Opinion article for Jornal Económico | The Paradox of Tradition and Innovation
Vera d’Orey, Executive Board Member at Base Capital (C.Santos VP | Europeças), wrote an insightful opinion article for Jornal Económico on “Leadership and Succession in Family Businesses – The Paradox of Tradition and Innovation.”
Family businesses play a major role in the Portuguese economy and encompass a significant number of industries of different sizes. These companies are mostly characterized by their long-term vision and resilience and are managed by family values that become the companies’ values. Often they are run by family members whose main motivation is the business’s growth and the ambition to leave something better than they found for future generations.
One of the biggest challenges facing family businesses is succession and the generational clash that can occur. Succession is difficult because it involves the start of management by a new generation, and with it a new leadership, but also a potential culture change. The dichotomy between tradition and the will to do differently and innovate is the great challenge, a dichotomy challenged by the paradox between tradition and innovation. It is the tension that family businesses face between continuity, tradition, and culture and the need to adapt to social and economic change that best describes this paradox.
Tradition dictates that culture and values are passed down from generation to generation and play a key role in building the company’s identity. In addition, tradition also involves the transmission of knowledge and ways of managing. Although tradition may evolve over time, it is valued as fundamental for preserving the history and legacy of companies and is often responsible for their success.
Innovation is related to the transformation, creation, and implementation of new ways of working and different ideas so that companies can adapt to changing markets. Innovation plays a crucial role in the development of companies by enabling them to avoid becoming stagnant and by increasing their competitiveness to strengthen their position in the market.
Achieving a perfect balance between tradition and innovation is a huge challenge for companies. While tradition conveys continuity and responsibility, innovation brings clear advantages in modernizing companies and developing businesses. However, it is fundamental that companies’ and families’ cultures, values, and traditions are taken into account in the innovation processes to maintain the companies’ identities. This balance is essential for the companies’ success and longevity.
To ensure a successful succession and preparation of future generations and to overcome the paradox of tradition and innovation, it is essential, among others, the debate without prejudice between generations, the strategic planning of companies, and the training of future leaders. This preparation is fundamental for the new generations to face the challenges they will encounter in their companies during the succession process. These challenges are related to family relationships, resistance, and trust within the companies themselves. To help in these processes, we often appoint managers who bring an independent, fresh vision with new perspectives to the company.
In conclusion, the paradox between tradition and innovation challenges leadership and succession in family businesses. Balancing this paradox is indispensable for companies’ success. Therefore, it has to be accompanied by a leadership capable of preserving the legacy and, at the same time, having the ability to create and listen to new ideas. When companies achieve this balance, they simultaneously benefit from tradition’s stability and innovation’s growth and competitiveness potential.
Read the full article (original) in Portuguese here.
Source: Jornal Económico