The recent column by Albert Jan Thomassen, "When owners pilot the plane" does a good job of discussing the problems that entrepreneurs such as Stelios Haji-Ioannou, founder of EasyJet, face in working with a management team and a board of directors.
But there are deeper issues beyond differences in their perceptions of risk management and growth rate that business families must address with their owners' group, management teams and boards.
Business families, especially those headed by founders and entrepreneurs, need to agree on a sound flight plan before boarding their plane. I would argue that they should also think carefully about their vision, roles, processes and governance before attempting to fly it.
This parallel planning is fundamental as it reduces the chances of an EasyJet-type situation with too many pilots in the cockpit trying to fly the plane at the same time.
Sound preparation through planning, careful monitoring and adjusting the course based on weather conditions is essential to successful flying. Family businesses are very similar; in fact, I would argue that a business family that can correctly answer the five questions below can also make their family business fly successfully:
1) What is our destination (vision)?
2) How do we develop our flight plan (process)?
3) Who is qualified to fly the plane (roles)?
4) How do we know we are on course (governance)?
5) Who can change the flight plan in mid- air?
If the family and management have a clear destination (vision), they will know how much fuel they will need, how many pilots they require, how many passengers they can carry and the type of flight plan they need to prepare.
If the pilots develop a flight plan (process) based on where the passengers (owners) want to go, considering the weather conditions (environment) and the air controllers' instructions (board) then there will be a shared commitment to everyone staying on the plane.
There is little doubt about who should fly the plane (roles) – a professional pilot with sufficient flight hours, full certification and an agreed flight plan. Think about whether unqualified members of your own family feel they should take the controls. Staying the course also requires instruments (family council) and air controllers (board of directors) as it is these family and business governance systems that ensure the plane is not only flying to the right destination but also that proper maintenance (investment) is completed to keep the plane airworthy.
The last question is seldom asked on planes but frequently leads to family business conflict: Who can change the flight plan in mid-air? This is the question that EasyJet is struggling with – is it the current management team or the former founder? It is not an easy question to answer because founders and large shareholders do have a deep commitment to the business and often long experience.
But think about this: who would you trust to land your plane in the Hudson river when the engines have failed – a family member who has not flown for years or Chesley B Sullenberger?