What is the difference between ownership and management?
These differences are some of the most important aspects of ownership that next-gen leaders need to learn. While acknowledging there will be some overlap, the differences between the two roles are critical to understand in order to help the next generation of owners prepare for their new role. Let’s discuss two of the critical differences.
Oftentimes, first-generation owners of a family business must wear both hats. As the company grows, they are able to bring in managers to allow the owners to work more on the business rather than in the business. This is where incredible growth happens.
As second, third, and so on generations come into the business, they are most often introduced into the business in various employee positions including management roles. Therefore, helping them understand the differences in managing a business versus owning a business is critical to their successful transition.
One of the most important differences between owners and managers is how you view the business.
For managers of family-owned businesses, it is critical that they have a good view of the ground level. Their main role is execution and the allocation and maneuvering of resources. They are responsible for the execution of the vision. For owners of a family-owned business, their view needs to be more often at the 20,000-foot level. They are responsible for building the vision of the business. If you have owners who spend too much time at ground level, they can get too caught up “in the weeds” and lose the ability to see the bigger picture. Conversely, if a manager spends too much time at 20,000 feet, they can miss issues that need to be addressed in execution at the ground level.
From this higher-level view for an owner, this is where the vision for the organization is developed. It is important for the owner to develop a vision that gives the company direction. They see where they are on the map, and then strategically pick a direction to drive the organization. From here, the managers drive the metaphorical car–execution.
Without an owner’s vision and direction, the manager simply drives the car around wasting resources while getting essentially nowhere. Without the managers driving the car, the owner’s vision is simply a spot on a map not to be reached.
Another important distinction is culture.
Where does culture start? Who is responsible for culture? How is culture developed and maintained?
The quick and easy answer is everyone is responsible for culture. Everyone is responsible for helping to develop and maintain the culture. However, where culture starts is with the owner.
As an owner, it is your responsibility to establish what kind of culture you want for your business. It is your responsibility as an owner to model the kinds of behavior that build the kind of culture that will lead to success in your organization. You then, as the owner, teach your management team and then in turn, managers teach and model to your employees.
There are a fair number of differences in the role of an owner versus a manager, vision versus execution and culture are two of the larger differentiators between the two roles. Helping the next generation of ownership in family-owned businesses understand these differences and how to adapt to the changes will go a long way in setting them up for a successful transition.