BBC's 'Can't take it with you' programme and succession planning

http://www.ifb.org.uk/ In the latest episode of BBC2’s 'Can't Take It with You' the seasoned business guru Sir Gerry Robinson and Withers partner, Sue Medder, encounter two family businesses and the problems that can arise for the senior generation when considering succession.

When dealing with generational transition in family business, it is important to consider carefully how best it should be passed on to the next generation, taking care to ensure that an acceptable balance is struck between the interests of those family members who work in the business and those who do not, whilst also trying to ensure the continuation of the business as a going concern.

The two cases in the TV programme highlighted the most frequent problem facing family firms, and particularly those with ageing owners: a void in succession planning. Surveys of owners demonstrate time and time again that they put their heads into the sand sidestepping sometimes painful conversations with key stakeholders - particularly with their own children.

Communication is the key to unlocking the way forward, including a mix of one-to-one discussions and bringing all the parties together around one table. The programme also usefully demonstrated how external intervention by a moderator can play a vital role in bringing objectivity to an emotional situation and addressing tough questions that may have been swept under the carpet.

Drawing up a will plays an important part in such a process as it sets out how ownership and management of the family business will be dealt with when the seniors have passed away. Such a document becomes much easier once there has been open dialogue and engagement with the key stakeholders to try to understand everyone’s goals and how individual family members can find ways to work together.



Related articles

• Family businesses 'fail to plan' (telegraph.co.uk)
• Parents passing businesses on to children quicker to ease adviser fees (telegraph.co.uk)

Family business entrepreneurs: the pros and cons of family support

http://www.ifb.org.uk/ The recent sell-out IFB Next Generation International Convention on entrepreneurship was a tremendous success as 185 young delegates from 25 nations listened to inspiring speakers on starting up companies, intrapreneurship in an existing business and emerging social enterprise models. The consensus seemed to be that today’s young family business members want to make their own mark in the early stages of their careers, either by working in a non-family company, or increasingly by setting up their own business. Choosing the entrepreneurship route is becoming more popular; it gives the young person more independence and is a great way to prove yourself, at a stage in life when there is often little to lose.

One of the most active questions discussed was the pros and cons of having “family support” when starting a new business. Advantages include access to capital, ready-made networks, other support that the family (and perhaps its business) can provide and the pressure to succeed. On the downside many felt that using family resources including funding could lead to a lack of independence and thus a loss of freedom for the entrepreneur.

Lara Morgan, founder of toiletries success story Pacific Direct, told the story of how she broke away from her father’s firm at 23 and never looked back eventually selling her business for £20M. She argued strongly in favour of having full control over one’s destiny without anyone looking over your shoulders. Others argued that family entrepreneurs should welcome family support. If a family member starts a new venture family capital and networks can be invaluable; but if the family are investors care needs to be given to the governance system that should give the entrepreneur the freedom to manage, with a good board in support.

Family Business Stewardship - a model for business success

http://www.ifb.org.uk/ The debate on the principles of good ownership very much came to life at the height of the recent financial crisis. Corporate failures, such as Lehman Brothers, raised questions about the health of capitalism and whether it was always working for the benefit of society as a whole. Politicians and the media called on owners to be more accountable and to ensure that their companies treated stakeholders fairly and acted as responsible corporate citizens.

Tomorrow’s Company, a think-tank that aims to reduce the gap between business and society, stepped in to the debate with the publication of a report “Tomorrow’s Owners - Defining, Differentiating and Rewarding Stewardship”. The report, to which the IFB contributed, defined stewardship as the active and responsible management of entrusted resources now and in the longer term, so as to hand them on in better condition. The report set out four principles for corporate stewardship, and related behaviours:

• Principle 1. Setting the course: attention to clarity of purpose

• Principle 2. Driving performance: attention to performance and improvement

• Principle 3. Part of the landscape: attention to the wider world

• Principle 4. Planting for the future: coherence over time

Throughout this recession the family business sector has been held up by observers, such as the CBI, as a source of stability. Although the trading environment has been very difficult family firms have generally held a steady course. Arguably one of the reasons for the success of family firms during tough times is their adherence to the four stewardship principles.

A leading example of family business stewardship in action is Wates Group who place respect for communities and people at the heart of their business. This approach has earned them the prize of Major Contractor of the Year for a second consecutive year at Building Magazine’s awards.

The IFB Research Foundation has partnered with Tomorrow’s Company to examine empirically how family businesses function in terms of the stewardship and to find out if this is a model for business success. If you would like to participate in the debate about family business stewardship please leave a comment here or email your views to info@ifb.org.uk .You can also request a copy of the IFB Family Business Stewardship Report that will be published in June 2011.

Strengthening the family business corporate brand

http://www.ifb.org.uk/ Sir Michael Bibby, chief executive of Bibby Line Group was the final breakfast speaker at the Next Generation Forum in 2010. His comments underlined the importance of the family business corporate brand as a magnet to help recruit and retain employees motivated to perform at their best. Sound values at Bibby including a focus on the long-term, quality operations, trust in people and support for communities, is part of what makes people “feel like they work for their own business” as Sir Michael puts it. By promoting a strong sense of goal alignment employees are selected both for their skills and whether they share the values of the business.

These insightful comments echo throughout the family business sector. Each family business works to reinforce the foundations of its corporate brand; underpinned by the origins of the family business, the reputation of the firm is carefully developed and shaped over time. Good stewardship leads to employees being more motivated, with retention increasing as they align withthe underlying sense of mission and values of their organisation.

Developing trust with consumers
Consumers are also savvy and want to know about the organisations behind the products and services they buy; convincing them for example that the business has sustainable and responsible sourcing policies can be a powerful differentiator in favour of the family business corporate brand. UK family business company brands such as C&J Clark, Wates and Bibby Line Group are examples of organisations where a strong corporate culture underpins successful business practices developing trust with their customer base.

In 2011 part of the IFB’s work will be to find out more about how these and other family firms have found a winning formula.

Brazil's Thriving Family Businesses

Image via Wikipedia

http://www.ifb.org.uk/ Visiting Brazil as part of an IFB and Pi-Capital delegation of family business owners and entrepreneurs, last week, gave me a unique opportunity to meet leaders at the forefront of driving the growth and development of this rising global powerhouse.


The programme organised by Leaders Quest, included meeting Persio Arida, managing partner of BTG Pactual (Brazil’s leading investment bank) and Arminio Fraga, head of Gavea Investimentos and former President of the Central Bank of Brazil. Both are respected public figures and provided upbeat assessments on the outlook for their nation which is forecast to emerge as the world’s fifth largest economy. The UK’s Ambassador Alan Charlton also echoed this in a speech to the delegation.

A wave of optimism is sweeping across Brazil and the sense of opportunity is heightened by the fact that it will be hosting the World Cup in 2014 followed by the Rio Olympics in 2016. Meeting well known family-controlled business groups such as Camargo Correa, Odebrecht, Wilson Sons and members of FBN Brazil we saw strong signs of investing for growth. These groups, and others we visited, are achieving long-term sustainable performance, focusing on more than just financial results by strengthening their human resources to drive further growth. In a nation with wide disparities of wealth, there are barriers to social mobility partly due to weaknesses in the education system. The leaders we met are supporting social enterprises that are working to address these and other social issues. Some of the most progressive social entrepreneurs we met include internationally renowned Rodrigo Baggio, of CDI and Dr Vera Cordeiro of Saude Crianca; these and others showed us how their organisations are tackling some of the most endemic issues in their society.

Progressive governance practices are seen as key to enabling Brazil’s leading family controlled groups to achieve clarity in their vision for growth and combined with sound values Brazil’s family business sector is well placed to contribute to driving economic development. Buoyed by an expanding middle class the Brazilian market for goods and services consumption is set to grow, assisted by growth in exports of minerals and commodities. With the scourge of inflation now seen as a historical phenomenon the risks for Brazil veering off course appear to be limited.

Entrepreneurship - the pursuit of opportunity

http://www.ifb.org.uk/ I’m looking forward to hearing the opening address by Professor John Mullins, of the London Business School, at the IFB’s Next Generation International Convention 2011 in January. The convention’s theme is Entrepreneurship – the pursuit of opportunity and as associate professor of management practice in marketing and entrepreneurship, Mullins is an acknowledged expert in the field.

Professor Mullins will be developing some themes from his latest book Getting to Plan B, where he debunks the form-filling, spreadsheet-driven mentality popular in business planning. Mullins believes that entrepreneurs should adopt a series of ‘stress tests’ to their initial ideas so that any weaknesses can be corrected. He suggests that the real success of companies such as Google, PayPal, Starbucks and others was that they were prepared to rip up Plan A and make radical changes to their business model.

Cover via AmazonHe has also identified two other key criteria for any successful enterprise to assess. First many business people see fast-growing markets as a good area to explore, but Professor Mullins wants people to realise that the more important side of the equation is to ask whether customers will actually buy your product. Secondly if you’ve satisfied yourself on that question then you have to ask if you can build a sustainable competitive advantage in that industry – otherwise you might find a bigger player comes along and wins the day.

We feel sure that insights such as these will inspire and enthuse the next generation family members who attend the Convention 28-29 January 2011. It will be a great occasion for delegates to hear from a line-up of international speakers about entrepreneurship in all its forms - whether its starting a business, looking to set up a social enterprise, or just learning more about entrepreneurship.

You can hear more from Professor Mullins about these ideas on this video.

Innovation – why family firms lead the way

http://www.ifb.org.uk/ The FBN International Summit in Chicago, where over 650 owners gathered this earlier this month, highlighted how innovation runs through the veins of the family business sector. With shortening business cycles, the advent of disruptive technology, globalisation and hyper competitive markets there is no room for companies to hide. Family enterprises have to embed into their organisations a culture that embraces change and promotes innovation –their survival and growth depends on it.

At the Summit global players such as Odebrecht from Brazil, FIAT of Italy, and North America’s Bechtel Group shared how their values and culture supported innovation. By embedding progressive employment practices that embrace change and continuous improvement these organisations have risen towards the top of their respective sectors.

In the case of smaller family firms focused on niche markets the same rings true. The owners generally set the lead, seeing their primary role as recruiting a team of highly motivated and skilled entrepreneurs and managers. Some of the best exemplars included Radio Flyer, a Chicago based third generation toy company who have won numerous awards for their achievements, creating a culture of innovation among their 110 employees. Revenues here have leapt four-fold since the current generation took over leadership. From Spain, Leche Pascual stands out for the transformation of their corporate culture since the third generation took the helm, embedding a systemic approach to innovation within the organisation. This has lead to 50% of their EUR 900M turnover being generated from new products that did not exist a generation ago.

The key learning’s on innovation from the FBN Chicago Summit include:

• Start with the company’s values; ensure they support innovation and change

• Ensure the board is committed to embedding a culture of innovation through choosing leaders who will help drive change

• Develop employee practices that reward entrepreneurship and innovation at all levels