Family businesses are complex management units because they always require a systemic approach - family and business - as the two-circle model states.
The three-circle model introduces additional complexity, as it considers three systems - family, management and ownership - and is therefore a more robust model for dealing with this reality.
But the systemic model, which I consider to be more realistic for the Portuguese case, considers three distinct systems with deep interconnections - the governance, management and size systems.
In this model, successful business groups have good family and company governance models, good management of their production units and an adequate size that allows them to achieve high levels of profitability by offering products and services with high added value.
Without an adequate size, it is difficult to adopt efficient governance models and attract qualified managers; without adequate governance models, it is difficult to grow the company and adopt competent management models; without good management, the company does not grow, conflicts worsen and governance models become ineffective.
The intensive, applied course in family business management that we have developed at ISCTE Executive Education was built on the basis of this three-dimensional system.
Within the scope of governance, the most relevant topics include the family's governance instruments, those of the company and their systemic compatibility for the family business, with special emphasis on the family office and the corporate holding company.
In terms of management models, the topic of strategic business management in general and models specific to family businesses are crucial, with special emphasis on the models of organisational identity and the paradox theory.
Finally, in the area of size, growth strategies are unavoidable, particularly through mergers and acquisitions, and the process of preparing, evaluating and deciding on investment projects incorporating innovation processes.
When these three systems - governance, management and size - are in balance and efficiently managed from a systemic perspective, all the other issues that are systematically mentioned, such as succession and conflict management, are much easier to resolve. The study and application of correct management models for family businesses is a huge intellectual challenge.
The three universities that have excelled in this area of knowledge, IMD and St Gallen in Switzerland, and Harvard in the United States, have been progressively increasing their academic output on these topics, which are fundamental to the Portuguese economy, since family businesses represent almost all of the companies owned by Portuguese entrepreneurs.
At ISCTE, we will continue to study and pass on knowledge in this fascinating area.
Article in accordance with the old Orthographic Agreement.