Family Business Competitive Advantages Revealed In Tough Times
By Craig E. Aronoff, Ph.D.
In the bubbling 1990s, in the new-instant-global economy, family business sometimes seemed out-of-date, slow, even boring. Family business certainly was not “the new, new thing.” It wasn’t the place where you would “first, break all the rules.” Family businesses, unlike Bill Gates, didn’t “move at the speed of thought.” The common wisdom of the new economy seemed to leave family business behind.
Then the bubble burst. The Internet, rather than offering a “new economy,” proved to be only a tool to be used by businesses in pursuing economic goals not unlike those that businesses had always pursued. Economic cycles, it turns out, have not been repealed. Then a teetering economy was pushed over recession’s edge, by jets crashing into buildings.
In the weeks following September 11th’s tragedies, we learned many lessons about politics, religion, defense and especially economics. We instantly gained a much deeper understanding of risk. The plummeting stock market reflected economic value and potential destroyed, and helped us to put real wealth in better perspective.
Suddenly security and predictability became top priorities, even for those who had previously given such matters little thought. Strong balance sheets became more important than top lines or even bottom lines.
Companies relying on global, just-in-time, supply chain management were rudely disrupted by planes, trains, trucks and ships slowed or stopped by security concerns. Demand for warehouse space increased as stockpiles and inventories of raw materials and parts grew in response to risks and interruptions.
Companies are now more reluctant to rely on distant suppliers, even if they are less expensive. The value of long-term relationships with people and companies of known reliability has markedly increased given the circumstances of recent weeks.
As announced lay-offs pile up, employers who cushion workers against occasional downturns rather than sacrificing them to Wall Street’s profit expectations, earn strong employee loyalty.
In times rife with physical and economic danger, privately owned, conservatively financed, relationship-focused, service and quality oriented businesses will regain competitive advantage. Long-term business success and survival depends on managing risks and maintaining structures to support performance in good times and bad.
We’ve all been dramatically reminded that we can not and do not live for ourselves alone---that we are part of something that is greater than all of us. The best family businesses exemplify that reality under all economic circumstances. Their true strength is revealed in times like these.
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