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Professionalising family businesses

Four years ago I wrote a column on the intergenerational challenges facing family businesses, admiring the way those who overcame such challenges did so while noting how too often the founder was reluctant to empower subsequent generations.

I want to return to that topic today, thanks to the opportunity I have benefited from over the last few months to meet with a good number of owners of medium-sized family businesses. In some cases the founding father was still very much in control, as his sons (occasionally these days his daughters, too) have been getting to grips with leadership; in others, the elder had withdrawn somewhat, just coming to the office for short periods of time; and in older-established businesses third and fourth generation family members have now risen to prominent positions.

What patterns have I observed? First, irrespective of the age of the company or its leadership, the top person is inevitably ultra-operational, what one might call “transactional”. To the extent that in some of my meetings the phone kept ringing so the boss could progress some immediate transaction, make some micro-decision.

Here, they had just found it too hard to develop a trusted and empowered senior management team to whom to delegate, and the inevitable consequence was that little mindspace was available to allow them to indulge in higher level strategic thinking.

All these micromanaging owner-director-managers were leading successful entities, ones that had survived many ups and downs, including splits from other family members. Their businesses were utterly dependent on their personal talent and experience, their energy and charisma, their motivation to show up to keep the revenues flowing in and to manage costs.

Some are fortunate in having members of subsequent generations who are both fit to contribute to sustaining the business into the future and willing to. But for others succession planning remains an unresolved question.

So busy are they with day-to day issues that it’s just too hard, indeed too inconvenient, to think about the consequences of something adverse happening to them: ill-health, for instance. Some had a notional board, often only including an elder or a spouse – most of whom would not be engaged in the business, while for others it was “me and my brother” or me and my son(s)”.

“Board meetings” might take place around the dining room table at home, or driving together to and from the office, and while a few were considering appointing independent directors none of those I met had done so.

The 2015 Companies Act specifies that four board meetings a year must be held by all registered companies, but most of our SME leaders just aren’t in the habit of complying with this requirement. Their focus, their discipline, is so much more on the day-to-day, and one of the consequences is that formal longer-term strategic plans or mechanisms for managing their implementation rarely exist.

Having said that though, these entrepreneurs are all bold innovators, courageous and optimistic risk-takers, forever on the lookout for new opportunities. They are to be admired, as they operate in this difficult environment.

OTHER VOICES

Some are hiring higher level professional managers, and bringing in consultants and advisers to help them rise. But my perception is that those who would most benefit from fresh and external inputs are the ones least likely to seek such interventions.

It is those who are most exposed to contemporary trends and hence are already ahead of the game who are open to listening to other voices. It is such people too who consider options such as public listing, joint ventures and external investors.

They are the ones with appropriate systems and controls, and robust risk and compliance management procedures.

In Kenya we are so fortunate to have such widespread entrepreneurial energy and talent. What we look forward to seeing is more of our SMEs professionalising in ways that can see them grow to larger scale, employ more people, focus on markets beyond the domestic, and be sustainable for future generations to inherit.

After MCAK launch, focus turns to building linkages

Along with nearly 50 bright young local management consultants I recently spent an uplifting evening at the Pallet Café in Lavington (where all the very helpful waiters are deaf), to participate in the launch of the Management Consultants Association of Kenya, MCAK, reachable at info@mcak.or.ke.

I wrote a column on the imminence of this launch not long ago, and I was delighted to see it now taking place. Not least as through it Kenya now begins its journey towards joining the world body for the profession, the International Council for Management Consulting Institutes (ICMCI), known as CMC Global.

At the launch, MCAK Founding Chair Erick Ngala explained that he and his colleagues identified ICMCI as an internationally accepted partner through whom local consultants, trainers and coaches could develop their competencies. And a key factor was how ICMCI had partnered with ISO to come up with the standard for their profession, ISO20700.

At the event, Kenya Bureau of Standards Director for Standards Esther Ngari expressed the willingness of KEBS to work with MCAK in its implementation.

ICMCI Executive Director Reema Nasser also spoke, laying out the steps MCAK needs to follow in order to become a full member of her institute, saying it typically takes around three years, culminating in a rigorous audit. ICMCI already has members in over 50 countries, and it looks forward to Kenya joining South Africa, Nigeria and Algeria as part of an emerging Africa hub, with Zambia and Tunisia also on the way.

Her organisation has been accorded UN NGO status, and what particularly impressed me was the basis on which individual consultants are assessed by ICMCI: through how their clients judge their performance.

During the evening, I heard from the consultants present about how they are finding the consulting world. Nothing comes easily for them — and wrongly they assume that an old war horse like me cruises along effortlessly. Several had migrated to consulting from the banking sector, and several told us they were not feeling fulfilled in their daily routine there.

“I knew what I had to do each day,” one revealed in the formal session, and now, even though he is working much harder, even as he is uncertain about tomorrow, he enjoys his life much more. He reads a lot, interacts with many people, and is learning so much. “The cake is big enough for us to collaborate,” he concluded, looking forward to the association growing the field as the members help each other.

In my remarks at the event, I congratulated Erick Ngala and his team on launching the association, more so in this by and large low-trust society of Kenya that is so individualistic and filled with high energy competition. I also drew attention to the fact that membership will be voluntary, unlike for professions such as lawyers and accountants. Beyond that, almost everyone will contribute as volunteers, so finding the time to make it all happen will remain a challenge. Finally, I wondered how the large consulting firms will be attracted alongside the small and individual players, and the younger ones along with the veterans.

I then related to my experience of working in and with professional and business associations, where I have found that the critical success factor is the presence of a few dedicated individuals who understand the purpose of the institution and the benefits it must deliver to members. This so they can share and collaborate – even as they continue to compete with one another.

From what I witnessed that evening, I see great hope for MCAK, as a great job has been done thinking through all this. They look forward to raising the awareness of the profession and building the consulting brand; they will be working to create an enabling environment for consultants; and through this will promote higher standards, including through professional development.

I am confident and optimistic about the association, with its thoughtful, humble leaders who are focused on collaboration and adding value, and who have already organised international partnerships. What they must also nurture, I suggested, is local linkages, both horizontally and vertically with the likes of APSEA and ultimately KEPSA.