Business leaders already were concerned about uncertainty, and Donald Trump’s re-election has heightened unpredictability in key areas including industrial policy, tariffs, central banking, regulation, geopolitics, and anything Elon Musk gets involved with.
This sort of profound uncertainty and change are all-too familiar to businesses operating in frontier markets. In a book out later this month called The Enduring Enterprise, Devin DeCiantis and Ivan Lansberg, argue that family-operated businesses in such economies have a lot to teach us about leadership in our own
“Many of these companies have been around for multiple generations and survived all sorts of calamities, wars, political upheaval, and you name it,” says Lansberg, often far from the stable regulatory environments and capital markets US companies are accustomed to.
DeCiantis and Lansberg point to a set of “big five” factors that are making even advanced economies more unstable and unpredictable: disruptive technologies, demographic shifts, social tensions and political polarization, market volatility and deregulation, and climate crises. Here are excerpts from our conversation with them about how leaders should approach the current moment, edited for length and clarity:
What makes family enterprises uniquely equipped to handle that kind of uncertainty that you’re looking at?
DeCiantis: As the world seems to be growing increasingly complex and uncertain—irrespective of where we operate, whether it’s in advanced economies or in more emerging and frontier contexts—we can no longer really rely on the institutions and the infrastructures that have sustained stability and growth for nearly a century in these environments. Organizations are forced in the absence of these stabilizers to build stability into their organizations directly. Family companies who operate on the frontiers of capital have been there and done that.
Lansberg: For example, family companies as a group tend to be more prudent. One of the strategies that we hone in on is creating redundancy and having multiple elements in your design so that if something fails, you’ve got a backup. We argue that companies in advanced economies have become very complacent about risk management because they’re operating within a very mature institutional setting. The banking system works and the legal system mostly works, so those institutions then take on the role of creating stability, whereas for family companies, they have to construct it from within.
DeCiantis: Families are also innately good at balancing both growth and resilience because they’re intergenerational in their planning horizons and can leverage their institutional memory much more easily than businesses where leadership transitions take place every four or five years. They’re not just chasing the upside, they’re constantly protecting against the downside because their mission is not to make hay while the sun is shining and then move on if those bets don’t pay off. The aspiration is to build and sustain an ecosystem of activity and wealth creation and community development that will carry on for decades.
How can leaders and managers in advanced economies apply these lessons?
DeCiantis: We all have a memory of the first couple of days and weeks of the Covid pandemic, when everything shut down and leaders were still trying to figure this out. And in those moments, recognizing that change was inevitable and that we need to maintain contact and connection allowed successful companies to plug and play into small and agile teams that leveraged modularity. That becomes a very powerful source of agility and adaptability in any organization, whether you’re doing it at the company level, directly into your products, or into your teams. Ideally, people can unplug and plug into teams seamlessly and redeploy themselves to solve problems without having to check with authorities within the organization.
Lansberg: Recognize that middle managers are often the ones who are in control of innovation within the company because they’re much closer to the products and the manufacturing processes that are in place. For example, there is a company in Mexico that manufactures chassis for cars, and when Covid hit, the line engineers were the ones who began to shift their attention to building respirators for hospitals that were in very short supply in their communities. That then kicks in relationships with the local hospitals and the local community, which creates trust and allows these families to sustain the kind of resilience that these companies need.
It seems that frontline workers are often the first members of organizations to feel the effects of the “big five” sources of instability. Are there lessons leaders can learn from them, similar to the wisdom from businesses operating in frontier conditions?
DeCiantis: The folks on the front lines of an organization have more in common with the company’s customers than their executives or their board members. So it behooves organizations to at least try to draw some insight from the diverse perspectives that those individuals within the organization often hold.
Lansberg: That’s particularly critical in times of upheaval. For example, one of the cases we feature in the book is the Carvajal company. A couple of years ago, there was all sorts of social trouble in Cali, Colombia, where they’re based. Pedro Carvajal, who’s the CEO of the company, went way out of his way to have conversations with their frontline employees and with the community that they serve in order to diagnose what the issues were that were provoking this upheaval. They then used the company’s goodwill to connect with other family companies in the region to create a much more strategized and orchestrated response to the condition they found themselves in. For family companies, the contact between the community and leadership is much closer because their names are attached to the businesses. It isn’t just the company’s reputation, it’s the family’s reputation.
The Enduring Enterprise: How Family Businesses Thrive in Turbulent Conditions is out Nov. 26. Preorder it on Amazon or Bookshop.