Strategy development in family businesses: aligning owners, family, and company

Which three strategies run side by side in a family business?

Every family-run company has three levels that interact with each other and are rarely discussed together.

• Owner strategy. What do the owners want from their wealth? Returns, security, independence, growth, a sale in ten years. This question determines which corporate strategies are viable in the first place.
• Family strategy. Which family members work in the business, under what rules, and how are those who don't work in it treated? This is where the conflicts sit that later surface as questions of substance.
• Corporate strategy. Where the company is headed in the market. This is the level everyone talks about, and it's the third one, not the first.

Work on the third one alone and you'll face decisions later that look unfounded. They aren't. Their rationale sits one level up and was never said out loud.

Why does the process start with the owners?

Because the owner question defines the space of what's possible. A strategy that requires a capital increase in five years isn't feasible if the family doesn't want outsiders in the shareholder group. That's not a matter of taste, it's a constraint.

Here's a common example: the leadership team spends months developing a growth strategy built on acquisitions. In the final presentation, the senior shareholder says he won't support debt above a certain level. That kills the strategy, along with four months of work.

The clarification itself rarely takes long. Half a day with the shareholders is often enough, provided someone asks the right questions. What costs time is avoiding that meeting.

How do you get the family and management around one table?

Separately before jointly. That's the single most important move.

The shareholders sort out their expectations among themselves, without the hired management in the room. The family then brings an agreed position into the joint session. Do it the other way around and the discussion turns into arbitration, with management mediating between family members. That damages their position for good.

With multiple family branches among the shareholders, one more step helps: each branch clarifies its position internally first. Whatever goes unsaid in mixed groups will otherwise come back as a blockade once things get concrete.

What changes when succession is on the table?

The sequence, and it runs against intuition. Many families settle succession first and strategy second. That's understandable, because succession is pressing, and it regularly leaves the next generation taking over a company whose direction hasn't been decided.

The more robust sequence: decide the corporate strategy first, then align succession with it. Because strategy determines which capabilities the successor needs. A company betting on internationalization needs something different at the top than one betting on specialization in its home market.

And here's the uncomfortable part: sometimes the strategy work shows that the obvious in-family solution isn't the right one. That insight is valuable, and it's exactly why the sequence so often gets reversed.

Who facilitates when everyone in the room is related?

Someone from outside, for a reason that has little to do with method.

In a family setting, every sentence carries history. Whoever facilitates has to be able to interrupt without it being read as taking sides, and to ask questions that stay unspoken between relatives. A family member can't do that, and hired management shouldn't have to.

The same applies to advisory boards staffed with people close to the family. A board member who has been there for twenty years is part of the history.

How do you document the outcome so it sticks?

In writing, and shorter than you'd expect. What the shareholders decided fits on two pages: expectations for returns and distributions, position on debt and outside capital, rules for family members working in the business, time horizon.

This document isn't a contract and doesn't replace a shareholders' agreement. Its purpose is to let management know the boundaries within which it can decide without asking every time. That, more than anything else, speeds up strategy work in the years that follow.