Can you lead a privately owned family business with the same skills required to run a public company? Probably. But not as well without what I call Family-Suite, or “F-Suite,” capabilities. Here’s why.
Leadership of public companies and private family businesses are different “games.” The days of landing a position in the C-Suite, or the top management of a public business, because of your surname and/or family connections are long gone. The skills required to manage a public company today are fairly cut and dry, and can be thought of as C-Suite capabilities such as the development of sound business, financial, marketing, and operations strategy and tactics to drive profitable growth.
Naturally, the aim of public companies is to hire the best C-Suite managers available, amidst an unprecedented current war for talent. Such leaders gain the required capabilities through business experience and, often, MBA training, with many business-school students aiming longer term for C-Suite positions.
While leading a privately owned family business also requires C-Suite skills, you’ll need something else as well, something critical: an F-Suite mindset. Here’s what I mean by that. An F-Suite mindset includes the virtues inherent in family businesses: long-term vision, community engagement, sense of legacy, and clear values.
The most effective leaders not only understand these deeply but harness and implement them across every area of the business, from strategy to hiring to culture, thus preserving the founders’ vision and values while making sure the business can deliver on its mission and strategy.
The two types of skills/mindsets work in tandem in family business: the C-Suite needs to understand the nuances and idiosyncrasies of the family’s tradition and values, and the F-Suite needs to recognize the importance of driving growth.
For example, when a family business transitions from the founders to the second-generation, it’s critical to use the established purpose (typically with focus on the long term over short term), values, and culture of the family/business to inform the development of strategy and tactics going forward—that is, the F-Suite must inform C-Suite decision-making. At the same time, operating well and growing as a second-generation business, typically with larger-scale targets and expectations, requires evolving C-Suite capabilities on top of an F-Suite mindset.
In short, while the skills needed to work at a family firm such as SC Johnson or a non-family corporation such as Proctor & Gamble may be similar, the mindset required will be very different, with incorporation of an F-Suite mentality critical at the former.
Moreover, recognizing the importance of the F-Suite and mastering the related mindset will become even more important in managing family businesses in the 21st century, as family-owned firms face rising challenges related to business environment factors including competition and customers.
These issues and much more will be the focus of my forthcoming book written with Ken Moores: Leading a Family Business: Best Practices for Long Term Stewardship
Dr Justin Craig is Clinical Professor of Family Enterprises and Co-Director of the Center for Family Enterprises at Northwestern University’s Kellogg School of Management