Models for Family Companies and Complexity Management Structures
TI 10 - May 2021

Luís Todo Bom

Manager and Professor at ISCTE
T

he several models available to manage complexity through the development of integrated structure, may be grouped as follows, by growing order of complexity:

  • Captain Model, which occurs in the case of a SME (small and medium sized company), in a traditional industry, managed by the founder. 
  • The Imperor Model, which integrates several business areas and family, united by a leader, who may or may not be the founder. 
  • Family Team Model, which includes an extensive family, but all working in a small traditional business.
  • Professional Family Model, in which we find few members of the family, designated by the governance organs of the family, involved in a complex business.  
  •  Corporation Model, which consists in a complex family that governs a complex company in terms of differentiation and dimension of the several business units and requires complex models of governance and family.
  • Family Investment Group Model, when families invest together in businesses of varied complexity, which corresponds to a process of segregation of business areas and their distribution through several company members. 

The development of the structure increases gradually in terms of complexity and management demands from the captain model until the family investment group model. In a systemic way we can state that there is a triangle of efficient management of the family company, as shown in the picture below, with three areas of intervention to manage complexity: evolution of the model, complexity reduction and structure development. According to this model the efficient management of complexity implies systemic intervention in three levels:

  1. In the management of the evolution of the complexity model throughout the five models described below, through the changes needed to the family and company governance instruments.
  2. In the reduction of complexity of the family and / or the company business areas, in the sense of reducing structural risk bearing in mind that the reduction of complexity is mandatory in case we find ourselves in limit situations.   
  3. In the development of the structure to manage complexity, refining the structure model and the management instruments according to the degree of complexity of the family company. 

*Text extracted from Manual de Gestão de Empresas Familiares, 1ª edição, Edições Sílabo, Lisboa, pp. 51-53.

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