Do you know about the Family Three Circle Model Nightmare? You may have seen something similar to it before. Various versions of this model have been bandied around the Family Business circuit for a long time.
It has been used to explain any big interactions within the Family Business. Its “Big Picture Stuff” which captures the relationship between:
- The Family
- The Ownership
- The Business
Family Business 3 Circle Model
Of course, the big picture is important – the throw away here is that the Circles interact and cause pressure on each other …. and well they do!
The Three Circles though show seven, yes 7, sectors of pressure and interaction between:
- The Family
- The Owner
- The Business (non-family Management & Employees)
- The Family Owners (Shareholders who do not work in the Business)
- The Owner Managers who are not Family
- The Family in the Business with no Ownership responsibilities
- The Family in Management with Ownership responsibilities
7 Sector Model for Family Business Interactions
Now, isn’t that complex?!
As you can imagine, on the scale of A to Z, this can be an X or a Y as a cause of conflict in the family and the business. And an M or N on the scale regarding decision making and a H or G regarding the running of the business.
It’s a complex nightmare some family businesses don’t ever wake up from. The some that do wake up, often don’t do it in time, so they don’t survive.
That’s the stark reality. Not recognising the problem and or not doing anything about it in time.
Here’s An Example
Take the story of a large family-owned chain store, for example. The sales proposition is great, high end, city centre location, arty crafty background with major profit margins.
So, what’s the problem? Well, if the owners talk to the stakeholders BEFORE making major decisions about the future (which effect management, staff and family members) a lot of potential grief can be averted. But, in this case study, let’s say they didn’t.
The decision not to talk brings enormous profit to Circle 2 (the Owners) for a short time. Then after the first few weeks, disaster approaches as the Company fails to respond to the decisions made. Those that suffer are the extended family of the owner, employees (and their family members) – as well as staff morale, public perceptions, and profits!
Here, Circle 2 does not talk to to Circles 1 or 3 before making decisions (which effected them all). This is because Circle 1 perceives the each of the Circles as separate, bouncing ineffectually off each other.
Family Business 3 Circles Model Nightmare
But as we’ve seen earlier, this is NOT the case in reality. And this perception doesn’t make for harmony, doesn’t make for a future, and doesn’t make for Family or Business sustainability…. It only fuels the nightmare!
The Family Three Circles Model? ……what Model?!
For more information about how we can help your Family Business avoid the Family Three Circles Model Nightmare, Contact Us.