Scott McCulloch is editor of Families in Business.
Family businesses and the disaster recovery industry make unlikely bedfellows, yet when it comes to business continuity planning the parallels are striking. In my past days as a journalist covering the TMT triumvirate – telecoms, media and technology – I often interviewed chief technical officers and IT directors in organisations as diverse as investment banks and manufacturing conglomerates.
I quickly realised their common thread was in contingency planning or, worryingly, their lack of it. When I quizzed boardroom big shots on their plans lest a rack of servers overheated or a disgruntled employee hatched a denial-of-service attack on an order processing system, they trotted out their business continuity speech. "We have safety nets," they would say, regaling me with stories of redundant hardware working in lock step with operational hardware. The big idea was if one crucial machine broke another would take over – instantly.
On other occasions I was escorted through James Bond-like network operations centres staffed with boffins quietly monitoring video walls of data packets flowing across credit card networks. I was awe-struck as I strolled through a sparkling and eerily vacant trading floor deep in the City of London. Though replete with computers, telephones and hundreds of desks bearing employee nameplates, the trading floor itself was bereft of a single soul.
It was a parallel universe of the client's 'live' office – empty but kept running 24/7 by a disaster recovery company on behalf of its deep-pocketed and secretive customer. I'd even been down Margaret Thatcher's war bunker in southwest England. A clandestine financial services company was considering co-locating its precious data there, or so the start-up company planning to run it told me.
Of course the IT vendors selling to the chief technical officers I had interviewed put a different spin on their stories. Theirs were tales of shambolic or indeed no planning by their nameless clients – stories of software upgrades gone horribly wrong or rogue keystrokes blowing away client databases. Insurance statistics made for grim reading too. In the event of a disaster, experts said, one in four companies would go bust in a matter of weeks; one in three would fail within two years.
So what of the parallels? During my interviews, contingency-planning experts inevitably lobbed their favourite sound bite: "If you fail to plan, you plan to fail." This phrase can be applied to any family business and its approach to leadership.
So here are the figures. Issues of succession and governance spark more than half of the boardroom conflicts in family businesses, according to new research. A survey of members of the Institute for Family Business, commissioned by JP Morgan Private Bank, found that related issues were the biggest source of disagreement for 52% of those questioned. Chris Hancock, head of JP Morgan's Family Business Honours programme believes the most important issue faced by a family business is succession. Despite this, more than half the family firms had no no plan in place. Bringing in non-executive directors is a good way to help smooth the succession in the longer term.
Companies such as General Electric under Jack Welch have successfully hedged their bets by installing several possible candidates. The scenario is similar at BP: there are four top-flight executives who will be vying for succession when the day comes, says one executive research consultant. Hancock insists family businesses look for outside help before they are forced to.
The idea is that it's never too late to plan. Well-run family businesses with good processes for decision making outperform their competitors. But the key lies in planning – before not after. So what's it to be? Disaster recovery or business continuity?