Agile Constitution for Agile Families in Business

In a world of agile everything, agile concepts are being applied in spheres far removed from software development, leading us to wonder whether agile concepts can help families in business (hereafter referred to merely as families) develop and execute strategies more effectively. 

‘Agile Everything’

Agile methodology was shaped predominantly through the leadership of Jeff Sutherland in the early 1990s. He pinpointed the inefficiencies of the traditional ‘waterfall approach’ in software development, with instructions from top-level management often failing to deliver the anticipated outcomes when passed down to developers.

In response, Sutherland devised an alternative method that encouraged the flow of ideas not only from the top down but also from the bottom up, thereby enabling teams to swiftly adapt to changes and enhancing the success rate of software development projects. This method was marked by regular weekly meetings that fostered shared decision-making, open communication and continuous adaptability – three foundational elements of Agile. Another core principle of the approach is to ‘fail fast and pivot’. This motto highlights the importance of conducting numerous small-scale experiments to determine what works and what doesn’t, be it a product, design or decision.

Agile concepts have increasingly extended beyond the realm of software development and now encompass management. 

In management, agility refers to a blend of organisational attributes such as flexibility, speed, awareness, preparedness and adaptability. Together, these attributes enable a business to adapt rapidly and cost-effectively to changes in the business environment, many of which are unforeseeable.

When agility meets strategic management, it engenders considerable emphasis on strategic thinking, execution and learning, rather than reliance on traditional – and sometimes bureaucratic – long-range planning techniques. In addition, an agile strategy maintains stability and direction, serving rather effectively as a catalyst for change through the development of high-level roadmaps, as opposed to cumbersome and detailed strategic plans. These roadmaps then become the springboard for regularly launching and implementing a series of action plans.

Just as businesses require agility to respond to uncertainty and perpetual change in the business environment, families in business also need to adopt agile methods in developing and executing strategies.

Agility facilitates overcoming slow decision-making or conflicting strategic directions, which can become costly obstacles to wealth creation, family harmony and the capacity of the business to prosper and continually transform. It is worth noting that agile concepts have also permeated the domain of family dynamics. Influenced by this wave of innovation, Bruce Feiler published an article in the Harvard Business Review in 2020, delineating how agile philosophy can contribute to a family’s happiness.

That said, a key question is as follows: ‘Why are agile methods relevant to the strategic management of a family in business?’ Let’s take the case of developing a family constitution.

Agile Family Constitution 

Developing a family constitution is a crucial strategic activity that is essential for responding to changes and planning for the future. A family constitution formalises how the family should be organised, the governance structures the family must establish and how the family is involved in the business.

When adopting a traditional approach to developing such a document, large families typically opt to appoint a guiding coalition to steer the course. This coalition typically employs a top-down approach similar to the ‘waterfall approach’ mentioned earlier. The temptation is to plan all future scenarios to anticipate any possible family tensions or avoid unintended consequences.

Regrettably, the effectiveness of this approach cannot be taken for granted. More often than not, the process results in a comprehensive family constitution that, despite its thoroughness, still lacks one of the most important ingredients: a genuine buy-in from the broader family, which is essential for smooth implementation.

Having a constitution that remains unused in drawers constitutes a costly failure, likely leading to frustration and potential disengagement within the family.

From my experience, the application of agile principles offers the possibility of reaping four crucial benefits:

1. Optimising the resources available to develop a family constitution, thereby delivering optimal tangible value.

2. Allowing the broader family to maintain momentum from the initial scoping phase to the implementation phase.

3. Enabling the capacity to pivot or adjust course to adapt to changes along the way.

4. Democratising the constitution development process. This does not imply the absence of a guiding coalition or leadership; rather, this group actively involves the broader family in the development process.

How Can Agile Concepts Be Applied in Practice?

To address this question, it is useful to refer to the four agile principles outlined in the Agile Manifesto:

• Value individuals and interactions over processes and tools.

• Favour working software over comprehensive documentation.

• Prioritise customer collaboration over contract negotiation.

• Embrace responding to change over following a plan.

Here, I elaborate on each of the four principles to explain how the agile approach can be applied in family business domain.

Individuals and Interactions over Processes and Tools

There is a vast, consolidated and publicly accessible body of knowledge on what a family constitution is and how to develop one. Some families may opt to utilise these tools and processes, believing that standardisation alone – which I view as an aspect of the traditional approach – is adequate. However, those who adopt the agile approach place considerable emphasis on interactions throughout the constitution development process to understand what truly matters on a case-by-case basis. This involves selecting what is necessary from the available body of knowledge and avoiding the superfluous. In addition, highly engaging family conversations and consultations raise awareness and create momentum, thus creating an environment that is instrumental to collaborative learning and unlocking creativity.

Working Document over Comprehensive Documentation

A frequent critique of family constitutions is their propensity to overemphasise the codification of procedural aspects, creating the illusion of being able to meticulously plan the future. Conversely, adopting an agile approach shifts the focus towards selecting a set of principles to be applied as needed and designing a framework for effective governance. This facilitates good decision-making. Therefore, rather than being long and intricate, an agile family constitution is characterised by a streamlined foundational structure supplemented by various operational annexes that can be updated easily and simply.

Family Collaboration over Contract Negotiation

Contract negotiation in a family context entails a level of inflexibility that can lead to disengagement, power struggles and confrontational approaches among family members, all of which conflict with the purpose of developing a family constitution: building a sustainable future together. Conversely, adopting an agile approach involves crafting a development process that retains flexibility all through and provides opportunities for family members to voice their opinions. These endeavours foster open collaboration and support shared decision-making, all of which enhance buy-in.

Responding to Change over Following a Plan

In the traditional approach, the guiding coalition often focuses solely on following a plan to draft the final document as quickly as possible to save time and resources and prevent change of opinion among members of the family. In contrast, the agile approach views the working plan as flexible, particularly in the early stages, when members of the family are beginning to trust the process and are expressing their genuine and deepest thoughts. This openness to change should be managed carefully to design fair, transparent and inclusive processes. Naturally, maintaining a clear purpose and a defined timeline are also critical in the agile approach, which does not imply the freedom to change everything at any moment.

Conclusion

Agile principles in the sphere of family tend to emphasise adaptive and iterative delivery, a departure from approaches that are solely the expression – or more often, the directives – of charismatic leaders or a senior guiding coalition. As families grow increasingly complex over time and the business faces various uncertainties, adopting Agile offers a great degree of flexibility and positions the family to be future driven.

It goes without saying that the principles underpinning Agile are deeply rooted in trust. Family members should place their trust in the family leadership, and the leaders, in turn, should ensure that everyone has the opportunity to speak and contribute on an equal footing.

Author: Paolo Morosetti