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How Family Businesses Can Navigate Post-COVID Challenges

John Bailie

June 25, 2024

“In quiet and untroubled times, it seems to every administrator that it is only by his efforts that the whole population under his rule is kept going, and in this consciousness of being indispensable, every administrator finds the chief reward of his labor and efforts. While the sea of history remains calm the ruler-administrator in his frail bark, holding on with a boat hook to the ship of the people and himself moving, naturally imagines that his efforts move the ship he is holding on to. But as soon as a storm arises and the sea begins to heave and the ship to move, such a delusion is no longer possible.” – Leo Tolstoy, War and Peace

Sound familiar? Each of us likely has a memory of a day in March or April of 2020 when we realized that COVID-19 was not a passing news item and that we were about to experience something unprecedented in our lifetimes. Three years hence, COVID-19 and the governmental, NGO, and private industry response to it are increasingly debated, questioned, and examined. Regardless of where we stand on those questions, those events presented an unprecedented disruption to business as usual – in our families and our family businesses.

While a few lucky businesses thrived during the lockdowns and pushed toward digital “work from home” measures, most businesses experienced some degree of a financial downturn. A common question from our clients and colleagues is “When will we return to pre-COVID levels?”. While this usually refers to revenue and profitability, there’s also typically an undercurrent of “When will things just go back to the way they were in 2019?”

Of course, nothing ever goes backward. Everything goes forward – just differently. Markets in many industries are simply not the same as they were in 2019. Patterns of work (such as the work-from-home push), masking or not, and tracking protocols, all have inevitably altered how, where, and with whom we work – if not for our company directly, then certainly for clients, customers, and suppliers. Add to this is the additional complexity brought by social unrest, political instability, economic volatility, a seemingly endless cycle of ongoing foreign wars, and national governments and international bodies asserting hitherto unheard-of powers (lockdowns, mandated medical treatments, breaking of HIPAA firewalls and protections) – and well, there’s no shame in feeling destabilized at times over the last three years.

In a private briefing from a family wealth advisor to family-business consultants, the very sober, steady, and experienced advisor said the following regarding the full scope of the market, workplace, legal, and regulatory changes that have and will continue to flow from these events:

“I am the least hyperbolic person you will ever meet. I spend much of my time helping my clients to calm down, stay focused, and not make dramatic changes. However, I will say this. Ten years from now when we look back on this period from the vantage point of 2033, our world will look as different as it did in the years that divided the industrial revolution from the agrarian period. Core features of our lives and the current way we do business will be completely transformed.”
And… he couldn’t tell us precisely what to expect – except perhaps… the unexpected.

So the real question for family business leaders is not, “How do we get back to pre-COVID levels?”, but instead “What did we learn from COVID and how should we change our approach to growing our business going forward?” It’s not about going back but going forward better prepared to meet new challenges.

Steps to Address Family Business Challenges Post-COVID

How do we prepare as leaders of businesses and families for potentially life-altering change without knowing exactly the direction of those changes? Well, here’s a few tips:

First, as Tolstoy says above, accept that our sphere of direct influence (those things over which we exercise meaningful control) is likely far smaller than it appeared prior to COVID-19. That little sphere, no matter how small, is where we need to devote the lion’s share of time, talent, treasure, and sacrifice. This can be jarring, but also liberating as our egos right-size to reality. As Pat Lencioni says in his book The Ideal Team Player, humility is perhaps the most important quality in a great leader (and it doesn’t hurt to be “hungry” and smart as well).

We will do ourselves no favors by continuing to act as if we control the raging sea. We don’t. We’re not God, and thankfully don’t have to be. The real God already has that job covered. It’s not what those we serve need from us.

What people do need is the installation of hope – not that everything will be ok, but that whatever comes we’ll face it together as a family and a business. We won’t have to face “it” alone (maybe everyone’s biggest fear). That’s leadership.

Second, know that the changes afoot might be unprecedented in our lifetimes, but they are not unprecedented in history. Unfortunately, less than 30% of family businesses make it to the third generation. So, that means in the average 50-70 lifespan of a two-generation family business there’s a limited corporate memory of tackling very hard times such as major recessions and unusual and unpredictable “black swan” events such as COVID. In the excellent book The Fourth Turning, generational theorists William Strauss and Neil Howe, make a decisive case that the history of the United States follows a pretty darn regular cycle that repeats every 80-100 years or so. Each cycle has four parts: a “high”, an “awakening”, an “unraveling”, and finally (you guessed it) a “crisis”. If you put stock in Strauss and Howe’s theory, we’re now at the end of a cycle and… it’s crisis time. So, over the course of any long human lifetime, we’d all experience each of the four phases but only once and at different ages depending on where in the cycle we were born.

The role of our generation, the current seasoned leadership in place in business and beyond, is to see the others through this period of crisis. As a group, that will be our single most important contribution to history.

Whatever else seems uncertain, that is our job. That’s an important thing to know in any crisis. We have a mission.
Our peers from the last period of crisis would be people like WWII generals Eisenhower and Bradley, presidents FDR and Hoover, Popes Pious XI, and XII – not bad company to be in. This was the established generation that led the teenage and 20-something “greatest generation” (GIs and Rosy the Riveters) through to VE and VJ Day, and the resulting “high” period of the 1950’s and early 60’s.

However, even those luminous figures were carried along by events much more than they shaped them. Their true contribution was getting the incoming next generation to the other side. Whatever they thought their greatest life task would be before that period of crisis, the sea of history had its own plans. These crises feel unique to us, but not to history. This has happened before, and we will get through it just like our predecessors did. Take heart, after the storm comes the sun.

Finally, in the very loosely quoted words of my friend, consultant, and complexity theorist John Pourdehnad: When crisis and complexity converge – don’t waste energy trying to control it, just make sure you have what you need to “go for a ride”.
It won’t be boring, and we get to go together as a family and as a business.