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Why family purpose fuels family strategy

Are well-defined milestones the secret ingredient in exceptional family businesses? Scott McCulloch breaks down the recipe.


How do you strategically align family business values and management culture in a family business?

The short answer is with great care. Yet it’s hard not to take a binary view with regard to chances of success. Either works or it doesn’t, right?

What if it falters? There is an interesting case of a multigenerational family business which no longer manages its business directly. Instead, it advises and supervises senior management through its family council.

Over time, the family became concerned to see an appreciation for its long tradition, heritage and culture fade – particularly among middle management.

The family wanted to reignite and transmit their values into a strategic objective of the family business.

They acted. They defined and implemented a scorecard that measured how well their strategic goal was being executed. They linked performance metrics from the scorecard to the managers’ compensation.

Soon they were able to reward behaviour that supported their strategy. The result? The family saw better identification with its core business values.

It’s no secret that successful family businesses possess distinct traits. Families with a clear view of what the family and the business bring to the world are arguably at an advantage because they have a strong sense of purpose.

They know why they do what they do.

Purpose goes a long way towards family business growth and renewal of family strategies.

The Danish family-owned Lego Group has a compelling raison d’être: “Our ultimate purpose is to inspire and develop children to think creatively, reason systematically and release their potential to shape their own future – experiencing the endless human possibility.”

Such clarity drives Lego’s Kirk Kristiansen family in what it does.

Clarity of purpose is as evident at Johannesburg-based Nedbank: “To use our financial expertise to do good for individuals, families, businesses and society.”

Nedbank describes itself as as a vision-led and values-driven organization. Yet Nedbank’s vision – “to be the most admired financial services provider in Africa” – is about where the bank would like to take the enterprise. Not why.

“[Our vision] doesn’t address why we should be of value to society, Nedbank chief operating officer Mfundo Nkuhlu,” recently told Forbes magazine.

“Vision is really internally focused, but purpose is external. It forces you to ask the question from the perspective of clients and society about what’s in it for them.”

What’s in it for our clients? Families who ask that question are really strategic planners, which implies focus, direction and taking bold actions to move the family business from where it is to where the family wants to go.

Strategic plans are critical to prioritizing resources (time, money and people) to grow revenues and increase investment returns.

Indeed, they focus on building a sustainable competitive advantage and are invariably futuristic in nature.

It’s hard for a family to look to the future without considering its purpose and family values, and where and how they will fit in to the business.

Hard but far from impossible.


Scott McCulloch is a North American media consultant.

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