How OKR helps family-owned businesses survive

Surviving the transition to the second or third generation is an existential challenge for family-owned businesses. How can owners who have spent their lifetimes building the family business pass the baton of leadership to the next generation? We talked about this topic with Martin Krumbein, a management consultant at onTarget Consulting. He revealed why OKR is a powerful method to ensure long-term success for traditional but forward-thinking family businesses.

Perdoo:

You worked at traditional German family businesses, so-called Mittelstand companies, for a long time. Why did you decide to move to management consulting and what are your focal points?

Martin:

I wanted to be an entrepreneur for a long time. One day, an owner presented the opportunity to become his successor for a consulting firm. Working as an executive at a big German Mittelstand company, I was previously responsible for developing and executing strategies, coaching employees, and selling technology products and services. Therefore, building a strategy execution consulting firm was a perfect fit for me.

Today I help mid-sized, usually family-owned, companies close the gap between strategy and day-to-day execution to have greater economic success. To achieve this, I use a combination of methodology (e.g., OKR), executive coaching, and software.

Perdoo:

39 percent of German family businesses expect a change in their top management within the next five years. According to other studies, less than a third of family businesses survive the transition to a successor generation. What are the most prominent challenges companies face during the transition?

Martin:

The practical knowledge of the older generations regarding strategy and its execution is really fascinating. Some companies I talk to don’t have a strategy written down at all, but they’re strategically well placed. The owners, who have shaped their companies for 30 to 40 years, gathered a vast amount of expertise they use for their strategic decision-making. During the business succession, this expertise often gets lost.

Besides that, a change in leadership style that often comes with the generational transition is a big challenge. While owners tend to count on an authoritarian leadership style and clear, hierarchical structures, the next generation often wants to establish a more team-oriented style.

Perdoo:

How can OKR help family businesses structure and conserve their experience-based knowledge?

Martin:

The structure of the OKR framework helps decentralize knowledge, and it combines a top-down and a bottom-up approach. The previous owner co-designs the future strategic guidelines by using his expertise when setting the Ultimate OKR as well as the Company OKRs. Employees then have the opportunity to refer to their knowledge and practical experience when setting their Group OKRs. This way, both the owner’s ideas and the entire organization’s pool of experience are incorporated.

Perdoo:

Is  OKR only valuable for executives or do employees also benefit from it?

Martin:

I learned that most young people want to leave a mark and make an impact. Unfortunately, many companies lack the required transparency of strategy and goals. OKR promotes transparency and gives employees the opportunity to become actively involved in the company’s development. From a business perspective, a transparent and goal-oriented work environment also helps attract and retain talent.

Perdoo:

So OKR doesn’t only secure the collective experience, but it also motivates especially young employees. Does OKR also help traditional family businesses become more innovative?

Martin:

Many family businesses are technology leaders in their industries and continuously develop technological innovations. I don’t see the greatest need for change in pushing product innovations but in implementing new management processes and refining organizational structures. That’s where OKR comes into play.

Perdoo:

When is the right time for a family business to implement OKR?

Martin:

For companies looking to set strategic impulses, it’s worthwhile considering an implementation of OKR; whether it’s part of a succession plan or to operationalize a multi-annual strategy. Another good starting point for a successful OKR implementation can be the plan to change the leadership culture.

I think that family businesses and OKR are a perfect fit. I like the hands-on mentality of these companies; OKR supports it and aligns actions in the long term.

About Martin Krumbein

Martin knows the challenges of medium-sized companies firsthand. For many years, he worked successfully as a sales executive before becoming a company founder himself. As a consultant, he combines in-depth knowledge with practical approaches and helps companies improve their strategy execution. He knows how to translate the strategy, vision, and values of the company into daily leadership practice. During his projects, Martin focuses on a consistent implementation, clear measurability, and sustainable benefits. Learn more: www.ontarget-consulting.de.