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Founders of family dynasties and family businesses are a special breed. Often, as various examples in this book show, they are visionary people with strong characters. They seem to have a need to succeed both in launching their businesses and in making them different from others. Henry Ford had a vision: everyone should be able to afford a car. At the time, his foresight seemed odd, but ultimately, he turned out to be right. Ruben Rausing, the founder of Tetra Pak, and Walt Disney had both a vision—create a whole new market where none existed before—and the determination to develop it.
Marcel Bich did not invent the ballpoint pen, nor did he like using ballpoints: the ink ran, they were messy, and everyone who had tried to produce a better quality had failed. But when an order came in, Marcel Bich decided that if he was going to supply ball-point pens, he was going to supply top quality. He spared no effort. To support top-of-the range research, he invested more money than his small company was making at the time. For three years he searched for the finest machinery and the best technicians. But no one believed in his venture. No bank supported his efforts. And yet his stubbornness paid off: after three years of effort, he had a well-functioning, non-messy ballpoint pen in his hand. His vision was simple: to produce high-quality, low-cost ballpoint pens that everyone could afford. Not stopping with pens, he later applied his low-cost, high-quality rule to razors and lighters. Today everyone either owns or has owned at least one Bic product.
Founders of successful family businesses often have strong values that they instill in the next generation. These same values, in many cases, are still very much in evidence a few generations down the line. A good illustration is the letter from the Murugappa family later in this book. However, once they have created a business and instilled strong values, founders often struggle to let go. In our work and research we have encountered many family businesses that failed because the patriarch refused to hand over the leadership of the business to the next generation.
Strong values and the difficulty of letting go are evident in the family business founders in this chapter. Fritz Henkel, Abdurrahman Paksoy, and Marcel Bich—all are men of strong character and deep-seated principles. Fritz Henkel handed his business over in 1929 and died in 1930; Marcel Bich organized his whole succession, handed over the business, and passed away the night before the first annual general meeting at which he was not to preside. Letting go of the business may not have been easy for them, but the perennity of the business was paramount for both. Each took considerable time to think about succession. Both put good structures and competent successors in place. They knew their own children were competent business leaders. They knew their children shared the family values because they had been working hand-in-hand for a very long time—30 years in the Henkel case and almost 40 years in the case of the Bich family.
By contrast, the letter from Enric Bernat Fontlladosa of Chupa Chups—the man behind Kojak's world-famous lollipop (from the popular American television series Kojak)—gives us the rare example of a founder who not only let go of the business and found a life after, but who also praises his children for taking the decision to withdraw from executive management.
Location: Düsseldorf, Germany
Turnover (in US$): $11.447 billion (2001)
Date of exchange rate: March 25, 2002
Name of local currency: Euro
Number of employees: 45,753 (Dec. 31, 2001)
Activity/industry sector: Consumer brands and technologies: laundry and home care (23% of total sales, including brands such as Persil, Mir, etc.); cosmetics/toiletries (16% of total sales, including brands such as Schwarzkopf, Fa, Diadermin, etc.); adhesives for consumers and craftsmen (10% of total sales, including brands such as Pritt, Pattex, etc.); Henkel Technologies (22% of total sales); Corporate, Cognis, Henkel-Ecolab (29% of total sales)
Geographic spread of the business (2001, % of total sales): Germany (23%); rest of Europe, Middle East and Africa (49%); North America (15%); Latin America (5%); Asia Pacific (8%)
Year the business was started: 1876
Name of the founder: Fritz Henkel (1848–1930)
Generation running the business: Members of the fourth and fifth generation are chairmen and members of the supervisory board and shareholders' committee of Henkel KGaA
Name and position of person writing the letters (1899, 1929): Fritz Henkel, founder, owner, and general manager of the company
Percent of capital owned by the family: 56.87% of the voting rights in KGaA are held by 62 members of the families of the descendants of Fritz Henkel, the company's founder, and by companies and foundations appointed by those families.
Recipient(s) of the letter: Fritz Henkel Jr., son of the founder
Düsseldorf, December 22, 1899
My Dear Fritz,
With this letter I confer in you the power of attorney in our company, and I have no doubt in my mind that it will fill you with pride just as it fills me with pride to hand it over to you. You know, my dear son, that your duties are many and your responsibility is almost as great as mine. You are now called to work at expanding our business and removing part of my job from my tired shoulders.
I feel sincerely happy and relieved to have found a devoted employee in you.
With all my love,
HENKEL & CIE. G.M.B.H. DÜSSELDORF
KOMMERZIENRAT FRITZ HENKEL
Regensdorf, July 25, 1929
My Dear Son Fritz,
You are celebrating your birthday today. Congratulations!
Twenty-five years ago, I took you in as a partner in my business. We have, since then, worked cheerfully and seriously together, and I would like to thank you with all my heart for your faithful collaboration. Today, the Henkel company is one of the largest and one of the healthiest businesses in Germany, and it is highly esteemed, not only in Germany, but also abroad. My dear son Fritz, we want to continue to do our duty together and work happily for the future well being of our company.
With all my love,
Location: Clichy, France
Turnover (in US$): $1,376 million (2001)
Date of exchange rate: April 25, 2002
Name of local currency: Euro
Number of employees: 9,700
Activity/industry sector (net sales by products): Stationery (52%); lighters (25%); shavers (20%); others (3%)
Geographic spread of the business: Western Europe (30%); North and Central America (54%); Latin America (8%); rest of the world (8%)
Year the business was started: 1945
Name of the founder and relation to the author: Baron Marcel Bich, author
Generation running the business: Second
Name and position of person writing the letter: Baron Marcel Bich, then president and CEO
Family members active in the business: Bruno Bich, chief executive officer; François Bich, executive vice president and category manager lighters; Marie-Aimée Bich Dufour, executive vice president and general counsel
Percent of capital owned by the family as of December 31, 2000: 34% (49.5% voting rights)
Recipient(s) of the letter: All shareholders of Société BIC in 1973
Short history: In 1945, Marcel Bich acquired, with his friend, Edouard Buffard, a small company that produced components for fountain pens in Clichy, France. In 1950, after two years of research and efforts to produce a good quality and reliable item, he launched his first ballpoint pen, which he called "BIC," a shortened, easy-to-remember version of his own name. He spent the next 20 years refining the technology behind what seems to be a simple product but, in fact, requires technology and precision to produce. Following his motto "provide consumers around the world with quality products at affordable prices," he introduced BIC lighters (1973) and later BIC shavers (1975). Now, every day, Société BIC sells more that 21 million stationery products, 4 million lighters and 9 million shavers.
Letter from Marcel Bich to the shareholders
Annual Meeting, June 4th, 1973
We are assembling for the first time since the Initial Public Offering of our company shares on the Paris Stock Exchange on November 15, 1972. I would like to take this opportunity to tell you how I perceive the principles underlying the conduct of our business.
These principles have been developed over the last twenty years, since I founded and have since run the Company. They were not shaped by a formal education from a French or American business school, but rather by the tough school of hands-on business that I entered at the age of 18 through the smallest door. There is no denying that I deserve to be called a moneymaker: our company was started in 1953 with an initial investment of 10,000 francs and has grown today to 150 million francs par-value share capital through internally generated funds. Equity has nearly doubled each year over the last 20 years.
One of the bases of this development is the ability to take chances. Potential gains increase in proportion to risks taken. The more you risk the bigger your chances of winning ... or losing. The most practical solution is to cover all risk from the start, and then you can't lose. This explains why you will not find in our balance sheet any medium- or long-term debt, a rare occurrence in today's world, where currency devaluation makes borrowing very tempting.
The second principle on which our business is founded involves fostering our staff's sense of responsibility. Our company is all but technocratic. We believe, for example, that one does not keep a rein on the price of beef by controlling retail prices, but rather by raising beef cattle. Technocracy is the evil of our times; starting at the top (many French leaders are graduates of the top Public Administration School in the country—E.N.A.), it spreads to all levels. Technocracy is particularly appealing to French people, who tend to be analytical in the Cartesian sense. It produces a crowd of administrators and organizers, but when it comes to doing the actual work, there is no one around to roll up their sleeves.
Technocracy results in a high production cost and, more alarming, low morale among employees who become bored with jobs in which they can't take any initiative. By placing confidence in workers, employees and executives, everything becomes easier. Contrary to popular belief, free and independent businesses today have a greater shot at success than ever before. As proof, just look at the increasingly serious problems with which large state-owned companies are struggling.
Furthermore, in order for a business to truly prosper, it must operate on a worldwide scale. This requires financial, industrial and commercial strength. This necessary strength, and equally essential reliance on individuals, are diametrically opposite notions. Here lies a fundamental contradiction that is difficult to solve. BIC tries to rise to the challenge in its day-to-day practice: "necessity is the mother of invention."
Chairman & Chief Executive Officer
Paksoy Tic San A.S.
Location: Adana, Turkey
Turnover (in US$): $50 million
Date of exchange rate: January 1, 2002
Name of local currency: Turkish lira
Number of employees: 250
Activity/industry sector: Food manufacturing
Geographic spread of the business: Nationwide and Middle East
Year the business was started: 1951
Name of the founder and relation to the author: Abdurrahman B. Paksoy, grandfather
Generation running the business: Third
Name and position of person writing the letter (1951): Abdurrahman B. Paksoy, founder
Family members active in the business: Ibrahim Paksoy, CEO; Ugur Paksoy, chairman
Other family members non-active shareholders: About 20
Percent of capital owned by the family: 92%
Recipient(s) of the letter: Second-generation members of the Paksoy family
Note: Abdurrahman B. Paksoy, the founder of the business, had seven sons. Five were educated abroad, four in Europe (France and England) and one in the USA. All five were trained as engineers; most were civil engineers. After their return to Turkey, they started working as contractors on big projects.
The Abdurrahman family had been in Adana for 250 years. They were from a farming background (cotton). In 1950, Abdurrahman decided that he would get all his sons together and start a cotton ginning company. The company started operating in 1951. When Abdurrahman passed away in 1953, his sons took over. Initially, five brothers were involved in the company. The two remaining brothers were active in the agricultural side of the business. All were shareholders. Not equal shareholders, but shareholders nonetheless.
In 1954, the Paksoy family set up a plant to crush cotton oil from cotton seeds. An oil business was started and it grew rapidly. In 1960, a soap manufacturing facility was added, and in 1974, after the third generation entered the business, a margarine plant was started. Today Paksoy produces margarine, oil and soap. The gin was shut down in 1956 and sold. The family is no longer in the original business.
Today, only two of the brothers are alive, and none of them is active in the business. Two cousins of the third generation—Ibrahim and Ugur—are running it.
No members of the fourth generation are involved in the business yet. It may be difficult to involve them in the business since the young ones all want to go to Istanbul. Adana is a big city, with about 1.5 million inhabitants, but Istanbul has more to offer and is attracting all the talents. However, one member of the fourth generation is showing an interest.
The third generation still lives up to the standards set up by their grandfather. At least in as much as modern life makes it possible. Unfortunately, since 1950 society has changed dramatically. In most cases, it is very difficult to resolve differences amicably, and courts and judges have to be used more often than the family would like to. The family tries to live in the spirit of the letter more than to its precise words; family members try to instill their grandfather's precepts to their own children.
Abdurrahman Bagdadizade Paksoy to his sons
January 24, 1951
Advice for my sons,
To live in tranquillity and happily and to be successful, remember:
1. Be just, sincere and serious in all your deeds and speech. When in doubt, choose the lesser of evils and clear your conscience.
2. Always obey the rules of conscience and law.
3. Act with determination and avoid being doubtful.
4. Feel free. Do not be helpless, lazy or shy.
5. Do not be fearful of any danger. Try to be cautious, defend yourself, drive away danger. Do not fear humiliation. Often, fear itself does more damage than the danger you are trying to avoid.
6. Try to get to know as many people as possible and make more friends. In your relations, let seriousness and sincerity rule. People will thus be satisfied. Never resort to flattery or hypocrisy.
7. If you expect friendliness, you should behave sincerely, for sincerity is the only way to be received with real friendliness.
8. Select your words carefully. Spoken words may have positive or negative effects depending on the manner and timing of your speech. A man's worth and value is measured by his words.
9. Never have the all-knowing attitude. Never brag to or argue with friends. Never criticize anybody. No matter who the other person is, always assume that he is more knowledgeable, more valuable and a better person than you are.
10. In trials and auctions, always take a positive approach. Never neglect to pursue your rights through the law.
11. Never submit to your feelings, always control yourself and never get angry or violent.
12. Never talk about the evil deeds of others. Do not blame people or speak badly in their absence because such acts will lead to offence and hurt.
13. Do not mistreat people who have wronged you, even when you are capable of doing so. Always forgive. In such cases, your forgiveness is very meaningful. Sometimes wrong deeds are merely faults, careless acts or the results of misunderstandings. Even with friends and siblings, settling an argument can be painful and may cause ungrounded animosity. It is best to act with care and prudence, as if nothing has happened. Nobody will mistreat good people; they will wrong people only if they consider them evil. Do not let anybody mistake you as an evil person; avoid creating such an image.
14. Never envy anybody; try to surpass them.
15. Do not ever promise anybody anything. Remember: a promise has to be fulfilled under all circumstances.
16. On occasions like religious holidays, never neglect visits—they are human debts.
17. Be a good citizen. Participate in elections. It is your duty to your country.
18. Be content. Contentment is not laziness; on the contrary, it is being satisfied with your life. Work as if you will never die. People who are contented will be happy; there will be no happiness otherwise.
19. Remember: it is impossible to be successful in every venture. Do not be discouraged if you fail. Believe in destiny and luck. Be a believer. Have faith. These will help you in case of loss and accidents, for you will grieve less.
20. Keep your conscience clear always.
Excerpted from Sharing Wisdom, Building Values by Denise H. Kenyon-Rouvinez, Gordon Adler, Guido Corbetta, Gianfilippo Cuneo. Copyright © 2011 Family Business Consulting Group. Excerpted by permission of Palgrave Macmillan.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
• The Authors
• Testimony, Thirry Lombard, Lombard Odier Darier Hentsch & Cie Bank, Switzerland
• Succession Tips and Tools
• CHAPTER 1 FOUNDERS* Letter, Fritz Henkel, Henkel KgaA, Germany
• Letter, Baron Marcel Bich, Société BIC, France
• Letter, Abdurrahman, B. Paksoy, Paksoy Tic San A.S., Turkey
• Letter, Enric Bernat, Chupa Chups Group, Spain
• CHAPTER 2 SIBLINGS* Lterr, Raya Strauss-Bendror, Strauss-Elite Ltd., Israel
• Letter, Robert Pasin, Radio Flyer Inc. United States
• Letter, Kenny Yap, Qian Hu Corporation Limited, Singapore
• CHAPTER 3 COUSINS* Testimony, Philippe Nordmann, Maus Frères S.A., Switzerland
• Letter, Marco Drago, DeAgostini S.p.A., Italy
• Letter, Bertel Paulig, Paulig Ltd., Finland
• Letter, Luiz ALberto Garcia, Algar Grupo, Brazil
• CHAPTER 4 WOMEN IN FAMILY BUSINESS* Letter, Mona Al Khonaini, Al Khonaini Al Katami Trading & Contracting Co. Kuwait
• Letter, Ardath Rodale, Rodale Inc., United States
• CHAPTER 5 SHARED LEADERSHIP* Letter, Dr. Peter Zinkann, Miele & Cie CmbH, Germany
• CHAPTER 6 WEALTH, TRUSTS AND STEWARDSHIP* Letter, Steven Waichler, Follett Corporation, United States
• CHAPTER 7 NO SUCCESSORS* Letter, Yoshibaru Fukujara, Shiseido Company Limited, Japan
• CHAPTER 8 FAMILY DYNASTIES* Letter, Dino Frescobaldi, Marchesi d
Posted September 12, 2014
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