FAMILY BUSINESS ENTERPRISE

TEAM OF LECTURERS
UNIVERSITAS PELITA HARAPAN
Family Business Enterprise | Universitas Pelita Harapan 2016
 MEETING 2:
FAMILY BUSINESS LIFE CYCLE
Family Business Enterprise | Universitas Pelita Harapan
 TOPICS TO COVER

1. Company Life Cycle influencing family business strategy (Poza

2010, 178-181).

2. Stages in Family Business Development, Managerial Family Cycle

and Professional (Susanto 2008, 37-49).

3. Evolutionary Stage in One Generation (Susanto 2008, 39).

Family Business Enterprise | Universitas Pelita Harapan

1 Company Life Cycle influencing family business strategy

Because of the unique nature of the relationships between family

and business, a family business require strategic planning
concluded in figure below.
Both the systems theory and resource-based perspectives of family
business, as discussed in chapter 1, argue for a better alternative
to the family-first or business-first approach to family business.
They suggest that jointly optimize the family and business
interaction are far superior.

Family Business Enterprise | Universitas Pelita Harapan

1 Company Life Cycle influencing family business strategy

Vision
Regeneration

Start-Up Growth Maturity

Decline

Stages in Business Development

Family Business Enterprise | Universitas Pelita Harapan
1 Company Life Cycle influencing family business strategy

Beyond the exciting and exhausting start-up phase and subsequent

growth phase lies the organizational maturity.
At this stage, the business represents a complex set of stakeholders:
banks, family members who have worked in the firm since high school or
college, they key nonfamily managers, etc.
Leaders may lose the vision of the business which often causes decline.
Add to this could be the CEO/entrepreneurs well-deserved feeling of
satisfaction at having finally achieved success, wealth and influence.

Family Business Enterprise | Universitas Pelita Harapan

1 Company Life Cycle influencing family business strategy
FIRM AXIS INDIVIDUAL AXIS
Regeneration Late adulthood
or decline Maturity Late adulthood transition
Middle adulthood
Growth
Survival Mid-life transition
Start-up FAMILY BUSINESS Settling down
Early adulthood
Introduction Entrepreneurship
Married couple
Growth Owner-managed
Maturity Family without children Family partnership
Decline Family with children Sibling partnership
Launching young adults Cousins collaboration
INDUSTRY AXIS Family consortium
Family without children OWNERSHIP AXIS
Grand-parenting
Retirement

FAMILY AXIS
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1 Company Life Cycle influencing family business strategy

Figure above captures complexity of the individual CEO, industry,

the shareholders, the business and the family when put together.
Because of family life cycles, what one generation of the family
sees as a priority may not be what the next generation perceives as
being fundamental.
Because of the firms life cycle, what the firm needs in order to
remain competitive may be very well not be what shareholders
(ownership lifecyle) had in mind.

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 2 Stages in Family Business Development

Family Circle Mr.Outside Influx

Biz-growth

Extended
No Mr.Outside
Family

Founder No Extended Family Involvement

Focus

Struggle Initial Growth Fast Growing Stabilizer Rejuvenate

Family Business Enterprise | Universitas Pelita Harapan Time

2 Stages in Family Business Development

Stages in family business development start from close-circle

family or immediate founder family.
Next stage, when the company start growing, second generation
and extended family: cousins, nephews/nieces,
grandson/granddaughter play parts and can even become family
dynasty.
Surviving company will then have professional influx, in which
professional helps from outside of the family are needed.

Family Business Enterprise | Universitas Pelita Harapan

2 Stages in Family Business Development
Stable

Prime Aristocracy
Premature Aging
Divorce
Adolescence Early Bureaucracy
Unfulfilled
Entrepreneurship
Go-Go Founder or Family Trap Bureaucracy
Infant
Courtship Infant Mortality Death
Affair

GROWING AGING
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2 Stages in Family Business Development

Adizes (1999) introduces 10 business cycle which can be related to

family business:
1. Infancy
If the founder has an idea but not being communicated, then the idea will
only be in courtship or affair only.
But if the idea is being realized, then the company is entering infancy period.
Infant mortality is the rate in which company cannot survive because of
negative cash flow.

Family Business Enterprise | Universitas Pelita Harapan

2 Stages in Family Business Development

2. Go-go
At this stage, company is now able to overcome negative cash flow.
Siblings and professional are starting to join the company.
However if the founder believe that only family can work in the company,
then founder trap can happen.
This stage can happen for 10-20 years, changing the company from
absolute monarchy/one man show to constitutional monarchy.

Family Business Enterprise | Universitas Pelita Harapan

2 Stages in Family Business Development

3. Adolescence
Family business at this stage is moving from traditional ownership to
professional management with better systems and procedures.
Systems and procedures created should not design carefully to avoid
premature aging divorce, a condition in which company SOP create
unnecessary obstacles to get jobs done, even for the founder.
At this stage, second generation can start enter the business and founder
or other family members need to start thinking to develop entrepreneur
spirit in order to avoid unfulfilled entrepreneur.
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2 Stages in Family Business Development

4-5. Prime and Stable

A stable period in which obstacles are rarely occur.
However, control function is still very important to make sure the company
performance will not decline.

Family Business Enterprise | Universitas Pelita Harapan

2 Stages in Family Business Development

6-10. Aristocracy, Early Bureaucracy, Bureaucracy and Death

Family business can become an aristocracy, a condition in which
bureaucracy limit the company grow.
If bureaucracy keep on increasing, shown by increase of chain of people,
then the company can go deeper into decline phase because of ineffective
workflow and inefficiency in running the family business.
Thus, organizational development Is crucial, could be by hiring competent
professionals.

Family Business Enterprise | Universitas Pelita Harapan

3 Evolutionary Stage in One Generation
I II III

Age of 0-5 years 10-20 years 20-30 years

Business

Age of Parents 25-35 years 40-50 years 55-70years

Age of 0-10 years 15-25 years 30-45 years

Children

Nature of Rapidly growing and Maturing Needing strategic regeneration

Business demanding time and money and reinvestment

Family Business Enterprise | Universitas Pelita Harapan

3 Evolutionary Stage in One Generation
I II III

Character of Small and dynamic Larger and more complex Stagnant

Organization

Owner- Committed to business Desires control and stability Seeks new interests, or it is
Manager success semi retired; next generation
Motivation seeks growth and change

Family Limited to basic need More needs, including comfort Larger needs, including
Financial education security and generosity
Expectation
Family Goals Business success Growth and development of Family harmony and unity
children

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 THANK YOU
FAMILY BUSINESS ENTERPRISE | UNIVERSITAS PELITA HARAPAN 2016

Family Business Enterprise | Universitas Pelita Harapan