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Family enterprises, as research indicates, are the most common form of business ownership in the world. Some businesses have been family-owned in Europe and Asia for seven-eight generations. Many of the best-performing companies in the world are family-owned. They drive global economic growth!
Among the World's Top 20 Family Business Groups, Indian companies like Tata Sons and Reliance Industries rank in the Top 20s. (Source: The World's Top 750 Family Business Ranking -by David Bain in 'Family Capital' 3 March 2020).
Over 70% of the GDP contribution in India is from family businesses. Budding Family-led organisations is a constantly growing sector looking to professionalise.
However, family-led businesses have challenges like every other kind of business. They face almost the same complications regardless of the industry they operate in or the size of their business. The budding organisations that are family-led businesses face unique sets of challenges due to the nature of their business structure.
Let's look at the nature of their challenges first and what they generally do to overcome these challenges.
There is always a solution. KAIZEN!
Many family-led budding organisations worldwide have found KAIZEN™ centred culture best suited for their growth.
It means Continual Improvement in personal life, home life, social life, and working life. When applied to the workplace, KAIZEN™ means continual Improvement involving everyone – managers and workers alike."
KAIZEN™ is more of a philosophy than a mere tool. It encourages all employees to seek possible improvements in processes and initiate positive change in an organization.
Cultural Enablers are the basic foundation for any Continuous Improvement Initiative.
The Values and Principles govern the behaviour. Thus, adopting KAIZEN™ Principles for the Organisation would facilitate the family businesses to Engage, Educate, and Empower their employees, leading to Excellence. Respect for every individual and Leadership with humility enables these.
If culture has to be changed, one has to change the behaviours. If behaviours have to be changed, routines have to be changed. Precisely, this is what is achieved with KAIZEN™ Change Model.
The KAIZEN™ Change Model provides a new routine to employees across all tiers; when practised, it will transform the Organisational Culture – a continuous improvement and sustenance culture.
Continuous Improvement has to happen everywhere and not in certain pockets. The focus of Improvement should not be limited to Quality, Delivery & Resource-Efficiency but should also be extended to Growth aspects.
KAIZEN™ provides the lens to look for non-value adding activities in all the processes. It enables people to focus on processes to get the right results. KAIZEN™ builds quality in the processes. It drives people to improve their standards to improve their performance constantly.
Once the new standard of practices has been set and solutions are in place, the budding business owners have two primary functions in the context of KAIZEN™ philosophy: Continual Improvement and Sustenance.
Without sustenance, everything in Gemba will deteriorate over time. The real challenge for Management is to manage growth, quality, cost, and delivery(G-QCD) simultaneously.
In general, A family-led business has a supervisor on behalf of the family in Gemba (Workplace). This supervisor will be trained to strive for realising G.Q.C.D. by attaining targets set by Management and demanded by customers. The adequately trained supervisor participates in policy deployment by always keeping in mind two or three annual targets for KAIZEN™, such as Lean Management and reducing inventory.
Focus areas or Areas of Improvement are identified by mapping the value stream in the organisation. Initially, the mapping should be limited to one process and then can be extended within the facility. The same can be extended once a certain level of maturity in Flow principles is achieved. As we are aware, Lean is the result of practising KAIZEN™.
A budding organisation that implements KAIZEN™ principles sees reduced waste and eliminates wastage in both product development and distribution with continuous efforts. A family-run business that is reeling under other familial pressures can ensure their Improvement progresses by deletion. Over time, having practised Lean techniques, they can sustain and restore Time to Market for the new products.
Taking cues from Sensei Masaaki Imai's books, a budding company can continually improve if they adopt KAIZEN™ as their company culture evolves to a methodology where everyone can participate in KAIZEN™ every day. The success of the company can be eased. The KAIZEN™ program is a better self-sustaining workflow process than a quality management program layered on top of all the other work that top Management must do.
But remember, as Sensei Masaaki Imai writes, "You cannot do KAIZEN™ just once or twice and expect immediate results; you have to be in it for the long haul." For a budding company, introducing KAIZEN™ is much easier. It is easier to be in it from the start to achieve what top companies are achieving after learning from a series of mistakes and innovations.
"Small actions are at the heart of KAIZEN™. By taking steps so tiny that they seem trivial or even laughable, you'll sail calmly past obstacles that have defeated you before. Slowly –– you'll cultivate an appetite for continued success and lay down a permanent new route to change." - Robert D. Maurer.
About Kaizen Institute
We are a global pioneer and knowledge-based organisation that provides consulting and transformational services in Business & Operational Excellence to companies in Europe, Asia-Pacific, Middle East, Africa and America.
We offer our services to companies in the public, service, and manufacturing sectors, focusing on organisational change, Lean manufacturing, and Continuous Improvement Culture Implementation.
Want Support to transform ? Find a Consultant Now
Among the World's Top 20 Family Business Groups, Indian companies like Tata Sons and Reliance Industries rank in the Top 20s. (Source: The World's Top 750 Family Business Ranking -by David Bain in 'Family Capital' 3 March 2020).
Over 70% of the GDP contribution in India is from family businesses. Budding Family-led organisations is a constantly growing sector looking to professionalise.
However, family-led businesses have challenges like every other kind of business. They face almost the same complications regardless of the industry they operate in or the size of their business. The budding organisations that are family-led businesses face unique sets of challenges due to the nature of their business structure.
Let's look at the nature of their challenges first and what they generally do to overcome these challenges.
- Informal culture and structure: For many businesses, the everyday system and culture found in many family businesses can equate to a lack of documentation, policies, and defined strategy and goals.
- Firefighting: Too much time is spent firefighting rather than moving the business forward.
- Perceived lack of career growth: It is perceived; that family members get the best positions, unlike hired employees who are hired according to their skill sets. Non-family employees may feel that more significant opportunities exist only for the family members, creating low morale.
- Lack of an external view: Family members often have similar upbringing and life experiences, leading to a uniform view of the business. Businesses need to have an external view of their company and competition to thrive.
- Resistance to change: By nature, successful business leaders tend to be committed to their ideas, making them inflexible and stifling growth.
- Succession Planning: Many family-owned businesses do not have a plan. This can be a source of intense family politics when the time arises to select new Leadership.
- No exit plan: Family businesses often lack a defined strategy for what will happen if an owner wants to retire, sell the company, or transfer responsibility, as this goes hand in hand with succession plan issues.
There is always a solution. KAIZEN!
Many family-led budding organisations worldwide have found KAIZEN™ centred culture best suited for their growth.
What is KAIZEN™, and how can it help the family-led budding organisations?
Through his book, KAIZEN™ - The Key to Japan's Competitive Success, Sensei Masaaki Imai made the world aware of KAIZEN™ and its practices. He writes, "KAIZEN™ means Improvement, involving everyone, happening everywhere and every day!It means Continual Improvement in personal life, home life, social life, and working life. When applied to the workplace, KAIZEN™ means continual Improvement involving everyone – managers and workers alike."
KAIZEN™ is more of a philosophy than a mere tool. It encourages all employees to seek possible improvements in processes and initiate positive change in an organization.
Cultural Enablers are the basic foundation for any Continuous Improvement Initiative.
The Values and Principles govern the behaviour. Thus, adopting KAIZEN™ Principles for the Organisation would facilitate the family businesses to Engage, Educate, and Empower their employees, leading to Excellence. Respect for every individual and Leadership with humility enables these.
If culture has to be changed, one has to change the behaviours. If behaviours have to be changed, routines have to be changed. Precisely, this is what is achieved with KAIZEN™ Change Model.
The KAIZEN™ Change Model provides a new routine to employees across all tiers; when practised, it will transform the Organisational Culture – a continuous improvement and sustenance culture.
Continuous Improvement has to happen everywhere and not in certain pockets. The focus of Improvement should not be limited to Quality, Delivery & Resource-Efficiency but should also be extended to Growth aspects.
KAIZEN™ provides the lens to look for non-value adding activities in all the processes. It enables people to focus on processes to get the right results. KAIZEN™ builds quality in the processes. It drives people to improve their standards to improve their performance constantly.
Once the new standard of practices has been set and solutions are in place, the budding business owners have two primary functions in the context of KAIZEN™ philosophy: Continual Improvement and Sustenance.
Without sustenance, everything in Gemba will deteriorate over time. The real challenge for Management is to manage growth, quality, cost, and delivery(G-QCD) simultaneously.
In general, A family-led business has a supervisor on behalf of the family in Gemba (Workplace). This supervisor will be trained to strive for realising G.Q.C.D. by attaining targets set by Management and demanded by customers. The adequately trained supervisor participates in policy deployment by always keeping in mind two or three annual targets for KAIZEN™, such as Lean Management and reducing inventory.
Focus areas or Areas of Improvement are identified by mapping the value stream in the organisation. Initially, the mapping should be limited to one process and then can be extended within the facility. The same can be extended once a certain level of maturity in Flow principles is achieved. As we are aware, Lean is the result of practising KAIZEN™.
A budding organisation that implements KAIZEN™ principles sees reduced waste and eliminates wastage in both product development and distribution with continuous efforts. A family-run business that is reeling under other familial pressures can ensure their Improvement progresses by deletion. Over time, having practised Lean techniques, they can sustain and restore Time to Market for the new products.
Taking cues from Sensei Masaaki Imai's books, a budding company can continually improve if they adopt KAIZEN™ as their company culture evolves to a methodology where everyone can participate in KAIZEN™ every day. The success of the company can be eased. The KAIZEN™ program is a better self-sustaining workflow process than a quality management program layered on top of all the other work that top Management must do.
But remember, as Sensei Masaaki Imai writes, "You cannot do KAIZEN™ just once or twice and expect immediate results; you have to be in it for the long haul." For a budding company, introducing KAIZEN™ is much easier. It is easier to be in it from the start to achieve what top companies are achieving after learning from a series of mistakes and innovations.
"Small actions are at the heart of KAIZEN™. By taking steps so tiny that they seem trivial or even laughable, you'll sail calmly past obstacles that have defeated you before. Slowly –– you'll cultivate an appetite for continued success and lay down a permanent new route to change." - Robert D. Maurer.
About Kaizen Institute
We are a global pioneer and knowledge-based organisation that provides consulting and transformational services in Business & Operational Excellence to companies in Europe, Asia-Pacific, Middle East, Africa and America.
We offer our services to companies in the public, service, and manufacturing sectors, focusing on organisational change, Lean manufacturing, and Continuous Improvement Culture Implementation.
Want Support to transform ? Find a Consultant Now
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