Family-run firms have to evolve business models to stay ahead

While it is important to have love, harmony and shared values in family-run businesses, these factors may not be adequate to help them survive and succeed in a fast-changing and fast-moving world ("Harmony vital to family-run businesses"; Aug 10).

The challenges for some of these businesses are that they may not have the strength, size, scale, scope and speed of operation to ring-fence themselves and expand their markets.

Many of their founders and successors tend to focus more on self and family pride than on progress, on control rather than competitiveness, and on maintaining the status quo more than on sustainability.

As a result, they face challenges in strengthening their business models, raising capital and other needed resources, attracting and retaining talent, and regionalising or globalising their operations.

If they are not well positioned and do not have access to essential resources to support long-term growth, perhaps they need to put aside their pride and ego, and consider other ways forward instead of maintaining and improving a family-run business model.

To sustain their business, they may have to operate as part of a loosely coupled group, cooperative franchise, or other forms of strategic alliance.

They can move cautiously and progressively from operating with a large degree of independence to full interdependence, and by being partially integrated to being fully integrated with strategic partners.

By connecting, collaborating and co-creating solutions with the right partners, they can expand their customer and capital base.

As a group, they are in a better position to list their companies in a credible securities exchange. They can tap the capital market to improve their offerings and spread their wings in overseas markets.

By calibrating and balancing their internal and external focuses, they can enhance their capacity, capability and competitiveness to support continuity and continuous improvement of their businesses.

In a global economy, family-run businesses will have to evolve their business models to stay ahead of the competition.

Patrick Liew Siow Gian (Dr)