Create a culture that encourages new product development
In recent decades, acquisitions have been a popular driver of family companies’ strategy. As competition for targets across markets has tightened and prices have increased, however, expanding by acquisition alone has become less viable as a strategy.
A path to growth that’s often overlooked by family business owners is new product development. Investing the time and money to create a pipeline of products can mean the difference between an economically sustainable legacy and a business that ends with he current generation.
To be successful, homegrown, organic growth and exploration requires leadership support and an operating discipline at the very top levels of the family business. It can require a significant change in culture — a move away from a culture that fears failure to one based on trust and communication. The culture must encourage tolerance of ambiguity and calculated risk taking. It must foster innovative, entrepreneurial thinking.
Such a cultural shift starts with the owners identifying and ensuring alignment on their values and the mission and vision for the family business. The owners must decide that the risks are well worth the rewards.