How Family Businesses Fail
Copyright Jack Mixner. 714 449 1040 www.mixnerstrategy.com
Collins calls it the Stockdale Paradox, namely, the inability of some companies to confront the brutal facts about the future of their company (Collins, page 34.)
Hubbard points out such a paradox in family owned businesses. When managed by family members, family businesses score poorly on managerial effectiveness and results. Having a family managing the company is detrimental to the long term health of the firm (Hubbard, page 2.)
Failing to confront the problem of having a family member managing a family business costs everyone money.
Strategic Implication
If yours is a family owned business, consider carefully your management team. It may be that there are better options that you are not taking advantage of.
Pointing out the problem does not have to be a formula for fierce in-fighting. Properly handled, managerial effectiveness can increase, even if family members stay in mangement.
First recognize the problem. Then build in safeguards. Company value increases as a result.
References
Collins, Jim. Good to Great and the Social Sectors. Collins. 2005.
Hubbard, Glenn. The Productivity Riddle. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06402?gko=e1377-1876-20605692