This week, Yasmine Omari, a Manager with the Deloitte Middle East Family Enterprise Consulting team in Dubai, discusses structure and ambiguity in the family business system.
There's often a perception that a lack of formal structures or processes in a family business is indicative of a lack of professionalism. Many advisors are thinking "Can you believe they don't even ..." as they set out an array of services intended to 'professionalise' the business.
While the business' affairs may well not have been conducted in a manner which the advisor deems to be the most professional, efficient or beneficial, it is important to recognise that this may not concern the founder who may have found an equilibrium between profitability, lifestyle and social / familial responsibility which works for them. It's one thing to have a high performing business, but having a satisfied and fulfilled constituency of owners, family members, and employees is another.
Most surprisingly, some advisors seem to forget that regardless of what their own perception may be, the family has invariably built and operates a successful business. Whilst textbook examples of good governance may not be immediately apparent, there is some form of natural governance and organisational strategy at work.
Professional advisors, and after all I am one, undoubtedly have an important role to play in the family business ecosphere; they clearly have valuable knowledge and experience to impart. Family business studies and surveys, as well as the plethora of academic articles and journals, are also excellent sources of best practice examples and possible solutions, but we also need to look beyond these. It is not about being 'right' or applying theoretical concepts. Successful family business governance and advisory is about finding ways to balance the inherent contradictions of advising both a particular family and their business.
It is also high time to challenge the negative perceptions associated with being unstructured, and unprofessional and instead recognise that the very 'fuzziness' of such enterprises can be a competitive advantage and enable nimble reactions to market movements. Moreover, expertise in operating in loose, uncertain environments filled with quandaries and dilemmas can be valuable in the corporate world. Multinationals seeking to innovate are beginning to realise that a lot can be learned from family businesses and many of their characteristics can, and should be, successfully transferred and replicated elsewhere.
This is where it becomes essential for advisors to 'touch' and 'feel' the family business, embrace the 'fuzziness' and weave emotional elements with the business considerations, to manage business and family needs accordingly, with manage being the operative word.
The reality is that there is no right answer, no one-size-fits-all solution and definitely no panacea for common family business problems or issues. We have to view such businesses from both a strategic and emotional standpoint, develop an appreciation for ambiguity, and build creative solutions to manage the inherent paradoxes.
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