4 Ways Technology Helps Family Businesses Make Better Decisions
Within the context of internal and external challenges, family firms continuously make choices that are as demanding as they are impactful — decisions with considerable implications for the future of the business and its owning family.
Effective decision-making can be the difference between success and failure; knowing what good decision-making looks like builds the awareness and confidence that leads to better outcomes.
Good decisions should create opportunities. Good decisions should be executable and replicable. Good decisions have a high degree of accountability and a systemic approach to gauging their effectiveness. And perhaps most significantly for family firms, good decisions involve all stakeholders.
A family firm’s governance provides the framework for good decision-making. But as family businesses age and grow, multigenerational involvement and complex interpersonal dynamics make arriving at effective decisions more difficult.
Fortunately, today’s technology offers solutions that family businesses can leverage to cut through the complexity, align their decision-making and navigate uncertainty.
1- Enabling Education
Failure to educate family members on business fundamentals can often lead to misunderstandings, bad decisions and family conflict. It is critical that family members understand the financial and business concepts that define their organisation’s history of success, current health and potential for future growth.
For family firms looking to help members understand these frameworks, a cloud-based centralised data repository is an effective tool to educate family members and improve business decisions.
By centralising information, family shareholders can access past and present knowledge to gauge both their business’s performance and potential. Family enterprises can use digital tools to disseminate information to directors, shareholders and family members, thereby avoiding misunderstandings, bad decisions and potential disputes that can occur when various entities act on dissimilar data.
2- Sharing Information
As families grow and members seek opportunities outside of the family business or in other parts of the world, obstacles connected to communication and transparency become more significant. Further exacerbating the situation is the way family firms often share information informally.
Conflict can arise when non-active shareholders use bad information to challenge active family members. A robust centralised data management system that can be easily and securely accessed anywhere in the world not only provides a family firm’s shareholders with the up-to-date information they need to make the best decisions but also serves to head off potential discord associated with a lack of transparency or communication.
Collaborative communication channels such as document sharing or intranets can also be used to easily disseminate and share information among family members and board members. These systems can also be leveraged to capture anonymous feedback through surveys that can inform any major decision a family firm might face. Today’s secure communication portals make it easy for family boards or family members to share sensitive information securely while maintaining their privacy.
“The family-owned Ford Motor Company credits
its intranet as the foundation of it becoming a
digital business. Originally developed in 1996 as
a personal online environment for employees,
Ford’s modern communications hub has
become an essential part of the company’s
enterprise-wide strategy to consolidate and
enhance its information sharing among
stakeholders.”
3- Promoting Accountability
Family firms typically clarify the roles of their actors in lockstep with the expansion of the business and the growth of the family. The creation of individual boards and committees helps promote effective information sharing and gives a voice to everyone in the decision-making process.
For family firms that typically operate in a complex ecosystem of business owners, stakeholders, bankers, attorneys and managers, digital tracking tools provide an affordable, real-time solution for collaboration.
“Walmart, the world’s largest family business,
took accountability a step further when they
began to track fresh food by joining a growing
list of businesses to adopt Hyperledger, an
open-source project created to advance
blockchain technologies.[1]“
Whether it’s a global conglomerate or regional SME, there is today a myriad of digital tools that help family business members maintain accountability and actively participate in key decisions.
4- Increasing Participation
In many family-run businesses, the process of making a decision is often as important as the decision itself. A decision-making methodology is essential for long-term success and stakeholder harmony. Balancing objectivity with speed in decision-making can be challenging, but especially so when navigating uncertainty.
Automation tools and technology not only elevate the efficiency of performing repetitive complex tasks but can also be used to ensure a family firm’s shareholders are always equipped with the most up-to-date data to understand and actively participate in key decision-making.
For family businesses that must liaise with a plurality of active and non-active family members, there are powerful digital automation tools that update, record and report key metrics. From populating tax forms in finance to streamlining workflows in HR and customer service, automated processes can save family firms a significant amount of data collection time, boost analytical capabilities and be deployed to inform good decision-making.
