Wise Family Business

Joachim   Schwass • Anne-Catrin   Glemser

Wise Family Business Family Identity Steering Brand Success

ISBN 978-1-137-58599-8 ISBN 978-1-137-58600-1 (eBook) DOI 10.1057/978-1-137-58600-1

Library of Congress Control Number: 2016948764

© Th e Editor(s) (if applicable) and the Author(s) 2016 Th e author(s) has/have asserted their right(s) to be identifi ed as the author(s) of this work in accordance with the Copyright, Designs and Patents Act 1988. Th is work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Th e use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Th e publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made.

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Th is Palgrave Macmillan imprint is published by Springer Nature Th e registered company is Macmillan Publishers Ltd. London

Joachim   Schwass IMD Global Family Business Center Lausanne , Switzerland

Anne-Catrin   Glemser IMD Global Family Business Center Lausanne , Switzerland

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Family businesses are the “backbone” and “hidden treasures” of many econo-mies across the world. At the European Family Business Summit in Berlin in November 2014, Angela Merkel acknowledged their strategic importance for the German economy. She observed that family business owners are mostly guided by long-term considerations, they take responsibility—for their own employees, for the region, and for future generations—and are often socially engaged and support projects to promote education, sports, and culture. She remarked that they are also active in environmental protection and are com-mitted to international development, emphasizing that families in business understand their operations not as a “speculation fund,” but rather as an added-value-creating activity that needs to be preserved over several family generations. In conclusion, she pointed out that family businesses truly live and walk the talk of what characterizes the social market economy model; they combine the fundamental values of freedom and responsibility. 1

Family businesses represent one of an economy’s most valuable assets and should not be confused with small businesses. Some of the largest and most prominent businesses, such as Walmart, Hutchison-Whampoa, Bombardier, and Peugeot, are family controlled. And in most countries, their revenues account for way over half of all companies’ sales, and they employ over half of the labor market.

Some of the world’s best-known consumer brands, for example, Porsche, Benetton, Mars, Barilla, Hermes, Miele, and Heineken, bear the name of the

1 Translation of Angela Merkel’s presentation to the 1st European Family Business Summit, Berlin, 24 and 25 November 2014. http://www.bundesregierung.de/Content/DE/Rede/2014/11/2014-11-25- familienunternehmerkonferenz.html;jsessionid=ECF0486B8DEE40B565B49C5A620F601B.s1t2 , date accessed 10 July 2015.

Foreword

vi Foreword

founding and owning families. Th eir brands may not be as cool as the “Apples” and “Googles” of today, but many of them are iconic category brands that we have grown up with and that stay with us throughout our lives.

In today’s world, content-built brands have an advantage—they can con-nect with the consumer. Many family businesses can leverage their heritage and authenticity, something that other companies often cannot do. However, when telling their brand story, they should be careful not to look through rose-tinted glasses. With today’s media and social media, we are only a click away from the facts and, at times, the inconvenient truth. Transparency is essential to build trust.

Many famous family business owners and founders have learned some tough lessons in times of political, economic, and social crisis. Th ey have con-cluded that “fl ying under the radar” is the best attitude for business-owning families to adopt. Th e Albrecht brothers (Aldi), Michele Ferrero, and Ingvar Kamprad (IKEA), for example, all maximized their privacy by remaining almost invisible to the public and rarely giving interviews or pictures to the outside world. Th e incoming younger generations are becoming more open, and often a change in leadership triggers a change in communication. Th e right to privacy is of utmost importance, and a well-thought-out command of communication can stop the media from fi lling in the vacuum of information and transparency with myths and interpretation. Th e art of family business communication is about fi nding and keeping the right balance over time—principally for the family, but also for the business and the public at large—and it is about looking beyond the visible dimensions of a brand. Th is book examines the multi-layered impact on a wide range of stakeholders when the family name is also the brand of the business.

Prof. Dominique   Turpin IMD President

Lausanne, Switzerland

vii

Th e authors would like to express their gratitude to many people and organizations for their support during the process of writing this book:

• our International Institute for Management Development (IMD) colleagues Dominique Turpin, Anand Narasimhan, Denise Kenyon- Rouvinez, Benoît Leleux, Marco Mancesti, Lise Moeller, Persita Egeli, and especially Michelle Perrinjaquet for her tireless editorial support;

• Marek Roleski of Firma Roleski for sponsoring the Family Business Brand Study, which was a precursor to the book, and Jacek Lipiec as well as Jakub Kołodziej for liaising with the Roleski family;

• Martin Kralik, Philip Whiteley, Claudia Binz-Astrachan, Willem Smit, and Hakan Hillerström for their valuable research;

• Charlie Potter and Richard Meredith of the Brunswick Group for their contribution to the book and for sharing their valued experience;

• all those who have infl uenced and shaped our thinking over the years, espe-cially Alden G. Lank and John L. Ward; and

• all the families and executives mentioned in the book, whose willingness to share was at the core of this knowledge-creation process.

Finally, we would like to thank our families for their explicit and implicit support and everlasting patience!

Acknowledgments

viii Acknowledgments

About the Sponsor

Th e authors gratefully acknowledge funding from the Roleski Foundation for this book on family business branding and would like to thank Marek Roleski and his family and management team for their dedicated commitment, excel-lent support, and interest in sponsoring the study and its publication .

When Mikhail S. Gorbachev became general secretary of the Communist Party of the Soviet Union in March 1985, he launched his nation on a dra-matic new course and introduced a dual program of perestroika (restructuring) and glasnost (openness), opening up for profound changes in economic prac-tice, internal aff airs, and international relations. 1 Th e same year, the founder of the Polish Firma Roleski was granted the fi rst private license to produce may-onnaise in Poland, which until then had been regulated by a state monopoly.

Firma Roleski was founded in 1972 by Marek Roleski who set up a small private business under the strictly regulated regime of the former Eastern Bloc economies. His mission was to deliver local food products to all consumer groups at a reasonable price and guarantee their quality with his family name.

In the 1990s, when international retail chains began emerging on the Polish market, the company started growing and expanding into neighbor-ing markets. Its product line was extended, new fl avors were introduced, and consistent R&D eff orts led Firma Roleski to become the fi rst Polish manu-facturer of organic products in its category. Today, Firma Roleski is the largest producer of wet condiments (mustard, ketchup, mayonnaise, and dressings) in Poland. It employs about 400 people and operates internationally.

Marek Roleski built a business in a market in which the notion of “family business” had long been wiped out. From the beginning, he had a clear vision: to keep the business in family hands and pass it on to future generations. Being a keen learner, he started looking into family business education and established the Roleski Family Foundation “which supports the development

1 HISTORY.com, ‘From Perestroika and Glasnost’, http://www.history.com/topics/cold-war/perestroika-and- glasnost , data accessed on 10 July 2015.

Acknowledgments ix

of family business and business education.” As he pointed out, “By putting my last name as the name of the brand a long time ago, I made a commitment both to myself and to the whole world that I would do everything it takes to make sure that the brand, just like my family name, is always associated with high quality and moral standards. I have undertaken numerous steps to make sure of that—implementing the fi rst Family Business Constitution in Poland and doing everything to make sure I help raise a generation of people who are well aware of the challenges nowadays.”

Marek and his family are committed to growing the business to the next level and are interested in learning best practices from other family businesses, industries, and markets in order to leverage the Roleski brand for future sus-tainable family business growth. Affi liating with IMD business school and sponsoring the research on family business branding gives Marek the oppor-tunity to learn from other family businesses before deciding how to leverage the Roleski brand in terms of the costs and benefi ts to the business. 2

2 Roleski Company information, www.roleski.pl. , data accessed on 5 May 2015.

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Contents

1 Introduction 1

2 Family Business Identity 7

3 Th e Nature of Family Business 31

4 Best Practices and Examples from Family Businesses 57

5 Overall Lessons and Analysis of the Company Cases 167

6 Th e Expert View: Proactive Communications—Building, Projecting and Preserving Reputation for Business Families and Family Businesses 189

7 Toolbox—A Process for Moving from Family Identity to Family Business Brand 231

8 Conclusion 273

Index 281

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Joachim   Schwass is Professor Emeritus of Family Business at IMD in Lausanne, Switzerland. He founded the IMD Global Family Business Center and for over 25 years has studied, taught, and advised leading families in business around the world. Schwass is the second-generation leader in his own family’s business. His authored works include Wise Growth Strategies in Leading Family Businesses and Wise Wealth .

Anne-Catrin   Glemser is the Family Business Research and Program Development Manager at IMD, Switzerland. She is responsible for developing new research initia-tives and programs in the fi eld of family business and heads the research activities for the IMD-Lombard Odier Global Family Business Award. Glemser has received sev-eral awards for her outstanding case writing skills, including the EFMD “Best of the Best” in 2015. Prior to joining IMD, she held key marketing positions with leading consumer goods multinationals.

About the Authors

xv

List of Figures

Fig. 2.1 Trust in diff erent types of business—developed versus developing countries 13

Fig. 2.2 Key attributes to building trust 14Fig. 2.3 Most trusted infl uencers to communicate purpose 16Fig. 2.4 Patek Philippe Corporate Advertising Campaign 2015 17Fig. 2.5 Patek Philippe Product Advertising Campaign 1996–1997 19Fig. 3.1 Performance of the DAXplus Family 30 Index 33Fig. 3.2 Performance of the 25 largest family businesses in the S&P500 34Fig. 3.3 Diff erences between the family system and the business system 36Fig. 3.4 Th e family business balance 37Fig. 3.5 Th e six Ds in family business 39Fig. 3.6 Th e needs of the three family business dimensions 40Fig. 3.7 Th e needs of the three family business

dimensions—over time 41Fig. 3.8 Boundaries and roles of the three circles model

for family businesses 43Fig. 3.9 Generational transition—the three stages model 44Fig. 3.10 Structural diff erences between the three family

business stages 44Fig. 3.11 Th e three family business dimensions and their

respective governance structures 46Fig. 3.12 Th e family constitution 47Fig. 3.13 Centrifugal forces on the three family business dimensions 50Fig. 3.14 Th e role of the family business brand 51Fig. 4.1 Th e three stages model: Identity issues over time 58Fig. 4.2 Storyline abstract from the corporate movie Th e Lego Story 63Fig. 4.3 Th e Lee family members’ distribution across family,

business, and ownership 103

xvi List of Figures

Fig. 4.4 Th e Lee enterprising family structure 105Fig. 4.5 Th e Lee Kum Kee team communication model 109Fig. 4.6 Corporate Values: Henkel AG & Co. KGaA 116Fig. 4.7 Cost and benefi t analysis of family business branding at Bonnier 121Fig. 4.8 J.M. Huber Corporation: Shareholder communication channels 150Fig. 5.1 Identity traps—stage I 169Fig. 5.2 Identity traps—stage II 173Fig. 5.3 Identity traps—stage III 177Fig. 5.4 Identity traps—issues over time 186Fig. 6.1 Relationship between brand and reputation 194Fig. 6.2 Reputational propeller 197Fig. 6.3 Th e prism 209Fig. 6.4 From crisis to new reputation 216Fig. 6.5 Integrated communications planning 218Fig. 7.1 Family identity building elements 232Fig. 7.2 Family business identity building elements 244Fig. 7.3 Strategic reputation risk management 250Fig. 7.4 Miele stakeholder engagement 253Fig. 7.5 Case study Nestlé: Purposefully creating and sharing value 265Fig. 7.6 Advertising Campaign ‘BACARDÍ untameable since 1862’ 267Fig. 7.7 Bacardi Graphic Novel Campaign 268Fig. 7.8 Strategic family business brand management 269Fig. 8.1 Identity building in family business context 277