How does the leadership model of an agri-business (viz. a farmer) compare with the model adopted by the leader of a mid-sized generic business, whether manufacturing, trading or services?
A discussion that I had recently introduced me to the farmer as a custodian of his business, not the leader or the manager. His/her sole and ultimate purpose is to preserve the business that he/she inherited from his/her father for his/her offspring. This does not suggest that production, marketing and profitability are ignored. Rather and most-importantly, these concepts and how they are enacted are a direct consequence of the custodian approach to leading the business.
How does this concept compare with traditionally run businesses? A recent study by McKinsey found that, in 1958, the average life-span of companies listed in Standard & Poor’s 500 was 61 years. Today, it is less than 18 years! McKinsey believes that, in 2027, 75% of the companies currently quoted on the S&P 500 will have disappeared.
A traditionally-run business, even a family-owned business, often has a layer of professional leadership at the helm. Not many family-owned businesses survive beyond the second generation. Arrangements for passing the baton to the next generation or to a professional successor, are rarely planned and plotted over a lengthy period. The farmer, on the other hand, devotes many years of his/her own working life to nurturing, developing and empowering the next generation.
Is this model of agri-business leadership a useful hypothesis for companies in the manufacturing, trading or services sectors?
- Does a custodian-outlook and custodian-purpose lead to the development of a sustainable, successful business, where longevity is the desired outcome?
- What is the alternative: the business is allowed to grind down to a sad demise as the owner ages? This outcome may not be wrong, but this process requires careful planning and execution
- Where does an exit strategy fit?
To answer these questions, business leaders need to contemplate, debate, question and deliberate the purpose of their business. Why does the business exist? Of course, what the business does and how it goes about its activities are very important aspects and these are usually articulated in the business strategy. But the business strategy has minimal impact if it is not aligned with the business purpose, the why.
