Business Succession Planning: Strategic Planning
July 11, 2019 | BY Shulem Rosenbaum
In 2014, Brian Acton and his partner, Jan Koum, sold the popular messaging app WhatsApp to Facebook for approximately $19 billion in cash and stock. However, in 2017, Acton left WhatsApp and thereby left $850 million in unvested options on the table. He paid this price over a dispute he had with Facebook executives regarding users’ privacy. While Facebook understood the need to monetize WhatsApp’s data, its founders did not believe that it was in line with their vision and core values.
Studies show that children are excited about inheriting the family business and taking it to the next level. 75% of the next generation have big plans and energetic ideas on how to grow the family business. However, a founder may often be at odds with the next generation regarding the strategy and goals of the company. Accordingly, to ensure continuity, a business should implement a strategic plan with a company mission and underlying core values to serve as the bedrock of the company for future generations to rely upon. A strategic plan helps determine the long-term goals of a company, its core value, mission, and objectives. Such a plan can safeguard the continuity of a company and maintain the principles and tenets of the original founder.
Core values are the underlying beliefs (“credo”) that govern an entity’s operations and relationships with other parties. They represent the fundamental beliefs of what is important to the company, publicize who the company is and what it stands for, and communicate the personal values and beliefs of the founder(s).
The core values are more than just a marketing concept. Instead, it should feed into the vision, purpose, and mission of the company and set the stage for all decisions that will be made as the company grows. Essentially, the core values should be treated as the foundation of the company and used to assist the company in developing and executing its goals and strategies.
For example, Whole Foods Market’s credo states: “We Sell the Highest Quality Natural and Organic Foods.” This will ensure that, although Amazon purchased the grocery chain, Whole Foods will remain a company that focuses on quality and product differentiation rather than cost leadership.
The mission statement of a company provides an expression of the purpose and range of the entity’s activities, including the overall goals and operational scope and general guidelines for future management actions. A mission statement represents a condensed version of the company’s strategic plan and serves to differentiate the company from its competitors. Effectively, the mission statement ought to provide direction to the company’s executives when deciding on the products or services to offer. Nevertheless, the mission statement should be adjusted to reflect changing business environments and management philosophies.
William Rosenberg opened the first Dunkin’ Donuts store in 1950. Today, there are more than 10,000 Dunkin’ Donuts franchises in 32 countries around the world. In order to ensure uniformity and continuity, Mr. Rosenberg created the following mission statement: “Make and serve the freshest, most delicious coffee and donuts quickly and courteously in modern, well-merchandised stores.” Although Dunkin’ – as it re-branded itself – sells beverages and pastries beyond coffee and donuts, the founder’s mission of providing delicious and fresh baked goods is shared by local, small business franchisees around the world.
A strategic plan along with the core values and mission statement assists company leaders in following the objectives of the company to achieve the desired measurable results, including profitability, growth, market share, innovation, etc. while remaining true to the company’s philosophy and its founder’s vision.