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  • Service: Enterprise, Family business
  • Type: Business and industry issue
  • Date: 8/20/2014

How Family Businesses are more open to Innovation 

More open to Innovation
True business success cannot be measured in profits alone, but rather, to understand just how well a company is doing holistically, we have to measure how much value they are in fact creating.

This value refers to what the business is able to offer consumers that is not only different to what else is on the market currently, but is also able to better their lives. In order to create such value, companies need to be as open to innovation as possible, which is easier than said for most companies.

Sustainable Innovation vs Disruptive Innovation

Most companies are fully prepared to contemplate sustainable innovation on an ongoing basis, as this is the simple option, involving the mere tweaking of current services and products, in order to keep up with consumer wants and needs. This might keep a business above water and making profits, but that’s as far as merely sustaining a certain level of quality will take them. There are no movers and shakers in this way of business, and more often than not this can come about from the simple fact that established businesses are convinced that practices that proved successful in the past are sure to continue to be so in the present, as well as going forward.

It’s this way of thinking that can be the downfall of a business, as the motions to have one simple innovative thought passed can be far too exhausting and end in the company rather sticking to the already well-established path, even if circumstances around the business have changed and moved on.

Disruptive innovation however, is the process of following a new and original thought through to fruition, even if the current circumstances make that difficult. It literally disrupts the status quo, shaking up processes and can apply to any area of the business, from department processes, to manufacturing practices, to the finished product or service. This may seem like to huge an undertaking, as well as a risk that could end in failure for the business, but when disruptive innovations are successful, they are game-changers.

The Family Business Advantage

At first glance it may seem like a family business is a business models which would be most hampered by traditional thinking. The reality though, is that due to many factors, implementing innovative thinking quickly in a family business is more viable than in many other companies.

These factors include:


  • Strong ties between shareholders, suppliers and communities

Family businesses naturally nurture a more personal approach to the running of the business, fostering strong relationships between all involved. These strong ties create a level of trust between all involve that allow new ideas to flow freely and be implemented quickly.


  • Collaboration between different generations

Often, family businesses will find themselves with at least two generations being involved in the business in one way or another, which leads to an interesting mix of ideas and values. Whereas the older generation could potentially fall into a routine way of approaching the business, the new generation will feed the business with current ideology, in keeping with what they know their generation wants from a business. When family businesses are able to encourage a company-wide philosophy of learning, so that each generation can impart their unique knowledge with each other, then the business is able to implement innovation and keep ahead of the market easily.


  • Family businesses are able to act quickly

Due to the less convoluted structure in many family businesses, changes can be implemented quicker than in many other companies, as fewer processes are involved. Many family businesses are owned and managed by just one main family member in each generation, even if there is an external board as well. Therefore if the owner agrees there is a need for innovation, or if the board does, then it can be put into practice quickly, and potentially before competitors come around to the same way of thinking.

Being successful at business is not just about each month’s bottom line. For truly innovative companies, a true measure of success is how much they can change the face of their industry instead. Good businessmen learn how the market functions and adapts to excel within it, but the great businessman leaves everyone wondering how the industry even functioned before they arrived.


Source:


https://www.tharawat-magazine.com/en/family-business-articles/innovation/1592-understanding-family-business-innovation

Christophe Bernard

Christophe Bernard
I am a KPMG partner based in the French firm’s Paris office, responsible for encouraging the growth of our firms’ middle markets practice across Europe, Middle East and Africa, a majority of that market comprises of family businesses.
 

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