As described in the Berretta case in Chapter 1, the company prospers from accepting contradicting strategies and processes: hand – crafted and mass – produced, local and global presence, organic growth and acquisition – based growth, among others. Beretta has been at this so long that these strategic contradictions often become the origins of their new and evolving strategies. Emerging from their loyal workforce, their extraordinarily strong culture, their family “DNA,” and tradition of leadership by family members, Berettas strategies are internally generated, sparked by paradoxical tensions, and filtered by their values.
This strategy – formulation process is unconventional, yet not uncommon in family firms. Most strategic planning processes look for ideas and opportunities from “outside”- from market changes or competitive moves, for example. The company then aligns its culture, leadership selection, and employee training to the strategy after the fact. In contrast, successful family firms generate adaptive strategies from the “inside,” developing strategic approaches that are already consistent with their competencies and culture. Put simply, who they are drives what they become, as opposed to what they seek shaping how they operate.As an example, a family business owned several plastics manufacturing plants in the United States in the early 1970s. They had perfected a philosophy of management – focused on engaging employees and customers in process improvement programs – that they believed might be universal. The family also had a passion for world travel, and thus relished the thought of doing business in different cultures. Turning curiosity into action, a family member took a job in Belgium with one of the firms suppliers. Soon afterward, the family indulged their cross – cultural interest further by purchasing a European manufacturer. Several decades later, this family business emerged as the global leader in its industry. The family had followed a specific passion they shared – rather than addressing a documented, quantifiable market need – and ultimately positioned the business for large – scale success. Currently, a next – generation family member is studying in Singapore. We can predict the next continent for growth.
As stated earlier, Beretta also exemplifies this inside – out approach to strategy. For the gun – maker, the arrival of new leadership, rather than significant market shifts, tended to herald new business strategies. But these were not strategies based on whim or leaders idiosyncrasies; rather, they evolved from the character of the company, its values, its history, its leadership, and its environment. In fact, it can be argued that most new strategies in old family firms are not really new: they already exist as concepts and fragments; in its own way, each new generation of leadership takes them on, champions them, and adapts them to market conditions.
ENDURING VALUES
Contradictions and paradoxes within a firms culture bring more wisdom to problem solving, more balance to analyzing alternatives, more potential to possibilities, and more care to risk taking. The values an organization embodies or professes to have also affect its potential to welcome and manage paradoxes. Consider two sets of values. Values like those on the left – hand side in Figure 2.4 are more transactional and measurable, and are associated with more algorithmic problem – solving approaches.
The list on the left of Figure 2.4 represents very common values in “professionally managed” organizations, or prototypical public companies. They lend themselves to tight operations and a strong orientation to results. On the other hand, they dont represent the history of the company, nor do these values ease peoples discomfort during times of ambiguity and uncertainty. Further, they dont provide insight into the integration or synthesis of paradoxical problems. Next consider the values in the right – hand column of Figure 2.4.
Such values, far more common in family businesses, are likely rooted in a businesss founding days and context, rather than crafted subsequently; they emerge from the founders or founding groups spirit and personality, rather than being drafted by committee. They are also more “human” in nature, giving comfort during difficult and uncertain times, and providing more security and stability during change. Note also that the values in the right column typically drive their more transactional counterpart values on the left side.
It is interesting to consider how these unique family business values support management of the tradition and change paradox. The very personal and individual values of a family firm often lead to a more direct connection between individuals and the firm. This vibrant connection – combined with humility – supports the next generations commitment to the lessons of the past. A next generation that is passionate about preserving the past, can also be adamant about needing adaptation and innovation for the future. The family value of courage supports the next generation as they pursue this challenging Both/AND approach. In this way, family values can play an important role in managing tradition and change.
As an additional example, consider the cultural values of the large, third – generation consumer – foods family firm Strauss in Israel.
