with this is a real challenge, especially for medium-sized family-run businesses. But despite growing uncertainty and constant change, many of them still neglect long-term strategy work. That is a fatal mistake. It is precisely in times of uncertain and volatile markets that business owners should deal intensively with their companies and their goals. It is no exaggeration when I say: "A business as usual attitude should not and will not exist." Therefore, don’t get stuck in the satisfaction trap because your business is doing well and solid. "Those who God wants to destroy, He gives them 30 years of success," they says. So be prepared for changes in almost all areas.

Tradition-based Innovation as Guiding Principle

To begin with, it is essential to view change not as a threat. Each change provides opportunities. Let’s have a look at the existing corporate landscape first. It is striking that products and services are increasingly interchangeable. Consequently, it makes little sense to continue to offer products and services that already exist in one way or another. The motto is: "Be different or die!" Being different and adapting to the needs of the environment—this principle prevails not only in nature but also in the market environment. Therefore, review your business model. Do you serve an ecological niche? Are you a specialist? Are you innovative? Successful family-run businesses have long recognized that the struggle for survival cannot be won by competing on price. They tend to specialize. More often than not, they are niche players maintaining close relationships to their customers. From this position, they are able to recognize their customers’ problems early on. Successful companies are successful because they solve the problems of their customers more efficiently than the competition. And here is your opportunity: There will always be problems that will need to be solved. I am strongly convinced that it will be the solution providers who will win in the long-term. Looking at it that way, it is essential to develop the solutions to tomorrow’s problems already today. Even companies that are successful today will have to work hard and demonstrate real innovation spirit.

Innovation Also Means the Willingness to Fail

But how do you spot trend-setting directions early on? It is imperative to recognize tomorrow’s customer problems as an opportunity for the future and develop already today innovative new solutions which most competitors are not able to come up with. Customers will increasingly demand to get anything, anytime, anywhere. Or better yet, that every wish will be read from their eyes even before they themselves are aware of what they want or need. Get yourself a radar system enabling you to systematically identify trends in the business environment and assess them in terms of their possible impact on your company. Innovative solutions require a strategic directional orientation: from the future back to the present. Those who find trend-setting, innovative solutions and, if necessary, are willing to abandon their long-held business models will most certainly have good prospects for success.

Focus on Your Core Competencies

With all eagerness to change and innovate, what is most important is that companies are aware of their genuine core competencies and always keep them in mind when developing their strategic perspective. Unlike strengths, core competencies are the true enabler for whatever special features you can offer in the marketplace. Generally, core competencies are a particular set and combination of skills and knowledge, resources and know-how that only your company has. They form the basis for your uniqueness and, consequently, should not be underestimated in their importance for corporate strategy. It is essential for your business to invest considerable time and energy in identifying and developing its future competency profile. Without competency profile, no viable innovation work is possible.

First Step - Who Wants to Plan for the Future, Needs to Know Where he Stands

The heart of any good strategy is the SWOT profile, the SWOT analysis. The aim of the analysis is to determine the strengths, weaknesses, opportunities, and threats of your organization in relation to your competitors—again and again. Where exactly does your organization stand currently? What about the areas of organization and planning, finance, service provision, market orientation, and leading/managing employees? Obtain as accurate a picture as possible of the situation of your organization. The result serves as a basis for the future strategic orientation.

Strategy is the Path to Your Future Competitive Advantages

To say it in advance: Strategy is neither a one-off action nor a sprint. Strategy is a marathon. That is, strategy must be reviewed and reconsidered on a regular basis, always keeping in mind the company's values. Write your strategy with pencil, but your values with ink! This way you avoid typical strategy pitfalls, such as tackling one short-term goal after another. Select your search area for strategic options wisely. If it is too narrow, for instance due to a too rigid timeframe, too unambitious ideas, too low investments, underestimation of needed resources, or stubbornly rigid thinking patterns, any strategy is doomed to fail. The same is true if the search area is too wide. Businesses will run into problems if they lose sight of their own core competencies, may it be because they are constantly searching for new options, underutilizing existing resources, not distributing risks, overestimating changes in the business environment, or underestimating experience. Therefore, it is important that you consider strategy not as a project but as an ongoing process. Check your strategy carefully again and again making sure it takes into account your company's core competencies. Never lose sight of the overall objective.

Distinguish Between Leadership and Management

Most mistakes are made when executing the developed strategy. Why is that? Is it due to lack of motivation to put the necessary effort? Or the fact that corporate governance, management, and employees are sitting in the same boat, but rowing into different directions? Our consulting experience shows: Most companies operate according to the motto "leadership is nice to have." The value and impact of leadership is simply underestimated. Do you also believe that leadership can be compensated by technical know-how? Or is the leadership task neglected in your organization every now and then because other tasks are given priority? If so, you are not alone. According to our experience, given the choice to solve a technical task or have a one-on-one employee meeting, three out of four executives would choose the technical task. Therefore, it is highly advisable for companies to make a distinction between leaders and managers. Because the most important strategic decision is to fill the leadership positions with the right people. Leadership skills are not given to each and every one. Often the profile requirements of the manager are diametrically opposed to it. True leaders motivate and trust, encourage and challenge. Trust fosters a sense of responsibility and reduces complexity. Both important prerequisites for running the strategy marathon jointly successfully.

Run Your Family Professionally

The family is the core of the family business. It is its blessing, if it is well organized, but often also its demise, if it is in dispute. There is enough cause for conflict—even in families that are not tied together by a business. In family-run businesses, the ways family members interact with each other are essential for the success of the organization. Issues like love, sibling rivalries, power, competition between active and non-active shareholders, money, and generation conflicts can have a negative impact on a family-run business. That is why successful family-run businesses have a “family constitution” that governs all matters between the family and business. The challenge it to run the family as professionally as the business and to always put the company's interests before individual interests of family members.

Make Yourself Independent

What else can family-run businesses do to prepare themselves for the future? Family-run businesses that are successful in the long-term aim for maximum independence, particularly from banks. They are always fit for the capital markets without actually needing them. In other words: Keep your home in order, so you can sell it at any time, without ever having to.


Fact is, unfortunately, that in Germany we have already lost the digital B2C business. If we are to lose the B2B business as well, it will take a great toll on us. Innovation is imperative. Therefore, businesses need a master plan for change: coordinated activities rather than the often hectic sum of individual activities. Strategy rather than project work. Innovation rather than sticking to the tried and tested. To put it bluntly: Only those who are willing to fail are truly innovative. But with all willingness to change, family-run businesses should never forget their values. Those businesses that keep in mind their own values, mission, and innovative vision and follow a strong, value-based leadership approach will be able to meet the demands of the future.

About the Author

Prof. Dr. Arnold Weissman teaches business management with a focus on family-run businesses and marketing at the OTH (Ostbayerische Technische Hochschule) Regensburg, he is the head of the competence area Strategy at the Zurich International Business School (ZIBS), and visiting lecturer at Zeppelin University in Friedrichshafen. He is also the author of numerous books and practice-oriented articles. As a success strategist, he advises medium-sized, internationally operating, owner- and family-run businesses.

He became known for his method "System Weissman - 10 Steps to Success" which he developed to address and meet the particular challenges of family-run businesses. In 1987, he founded the renowned consulting and training company WeissmanGruppe, which was recognized in October 2015 yet again for its high competency and consulting services for medium-sized businesses with the quality seal “TOP CONSULTANT 2015." The WeissmanGruppe operates internationally with offices in Nuremberg, Innsbruck, Zurich, and Lana. In his lectures and seminars, he inspires his audiences by his ability to convey complex expert knowledge in an intelligible way.