Lessons learned from 30 business families around the world, with the 6C formula for success and (not) success in Thai family businesses (final part)
This article will be a summary of the past 9 articles and will be the final chapter of this series. I will bring together the lessons learned from 30 families from around the world to consider together how the successful and (un)successful formulas can be applied and used as guidelines for families in Thailand. Which families will be able to apply the 6C formula and be successful, or which will fail when the 6C formula is missing?
Recipe 6C is the main framework used to analyze and extract lessons from 30 world-class family businesses, including:
1.Corporate Structure (Company Structure and Shareholding) – Appropriate Company Structure and Shareholding A good structure is half the battle.
2.Compensation (Compensation/Benefits) – Fair compensation and benefits with rules.
3.Communication (Communication) – Communication between family members.
4.Conflict Resolution (Dispute Resolution) – There is a clear dispute resolution mechanism.
5.Care & Compassion (Compassion and Kindness) – Compassion and kindness towards family members and stakeholders (Stake Holders)
6. Change (Change) – Adapting and changing to keep up with the world, especially changing business models and management.
This 6C formula, if used properly, can be an important factor affecting the sustainability of family businesses around the world and Thailand.
From the figures above, it can be seen that 18 family companies have good structures (C1) and all 19 companies have changed and adapted quickly (C6) and have continued to grow sustainably until today.
10 of 11 Family Businesses That Failed Because of the 1st C: Structure and the 5th C: Compassion and Kindness
Key observations from the debriefing 30 Families and Things to Do
- Good structure is half the battle. (C1 : Corporate Structure) Corporate Structure
Successful family businesses often have a clear corporate structure and shareholding, such as setting up a holding company or having good legal documents, a family constitution, a Family Council, including taking the company public, expanding the business through M&A, M&P.
Things to do : Create appropriate legal structures and documents and manage the business with good governance.
- Benefits must be fair. (C2 : Compensation)
Transparent and fair distribution of benefits reduces conflicts within the family. Having clear legal documents regarding compensation, dividends and benefits in the company regulations or family constitution.
Things to do : Set the rules for family members' compensation benefits with legal documents.
- Communication (C3 : Communication)
Good communication and compassion among family members helps reduce conflict and foster unity. Regular family meetings, with a family constitution as an important tool, as well as legal documents that must be discussed.
Things to do : Arrange for frequent discussions, including establishing a family constitution as a guideline or having a family council.
- Dispute resolution mechanisms must be clear. (C4 : Conflict Resolution)
Conflicts are common, so there should be a clear and fair dispute resolution process in place if a conflict arises, such as mediation by a family elder or an independent committee, or an agreement to purchase shares from the other party.
Things to do : Manage conflicts through a mediation process, with legal documents covering these issues in advance.
- Compassion towards family and relatives (C5) Care and Compassion
Successful family businesses often focus on family compassion with all family members and stakeholders such as employees, business partners, society, and the environment by using ESG (Environment, Social, Governance) principles, which will lead to sustainability, including the use of the four divine states of mind.
Things to do : Rules on these matters are set in the family constitution and these matters are communicated to family members.
- Adapting to change (C6 : Change)
Sustainable businesses must be able to cope with changes from both external (economic, technological, social) and internal (succession, new leadership). Change must happen quickly and be done seriously, not just talked about or thought about.
Things to do : Create a process for dealing with change, make decisions quickly, and prepare for the next generation of the family business early on by communicating with the family, relying on outside professionals or consultants to help drive change, and considering capable sons-in-law or daughters-in-law to help inherit the family business. Family members should have the opportunity to learn and practice together, not just not interfering at all.
I thank you Dr. Kritlert Sampantharak The book “Business Family: Lessons from 30 Business Families Behind the Scenes of World-Class Family Businesses” that I have used to apply to the 6C formula for success in Thai family businesses in 10 episodes, and I believe that it will be of some use to Thai family businesses.
#Thai family business may it prosper#
