Boost Innovation in Family Business by Promoting Autonomy With Strategic Control   

As the pace of change in the world increases, family businesses are often faced with the need to increase innovation to adapt to changes in the market and the family. It might mean coming up with an innovative product, feature, manufacturing process or whole new operating model. It might also require a creative dividend strategy or approach to family communication to serve a fast-growing family and shareholder base. 

Whatever the specific need might be, family enterprises may face greater challenges making it happen than non-family businesses. Research indicates that the ability to innovate can decline across generations, with later generations producing far fewer innovations. Family leaders looking to enhance innovative behaviors, especially among rising generations, can follow this simple advice: promote autonomy by wielding control strategically.  

Autonomy and innovation 

Several years ago, I led a study looking at how people management influenced the behavior and attitudes of teams working on product management and development. One of our main hypotheses was that micromanagement, in the form of strict control, would stifle morale across the board. 

Surprisingly, our research showed that tight controls on how team members carried out their day-to-day activities had a mostly positive impact on their attitudes and behavior. This was only true if they were working on projects where the market and technology were well-understood–such as for teams managing existing products. However, the more important finding was that when teams were working on innovative products where the market and/or technology was more ambiguous, the impact of leader control of day-to-day activities was clearly negative. In short, excessive control stifles innovation. 

That’s because control diminishes autonomy or a sense of independence, long recognized as an essential component of innovative, creative behavior. Individuals need space to explore and experiment, leading to novel ideas and innovative activity.   

However, autonomy can and does decrease across family business generations, driven by increased complexity in both the family and business as well as the need for the business to support a growing number of family members. Tradition and legacy can exacerbate this with a “Don’t rock the boat,” or “This is how our family has always done things” approach. Consequently, next-generation leaders often lack the autonomy required for innovative thinking and may feel pressured to maintain the status quo.   

Wield the right control 

The answer is not to remove all controls or expectations for next-generation members. Instead, family business leaders can use strategic control to increase autonomy with an outcome-focused approach. Most families use a specific kind of control when dealing with the next generation–called “process control” or “behavioral control.” It’s about micromanaging behavior to drive desired outcomes. It’s based on the assumption that because of the experience of prior generations, the “what,” “how,” and “why” are already understood. Thus, there’s one right or best way to do things. Not surprisingly, that rigidity diminishes innovation.    

Instead, aim for “outcome control,” with focus on controlling the result of a process or activity, but leaving the “what,” “how,” and “why” to the individual. Families tend to avoid this approach because it implies that there exist alternative and perhaps even superior ways to accomplish goals than what they already know. This can call into question the legend of the founder, the eminence of current generation leadership, and other long-held, sometimes unspoken beliefs about how things should be done.    

The genius of outcome control is that it provides autonomy for next-generation members to experiment, learn on their own, and apply their unique skills and talents to problems without sacrificing expectations for performance. This increased autonomy will drive higher levels of innovative thinking, activity, and results.   

Quick tips to get it right 

While using outcome control might not be the natural approach for you, the benefits are worth the effort. Here are some things senior-generation leaders can do to drive innovation by shifting from behavior control to outcome control.  

• Accept that change is inevitable.
  Change is the only constant. Even if the family knew the best way to do things at one time, things change, and you’ll have to as well. Take an adaptive, flexible approach.   
• Leave your ego at the door.
  It’s not about what’s best for you but what’s best for the family and its enterprise. Make it about them with statements like, “I trust you,” and “I’m confident in you.” More we, less me.   
• Recognize the diversity of capabilities in the family.
  Everyone has different talents, capabilities, and interests as related to business, family, and broader life. People and organizations are most successful when they are allowed to use/develop these and or apply these to their work in unique ways. Harness the collective and individual abilities in your family. 
• Promote continuous improvement.
  There is always a better way, but you have to be open to finding and embracing it. The mantra should be that of The Six Million Dollar Man, “You can rebuild it “better, faster, stronger.”   

Innovation is critical no matter what business you’re in. Family enterprise leaders can promote maximum innovation in next generations by wielding control with care. When they focus on outcomes rather than processes, they’ll enable the autonomy and creativity that goes with it.