As a family business expert dealing with growth and profitability issues, I receive many requests for interviews from writers and editors preparing family business articles for newspapers and magazines. They generally expect me to blame usual line-up of culprits that prevent growth and profitability, issues such as: cash flow; insufficient capitalization; product quality and reliability; customer service; management infrastructure; communication; management alignment; employee empowerment; planning - just to name a few!

Having worked closely for more than three decades with family businesses, in my opinion most critical impediment to successfully growing any kind of business is responsibility diffusion. And larger business grows - larger problem becomes!

With family businesses, responsibility diffusion can occur because of overlap of roles between family members who work in business and those who do not. Family dynamics that can influence responsibility diffusion include:

Family dynamics and responsibility diffusion

Fear of causing hurt feelings

Sibling relationships defined by birth order, gender and education

Lack of knowledge or understanding about some segments of business

Lack of formalized communications, meetings and infrastructure

Fear of being disrespectful

Lack of training in working together as adults thereby creating a tendency to revert to parent and child roles in making decisions

Perceived lack of economic parity gained from business by family members

Examples of influence of responsibility diffusion abound in almost every element of a business. In recent years, many business experts have focused attention on level of "service" a business provides to both its internal and external customers. "Service" assessments of a business can provide an interesting platform to discuss responsibility diffusion because discussions can cascade into so many crucial elements of a business. Some elements of "service" include customer service, customer care, customer relations, sales, and business development.

"Poor service" can be measured by many factors such as a reductions in new customer acquisitions, reduced repeat business from current customers, demands from customers to reduce price because of service related issues and most generally, a high level of frustration by customer constituency.

In operational assessments we conduct, we find that there is almost always a direct correlation between service issues, other problems associated with responsibility diffusion and lack of a system for ensuring accountability throughout business.

Family Business Expert suggests... First, build a strategic plan for family

One of most difficult problems confronting family businesses is building a consensus about how business should be operated, now and into future. In a non family business, answer is rather simple and obvious: Develop and implement a strategic plan.

In a family business, process is dramatically more complicated and filled with situations that can devastate both family and business.

A Strategic Plan for Family Many family business owners do not understand that before a family business can develop a successful strategic plan for business, there must first be a strategic plan for family. For example, ensuring senior generation's financial security, independent of business, generally is a fundamental requirement of family's strategic plan. Meeting this goal then becomes a critical objective for strategic plan of business.

In other words, economic engine (the business) is being asked to reach a specific financial goal of family, as opposed to reaching a business objective such as ROI, or other ratios or measures of profitability.

First Step Toward Consensus One of first steps in developing a successful process for building consensus is to clearly understand different perspectives "between" generations (inter-generational issues) and "among" generations (intra-generational issues). Inter-generational issues are generally easier to determine, and they are usually related to life stages. For example:

Parent Offspring Conservative Aggressive Risk adverse Risk taking Security conscious Development conscious Strategy: status quo Strategy: change/growth Controlling Wanting control Managing Past Managing Future

Intra-generational issues Intra-generational issues are less likely to be identified and discussed. As a result, these issues tend to "fester" over long periods of time, and they frequently present themselves in an explosive and destructive manner. Some of these Intra-generational issues include differences in compensation, perks, status, individual personal values and public recognition factors (visibility). Other problem areas are educational differences, varying levels of personal and professional sophistication, differing opinions of "value contribution," and, most importantly, spouse issues.