How Family Enterprises Can Navigate Adversity & Build Organizational Fortitude

Fire, floods, relocation, and a pandemic couldn’t sink Formans, the family-run smoked salmon supplier. Here’s how they stayed afloat.

When I tell people about the fire, the flood, and the compulsory purchase, everyone says, what about the plague of locusts? Well, now we have the plague as well.

- Lance Forman, Owner, H.Forman & Son and formanandfield.com

Policy analysts have coined the term ‘permacrisis’ to denote an extended period of difficulty arising from a spate of unprecedented and catastrophic global events.

From the financial crisis to Brexit, the pandemic to political instability, and global conflicts to economic turmoil, businesses of every kind have had to pivot. But for family enterprises, where the overlap of family and business systems means there is more at stake than financial capital alone, the risk is too great to do nothing.

How do organizations stay resilient in an era of uncertainty and what does resilience mean in the context of not one, but several unprecedented and catastrophic events?

I recently co-authored a research paper with Celina Smith, Emanuela Rondi, and Mattias Nordqvist that set out to answer this question for the first time. Published in the Journal of Management, the research explores the role of resilience across multiple adversities in family enterprises. H. Forman & Sons is the subject of the decade-long research project.

Now trading as Formans, the fourth-generation family business produces smoked salmon for retail outlets, hotels, and restaurants across the world. It is the oldest surviving London smokehouse and is led by the founder’s great-grandson, Lance Forman, who in the last decade has seen the business face floods, fire, enforced relocation, and the pandemic.

The paper explores the family’s reaction to each adversity and how they build and rebuild time and time again, getting stronger at every juncture. We use their story to offer research-based best practices for family enterprises to navigate changing parameters, overcome adversity, and build resilience.

This meant not only moving out of the newly constructed and purpose-built factory but also out of London due to rising property prices

The Plague Of Locusts

Lance Forman joined his grandfather’s business as CEO in 1994. Four years later, a fire burned the factory to the ground and led to the rebuilding of a new state-of-the-art facility in Hackney Wick.

Within a year of rebuilding, the River Lea burst its banks, causing flooding to the factory. It was a devastating second adversity to face within such a short period. After a six-month battle with insurers and another rebuild, Formans opened its third location in Marshgate Lane in 2001. Once more, the family and the business came back stronger than ever. Having realized the risk of relying on just one business discipline, Lance introduced a new home delivery service – Forman & Field. The business thrived.

In 2003, an article was published linking the Marshgate land area to the London Olympic Games, which proposed that if London successfully won its bid to host the 2012 Olympic Games, Formans and more than 250 local firms and residents would face enforced relocation. Within a year, Lance led the Marshgate Business Group, mobilizing affected firms to fight against relocation terms, and, in 2005, London was announced as the winner.

This meant not only moving out of the newly constructed and purpose-built factory but also out of London due to rising property prices. The intensity of the adversity would then increase as the firm faced protracted and acrimonious settlement negotiations with the government. In 2007, Formans built another factory, its largest building yet and within five years, the family purchased adjacent land to create a Riviera-style lounge – decentralizing their risk, expanding their business, and capitalizing on the tourism that the Olympics would bring.

In 2020, the pandemic hit and Formans was forced to scale back production once again. The family opened a local shop, selling produce for staff at cost price, while online sales for home delivery soared.

In each crisis, the family travelled through a cycle of five practices, which we illustrate with qualitative interviews as a perfect recipe for resilience.

Organizational Fortitude

Surviving one major adversity is an accomplishment, surviving four not only fortified the family but built confidence. The findings show that the Formans learned from each adversity and then applied that knowledge to the next, enhancing a notion that we introduce in this paper; organizational fortitude, which is used to define the propensity of an organization to stand resolute against adversity.

In each crisis, the family travelled through a cycle of five practices, which we illustrate with qualitative interviews as a perfect recipe for resilience. It begins with fearing loss before moving into a proactive response of securing resources and entrenching support, fighting the battle, reframing, and then finally, pivoting. The paper offers practical examples of each motion, from questioning the survival of the firm during the fire to mobilizing staff to save documents and equipment from flood water, reframing an Olympic relocation battle into building a narrative in the press and pivoting into new facets of the business such as a home delivery service.

The Formans transitioned from being victims of adversity to taking on existential threats and winning. Their story demonstrates that organizational fortitude is essential to creating long-lasting family business success and provides a list of traits, characteristics, and behaviours that are essential to overcoming adversity and building resilience.

The family continued to look after their staff throughout each crisis, evident to no greater extent than the shop they opened during the pandemic to offer cost-price perishables to the team.

Traits Of Resilient Family Enterprises

One of these traits is concentrated ownership. Lance Forman, as leader of the family and business systems, was pivotal as he not only had a heightened sense of responsibility for saving the family legacy but could bring the business and family together. In my experience of working with business families, family ownership concentration spurs family businesses to engage in resilient behaviour when their survival is threatened, which might include granting jobs to the next generation or maintaining family harmony.

The firm had a close-knit culture that meant each member was trusted to play a surrogate of the family, allowing Lance, as CEO, to delegate roles and responsibilities while he fought adversity. The more support the firm and its staff received from the family, the more they wanted to reciprocate loyalty and dedication by working longer shifts and even risking their own lives in the event of fire and floods.

Shared values are present throughout the Forman story. The family continued to look after their staff throughout each crisis, evident to no greater extent than the shop they opened during the pandemic to offer cost-price perishables to the team. All critical shareholders shared family values, and with each crisis, the firm became bolder, more assertive, and secure in the knowledge that the staff were right behind them.

Succession is pertinent too – and increasingly relevant within the shifting demographics of family enterprises today. When the fire destroyed the factory in 1998, Lance’s father, Marcel, was slow to respond. However, Lance was ready to step in and ran into the burning factory to save as much machinery as possible, carrying them through the night to make the next day’s deliveries. The high trust between father and son led to an implicit, uncontested, and seamless transfer of authority.

Finally, family enterprises need to be willing to pivot. I have previously written about the paradox of tradition and innovation and how both need not work exclusively. Families can retain their heritage while innovating and pivoting to survive adversity. In fact, it can allow them to thrive. When faced with the third adversity in less than a decade, Lance pivoted. Rather than hiring a surveyor or real estate lawyer, he hired a media lawyer and put all of his efforts into building a media following and narrative – selling a David vs. Goliath image to the press during the Olympic relocation battle.

The family learned it was not enough to be passive in the face of adversity but rather, they needed to seize the initiative and be inventive in retelling a story.

Every single adversity was leveraged to make improvements, from rising from the ashes and modernizing facilities to expanding the business to capitalize on the adversity from the Olympics, change is inevitable, the question is: is your organization resilient enough to survive it?

About The Author - Alfredo De Massis is ranked as the most influential and productive author in the family business research field in the last decade in a recent bibliometric study. De Massis is an IMD Professor of Entrepreneurship and Family Business at IMD where he holds the Wild Group Chair on Family Business and works with other universities worldwide.

Access the full paper here and join the conversation. How does your family enterprise navigate adversity? This article has been reproduced with the permission of the author.