Kellogg family biz conference accents competitive advantage, honors ‘great entrepreneurial spirit'By Kari Richardson
5/1/2005 - Although often portrayed as lacking in resources and governed by emotion rather than solid business strategy, family businesses enjoy distinct competitive advantages in the marketplace, and many of their perceived weaknesses are actually strengths, said experts at the Kellogg School's 2005 Family Business Invitational Conference, held May 17 and 18.
“We think they are poor in capital and talent. That they are just little ‘mom and pop' shops,” said Isabelle Le Breton-Miller, a senior research associate with the Centre for Entrepreneurship and Family Enterprise at the University of Alberta.
In reality, Le Breton-Miller said, family businesses often employ more effective long-term strategies when compared with their public counterparts since they have a greater interest in preserving the enterprise for future generations. Family businesses also tend to adopt a more committed, caring attitude toward the people they hire, she said.
“In general, many of the things perceived as weaknesses in family business in reality are powerful competitive advantages,” Le Breton-Miller said.
M.V. Subbiah, visiting executive scholar for 2005 at the Kellogg School's Center for Family Enterprises and retired chairman of the Chennai, India-based Murugappa Group, moderated the panel, “Perspectives on Family Business Success.” Subbiah, whose fourth-generation family business is a $1 billion, 23,000-employee conglomerate with interests in sugar, fertilizer, steel tubes, roller chains, financial services and more, said almost all family members work for some part of the company or help run its charitable enterprises, which include schools and hospitals.
A highlight of the two-day conference was the May 18 presentation of the 2005 Kellogg Award for Special Contributions to Family Business to Racine, Wis.-based Johnson Family Business Enterprises, whose consumer enterprise, S.C. Johnson, uses the tagline “a family company” in its branding. The award is given each year to a family business that has made “significant, generous and personal contributions” to benefit other family businesses.
Accepting the award on behalf of her family, Helen Johnson-Leipold shared some of the guiding principles that have powered the firm through its 120-year history. Johnson-Leipold is chairman of Johnson Outdoors Inc., an outdoor recreation products company, and chairman of Johnson Financial Services.
Chief among Johnson-Leipold's advice was to build, protect and leverage the family name, to balance tradition with change and to take calculated risks. For each principle, she shared examples of how preceding generations of her family used the strategy to build and to better the company founded by her great-great-grandfather, Samuel C. Johnson.
“Every family company was born of a great entrepreneurial spirit,” Johnson-Leipold said, describing how her great-great-grandfather, who began a parquet flooring company in the back of a hardware store, eventually began to mix up batches of flooring wax in his bathtub. Today the company has four separate enterprises and has added financial services and outdoor recreation products such as canoes, kayaks and motors to its well-known line of household products that includes brands such as Shout, Windex and Pledge, as well as industrial chemicals and cleaning services.
A guiding principle behind Johnson Family Enterprises' success and longevity, Johnson-Leipold said, is the entity's efforts to earn the goodwill of employees and customers.
“Our focus on people is a solid business strategy,” she said, describing how the firm instituted profit-sharing in the 1920s and how her father, the late Samuel Johnson, pushed managers to make a failing Canadian plant profitable so employees who depended on the firm for their livelihoods would not lose their jobs.
The Kellogg School invitational conference, “Best Practices & New Ideas,” gathered more than 200 family business leaders from 20 U.S. states and 12 countries, offering new insights, strategies and networking opportunities for family enterprises. It was co-sponsored by Northern Trust and Duff & Phelps LLC.