Thoughts from the Harvard Business Review family business handbook: Thai family business success formula For sustainable business succession (final part)

After analyzing Thoughts on creating a sustainable family business From the Family Business Handbook of the Harvard Business Review (HBR), if compared with “Formula for success in Thai family businesses for the inheritance of sustainability of the family business” from the book I wrote I have proposed the 6C formula for success, which consists of: (For details, see pages 76-93 of the book) In summary,

C No. 1 Creating the structure of a family business (Corporate Structure) Good structure whether it is a holding company form Grouping of companies Structure of shareholding It's important. A good structure is more than half the battle.

          C 2 Benefits or compensation (Compensation) Whether it is the allocation of shares and determining fair compensation Which fairness does not mean equal.

          C 3 Communication (Communication) That will reduce conflicts well. Communication is not about giving orders but requires the art of listening. Communicate regularly and communicate with sincerity and speak piya words Including informing and communicating about preparations for the transfer of power from generation to generation.

          C 4: Dispute Resolution (Conflict Resolution) It is not a matter of using legal measures to resolve disputes that are considered expensive and will damage everyone. But you should use a lot of communication. Whether it is negotiation, mediation, compromise by family members or by outsiders. If family members are generous and kind according to the 5th C (Care and Compassion), this dispute will be reduced.

          The fifth C is generosity and kindness. (Care and compassion) As I've said all along, which is more important than the 4 C's, the 4 C's are the use of the legal process in creating rules. Various regulations, but the 5th C is the most important because it will help reduce conflict and create unity in the family. Including in the present, running a family business to achieve ESG goals will be the survival of the current family business. The 5th C is therefore the most important.

          C 6th change (Change) that must adapt when disruption occurs by changing to be up to date, especially in the era called VUCA that is caused by volatility (Volatility), uncertainty (Uncertainty), complexity (Complexity) and ambiguity (Ambiguity). Whether it's Digital Transformation, Net zero Carbon, COVID-19, political conflicts, geopolitics, family businesses will be directly affected and must plan to adapt and change the business. family to cope with such situations

If we consider the concept of HBR's manual that gives family business owners the authority to design (Design), the form of family business structure will be consistent with C 1, where the owner can determine the criteria for setting up the company's structure and make decisions. (Decide) in determining ownership Including communication (Inform), transfer (Transfer) along with creating value (Value) for the family business.

This part of the family business owner's power, if applied to the 6C formula, is to structure the business format. ownership arrangement and communication It is consistent with the 3C principles, whether it be legal structure (Corporate Structure), allocation of benefits. (Compensation) Communication (Communication)

Bringing the said first 3C formula to drive forward the goals As the business owner who has the power to design and make decisions, every family business owner must have an understanding of legal issues. Management Including preparing relevant legal documents, such as regulations of the holding company and other companies. Shareholder contracts, wills and family constitutions

The decision to take such action requires the participation of family members. and having a professional who come to help support operations, including setting up a transition for successors (Succession Plan) or transferring the business in accordance with the values ​​of each family's business at the same time

Considering the challenges of family business Whether it is the matter of disruption that occurs from people within the family, the process of family members coming to work. and creating wealth in family businesses and disputes or conflicts in family businesses, which is normal for every business to have conflicts. The important thing is how family members can manage conflicts from the HBR manual mentioned above.

I see that if the Thai family business success formula, the 4th and 5th Cs, are considered together, it will be found that the Conflict Resolution process is an important factor. The process of eliminating conflict is important. Let's communicate, negotiate, mediate, compromise by family members or outsiders who are trusted by family members. Giving confidence between each other By creating legal rules such as regulations and family constitution. And showing kindness to each other (Care and Compassion) is an important matter that can reduce conflict.

As for C, the 6th number: Change: Change that causes disruption causes the family business to change. which if considered Whether it is change, disruption, red flags that occur in family businesses, the HBR manual recommends that family businesses must change and adapt. Every family must change the way they think and act immediately.

I see that this manual from HBR does not emphasize the importance of the fifth C formula for success, which is Care and Compassion for family businesses as a tool for resolving conflicts by using the mechanism of kindness and compassion to help resolve conflicts. And there may not be too much importance on disruptions that are VUCA, such as Digital Disruption, Covid 5 and Geopolitics, and a new important issue is ESG.

In this regard, changes in ESG are going to have a huge impact on both large businesses and family businesses, especially the problems of the E (environment) and S (society) that will affect or disrupt the business operations of the family business. Thai family is inevitable

There is data from PWC's survey of Thai family businesses in 2565. It was found that 75 percent of Thai family businesses show social responsibility, but most of them involve doing charity, donating or providing assistance to the local community. On the topic of CSR, Thai family businesses' understanding of ESG is still lacking.

Paying attention to the matter of C5 being caring and kind to the environment and all stakeholders (Stake Holders) will truly achieve ESG goals. The fact that family business owners pay little attention to ESG is because they may not understand and think that if they do it, it will bring little return. There are only expenses. But I believe that paying attention and running a family business based on ESG principles, I believe, will make the family business survive sustainably. (Sustainability)

Therefore, I believe that my 6C formula from the Thai Family Business Success Formula book It can be applied well to the ideas from HBR's Family Business Handbook. It should be reinforced with C5 “Care and compassion” and C6, changing the way of thinking and doing immediately in order to lead the family business to sustainability. The family members do not need to be afraid of this matter. Family businesses survive for only 3 generations.

I would like permission to advertise an international family business seminar. In the country for the first time it will be held by Stock Exchange of Thailand Between 3-4 August 2566 on the topic called The 1st SET International Conference on Family Business: Family Business in the Changing World by world-class speakers and owners of large family businesses in Thailand. Those interested, please follow.