Types of Family Businesses: It’s about growth and nurturing.
Over the past articles, we have explored the four different types of family businesses, as defined by the research done by colleagues in the Family Services industry. We have learnt that Family and Family business combinations can be categorized into four basic types – "James Bond," "Eternus," "United," and "Steward." This identification was made over several years on 21 German wine-business families by Sabine Rau. What they identified as unique about each type of family combination is that each makes different decisions, raises its next-generation differently, and ultimately engages in different succession processes bringing about unique outcomes. Understanding the four different types may help develop a next-generation leader and ensure the continuity of your family business. And further examinations of these types and exploring the African Family Businesses further may help us identify and grow our businesses better.
Why use information from as remote a country as Germany? You may ask. It is interesting to note that there is very little data on African Family businesses. However, there are organizations such as African Family Firms (AFF) which are endeavoring to compile and create such data for reference. For the intents of this series of articles, we are going to use available data and study from counterparts in the Family Business Services industry to form a picture of some challenges that face African Family Businesses.
From our gradual identification of the four family types, one prominent issue that comes to the fore is that the type of family may be defined by the stage at which they are on in reference to generational assimilation of the business.
If the types of families were to be represented as a linear graph as shown below showing progression and development, then one may be apt to say the age of the family co-relates to the maturity of their operation. The more mature the family is in generational growth, the more knowledgeable they are in the scale of development and type of family they have evolved into.
Simply put, The James Bond family, with its overbearing leader who is authoritative and lives for the "secret mission" of running their business, is very similar to the founder of many businesses. They micromanage everything and, in most instances, do not believe anyone else but themselves can run the business. They even feel threatened by their own family's presence in the business and therefore keep them at a distance.
The Eternus Family is usually lead by the 2nd generation leader who still has the feeling of weight of the James Bond leader. Though still authoritative, this leader has learnt from the mistakes of the leader who came before him/her. S/he finds it necessary to involve the family in the running of the business and starts early on towards a succession plan although cautiously.
The United leader is a 3rd generation leader. A leader at the head of a family much evolved and learned in business development and family integration. This family has learnt from the previous predecessors and is bent on inclusion and unity for the advancement of both family and business.
The Steward family and leader are a family way into the generational wealth. Entrepreneurial, inclusive, and organized. They are built on experience and values that allow them to identify the right leader while nurturing the overall available talent for the future prosperity of the whole.
This then goes to show that some families that don't make it past a particular generation; therefore, don't then mature as a family type. It also goes to the point that it is the Steward type that family enterprises should strive for if they are to achieve multi-generational wealth.
This then brings up the question of ubuntu and African Family Business. Most African Families are set up in the steward format before the business is formatted. The business then becomes an entity that intrudes into the extended family unit at times. Making it critical for the James Bond leader to engage advisors and start early to strategize the integration of the Steward family structure and operational type into the first generation of the business to give it a chance to grow into a solid structure. As it grows and we define our Africaness, we may start forming different types of family structures that work in our space and take us into generational wealth that spans twelve plus generations.
To conclude the discussion on the different types of family businesses, one key learning from this and any other research journey is that, it is pivotal to analyze the business family as well as the associated family business(es). The different family-types require different types of support for different individuals and sub-groups within the family. Another key lesson learnt is that families need to work with advisors who tailor their suggestions to the unique families behind different family businesses. Different families behind similar businesses might require a completely different approach to address current and future hurdles.