When considering the future of your business, what is the planning time horizon you typically use? Is it 3-5 years, a decade? What if you had to consider the future of your business 50 or even 100 years into the future?
Would the goals and strategies considered and employed be different if the planning horizon were a century rather than a matter of months?
Think this is a crazy idea? Who cares what my business looks like in 100 years?! One often-overlooked segment of business owners and family business owners is typically interest in the very long-run outlook for their business.
They may not look years into the future but generations into the future. Though some businesses may not be interested in family involvement and ownership they still may have a keen interest in the legacy they built and wishing that to continue beyond their own lifetime. As with Leon Danco’s first commandment of family business, “let your managers know that this business will continue forever”.
One such executive that took this to heart was Yvon Chouinard, founder and owner of Patagonia, a large private outdoor clothing company. In his book, ‘Let My People Go Surfing’, Chouinard discusses his firm’s “100 year plan”. The idea came to him as a result of his company’s first major crisis. In the early 1990s, Chouinard found his business facing a serious financial crisis. Growth was out of control, excess and obsolete inventory forced the firm into drastic survival mode.
After restructuring and laying off 25% of their workforce, Chouinard vowed to never find himself in that situation again. Growth for growth’s sake led Patagonia to the brink of ruin. He related this to his experience as a pioneering rock climber and alpinist – never exceed your limits.
To get his business back on a prosperous and sustainable track, Chouinard had to rethink why he was in business and what kind of company Patagonia should be.
This included examining the underlying values and culture that had made Patagonia successful in the past. This soul searching, which included extensive internal discussions, led to a renewed philosophy and mission for Patagonia. This renewed foundation would not give the answers to Patagonia’s future but provide the basis for asking the right questions to keep the business on a path toward a successful and sustainable future.
Patagonia’s philosophy and mission lead to new priorities and practices, such as the following:
- Focusing on growth that was sustainable over the long term. Avoiding growth and profit for their own sake.
- Investing in significant training and development of employees in Patagonia’s philosophy and mission.
- Maintaining the values and culture of the business.
- Maximizing attention to product quality through innovative, durable, and multifunctional products.
- Adding a Board of Directors to add structure and oversight of management.
- Streamlining the organization to improve efficiencies and adaptability by reducing management layers, centralizing control of sales channels, etc.
The hundred-year plan embeds the necessity of succession planning. It requires thinking across generations for the future success of your business.
If you could look out a hundred years from now, what would you be proud to see in your business?
About John Neff
John Neff is a partner with Family Enterprise Consulting whose purpose is to assist family businesses in planning, development, and transition. Previously he worked for 20 years in his family’s 3rd generation packaging manufacturing business, mainly in a financial capacity, and remains a board member. John is familiar with strategy and developmental tools such as Compression Planning, Appreciative Inquiry, and Quick Response Manufacturing. He is also working to complete a Ph.D. in Management from Case Western Reserve University.
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