by Gale Martin, Director of Marketing, S. Dale High Center for Family Business
The S. Dale High Center offers a Generation Next Affinity Group for young people committed to their family businesses. We meet every other month between October and June to discuss issues concerning their work and work life as they prepare
to assume responsibility for running their family businesses.
Since one of the members requested more information on best practices, for the last several meetings we have discussed
Managing in the Long Run: Lessons in Competitive Advantage from Great Family Businesses by Danny Miller and Isabelle LeBreton-Miller (Harvard Business School Press) as part of our work in this group.
Thus far we have learned about four categories of exemplary family businesses:
- Brand Builders
- Craftsmen
- Operators
- Innovators
According to the authors,
Brand Builders are image masters who create perceptions of themselves and their prompts that prompt customers to buy from them. Estée Lauder, Hallmark Inc., and L.L. Bean, Inc., are all family businesses who have created a brand that is highly sustainable as a competitive resource. The authors stated that Estée Lauder dominates the United States cosmetics markets with a 40 to 45 percent share. Hallmark lays claim to 55 percent of the U.S. market and is the only brand name card 80 percent of Americans can name. Miller and Le-Breton-Miller stated that L.L. Bean is the world's number one outdoor specialty products and sport catalogue retailer. Each of these companies, several generations old, had the vision to make choices in brand building that would position them competitively in the market. They committed themselves to offering a distinctive product that creates an emotional link with customers and to promote that product in unconventional ways--Hallmark, for instance, was told they can't sell a greeting card by turning it over and reading the name of the company that created it, which is exactly what they've done since the 1930s Hallmark they first advertised their cards on the radio.
The
Craftsmen are family controlled businesses for whom nothing less than perfection is acceptable. They craftsmen they cited included the Adolph Coors Company, The New York Times Company, and Nordstrom, Inc., to name a few. Craftsmen adopt the highest standards for their products, are willing to wait years for decent ROI, and are known to sacrifice a great deal just to do things right. The pursuit of quality has served as their conduit to sustaining their reputation and economic well-being of the family.
The
Operators focus on efficiency, making great use of routines, procedures, and automation to sustain their efficient model. Cargill, IKEA, and Tyson have all refined their operations based on sustaining a vision of an economy-driven business model that targets value-sensitive clients. Operators are also highly committed to consistent senior leadership.
The last group we studied were the
Innovators, or family controlled businesses who have distinguished themselves by taking risks and by continually challenging the frontiers of their industries. Corning, Fidelity, and Motorola were all mentioned as Innovators for whom renewal is a guiding precept. They exhibit an unfailing discipline, committing unprecedented resources to R&D, to sustaining a culture of creative new ideas that keeps moving the company forward.
No matter the category, all these extraordinarily family businesses possessed guiding principals--a vision--of the kind of company they wanted to be and what they needed to do, in the long run, to get there. The family businesses have embraced different paths to success, carefully examining what kind of business they wanted to be, based on their values, staking their reputation, their viability, on their values and vision.
What is your vision for your family business? Have your staked your business model to your vision, your operations, your brand?
Harvard Business Review Press has made an excerpt of
Managing in the Long Run available here.
