Watch Out for Those Leaders
Two ideas seem dominant among managers and entrepreneurs today. Firstly, the harshness of the crisis will spare the fittest companies. Secondly, the current economic context seems to favor family-owned companies, because they are better able to focus on the long term.
These considerations emerge out of the data contained in the fourth edition of the report compiled by the AUB Observatory, along with AIDAF (the Italian association of family-owned companies), which covers all Italian medium and large family-owned companies.
The report raises a further question: given the decisive role that family firms are expected to have in the near future, what are the leadership and governance structures they should have in order to foster more open-minded and dynamic management at the top?
In this sense, the data provided by the Observatory indicate that certain convictions turn out to be false. First of all, it is false that there exists a model of governance that is superior to others. Thus, the criticisms leveled at companies with lean and simple governance models appear to be unfounded . On the contrary, the variety of governance models (single executive without board, individual or collective leadership with family or non-family CEO, and with varying degrees of openness to external members in company boards) mirrors the unceasing quest for the right fit between governance model and corporate strategy.
From the experience of the AUB Observatory, it emerges how simple governance models are more apt and give higher performance in companies with simpler strategies, while more complex models are the right fit for companies having growth ambitions or more fragmented company ownership. For instance, the single-executive model is typical of smaller firms with few shareholders (less than three), while collective leadership is widespread in medium firms controlled by more than 8 people. Thus it is false to say that the choice of a collective model reflects the inability to pick an individual leader. Quite the opposite: the choice of collective leadership seems to mirror the plurality in ownership structure.
Last but not least, it is false that family leaders are always good for their campanies, while conversely the idea according to which the introduction of external leaders is always needed is also erroneous. The superiority of a leader (from inside or outside the family) seems to depend on the type of firm and the concentration of ownership. In particular, external leadership seems to provide a fundamental contribution in companies with several owners, but generates friction when ownership is concentrated, especially if the external leader is alone at the helm.
The actual cultural transition does not lie in betting everything on complex governance models and/or on involving actors external to the family, but rather in persuading Italian entrepreneurial families to undertake more careful analysis of their current and prospective managerial needs.