Should we hire three more sales reps? Would we be better off exiting the western market? Do we diversify into overseas markets? Should we add 50% more capacity? Will volume and total profits increase if we lower our price? Is dropping the old product line in the best interest of the company?

Every business faces strategic issues such as the ones listed above. They involve critical decisions that affect the course and direction of a company. In most cases, the path to resolution of these dilemmas is not clear to all parties. While these issues are at the heart of the most fundamental and heated debates in any company, in a family business they can be complicated by long-standing tradition or multigenerational perspectives.

These issues may be charged with emotion and carry different personal consequences for those on either side of the debate. Too often, those involved jump to their final position before they have taken the time to analyze the underlying facts and assumptions. When challenged, they can become defensive, hardening their position and grabbing at any evidence that might support their conclusion. Breaking the cycle becomes difficult as ego gets in the way. It's not unusual for relatives to seek a way of saving face before they can feel comfortable enough to back down from their positions to reach a resolution.

Clash of Perspectives

Recently, the owners of a family company met to determine how much of their management resources to invest in a long-standing but lagging market segment. Two brothers — the president and vice president — had run the business for more than three decades. Over the past ten years several of their children had entered the business and a few had worked their way into significant management positions.

Some of these younger managers wanted to exit the poorly performing market. They figured they had plenty of opportunity to grow other newer and more exciting parts of the business. But the president, with more than thirty years of experience, was unwilling to yield on the point. The younger generation couldn't see the wisdom of trying to grow a slow, traditional market as the president advocated when so many exciting high-growth opportunities were being starved for resources. The discussion became heated and devolved into a clash between generations.

"This business has changed — you're out of touch with today's markets," the younger team members insisted.

"I was seeing ups and downs in this industry before you were even born," the vice president shot back. As tempers flared, it seemed the parties were going to use power rather than consensus to solve their dispute.

I interrupted the arguing and asked each side to stop giving opinions and trying to persuade the other to take its advice on what should be done. Instead, I requested that they list the facts and assumptions that led them to their conclusions.

The younger generation went first. Traditional markets were growing slowly. In these markets, the family business faced large, entrenched competitors that had already proved they were willing to try to muscle the company out of some locations. The newer markets favored by the young relatives had experienced high growth over the five to eight years that these family members had been involved in the business. The young people assumed the strong growth would continue, although they admitted the possibility that cyclical downturns could dampen growth for a year or so. They felt the traditional segment required extensive resources and that finances constrained the total resources available to apply to all markets.

The two brothers in the older generation agreed with all these points, but added others that the young people had not considered. Trend analysis showed that there were fewer cyclical swings in the traditional markets than in the newer markets. Even in downturns, a company with significant share in the traditional markets would still have a substantial base business. The president observed that the newer markets had a history of falling by 50% at least once a decade. He assumed that would happen again in the coming years.

Although the young relatives were not entirely convinced that they should accept these assumptions, they realized the president's position had some merit. The older generation understood that many of the younger managers had not lived through a severe downturn and didn't recognize that the economy could threaten their business's very existence. The arguments subsided, and the family began a productive discussion about what was the right mix of traditional and new markets to ensure the survivability of the business.

While such disagreements can stem from legitimate differences of opinion about the same facts or assumptions, often a conflict arises because business owners have differing perspectives on a situation. One of the best ways to break a cycle of discord and resolve a planning controversy is to focus on the disputing parties' perceptions of the facts and on their assumptions, as this team ultimately did.

Five Steps to Consensus
When entering into strategic planning discussions that are likely to spark a disagreement, try to preempt arguments by getting everyone involved to lay out his or her critical assumptions before proposing solutions.

The following five-step process will head off many conflicts and keep those that do emerge focused on the root cause of the disagreement. The process is driven by a series of templates that engage a team in identifying and building consensus about their facts and assumptions before they begin to offer opinions and work on determining the best strategy to follow. Figures 1 and 2 (below) are two examples of these templates. They can help your team build a common information base about the current and future situation in a market.

To reduce the conflict and get better results:

1. Develop a template for listing the critical information that's needed to resolve the issue.
2. Separate facts from assumptions so each is clearly identified.
3. Ask the various parties involved in the decision to fill in the template with the facts and assumptions that are relevant to the issue.
4. Build consensus for a single set of facts and the most similar set of assumptions.
5. Discuss and resolve the question at issue using the set of facts and assumptions that all parties agree on.

This process of "structured analysis" enables the team to see the issue from a common and objective perspective. To stimulate an objective discussion, create a fixed set of parameters to analyze. Encourage everyone involved in the discussion to arrive at a common vocabulary and a common set of facts as well as assumptions.

When a team tackles topics as open-ended and all-encompassing as strategy formulation, it's critical to have a structured set of questions to help team members reach consensus about the situation they face. The discussion can break down when subjective opinions ("Acme is not a strong competitor in that market") are offered as facts. In many cases, team members present few facts (or none at all) before offering an opinion intended to drive to a conclusion ("It should be clear to anyone who has looked at the widget market that this sort of product will never be a winner"). If one person believes the economy is headed for a downturn while another is convinced that next year will be one of the best ever, there is no way they will ever agree on whether to augment the sales staff.

Writing a mission statement, developing long-term goals and formulating business strategy are often regarded as long and contentious processes. Because there are many issues to resolve, there are many opportunities for differences of opinion that could mushroom into full conflict.

Too often, teams try to accomplish these tasks in lightly structured off-site meetings over the course of a day or a weekend. Key decision-makers are asked to show up bearing what they expect to be relevant information. Questions are presented to the group, discussion ensues, and after a while one participant or another will try to steer the meandering conversation to a conclusion. If the group happens to be of similar mind — or if strong leaders are able to impose their opinions — a decision may be reached quickly. Frequently, however, discussions of this sort fail to lead to clear resolution; instead, the team gets caught up in unresolved conflict.

A sound and efficient strategy process involves taking measures to ensure agreement on relevant facts and assumptions before the parties begin the task of determining a direction. Designing an approach around the five steps suggested here will transform your meeting into a productive session that enables your team to reduce conflicts and make effective decisions.

Putting this simple yet critical information in writing tends to drive the group toward consensus. When this method is used, any disagreement that occurs tends to be over a small fact or assumption, which reduces the likelihood that emotions will surface. This tends to center the discussion and avoid long forays into controversial areas based on one person's perspective or opinion. Proceeding step-by-step to an informed decision effectively reduces conflict among team members and facilitates a sense of working together to optimize the business for the future.

Originally published in The Family Business Conflict Resolution Handbook June 2003 by Family Business Magazine. www.familybusinessmagazine.com.

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© Copyright 2008 Center for Simplified Strategic Planning