It’s a long way from a town in southern Poland to the bright lights of Broadway and the catwalks of Fashion Week, but one family firm has not just gone the distance, but done it in style. Inglot Cosmetics was founded 33 years ago by Wojciech Inglot, supported by his sister Elżbieta. They were later joined by a second brother, Zbigniew. The company is at the forefront of the science of beauty, exploiting an in-depth knowledge of chemistry, physics and pigmentation to create its huge range of intense and vibrant shades, which have made it the darling of the fashion and entertainment business. There are over 1,500 different colours to choose from across eyes, lips, face and nails, and Inglot’s signature ‘Freedom System’ allows customers to pick their own special palette of tones. These days, you can find Inglot at all the glitziest show biz events, from the sets of film and TV studios to backstage on Broadway, but the company has never lost touch with its roots, and still prides itself on its Przemyśl presence. Even the huge advertising billboard they have on New York’s Times Square is actually managed from the head office in Poland. As Zbigniew says, “We belong here, and we’re a big employer here. That’s a huge responsibility. And we’re committed to making our make-up here, too – 95% of it is manufactured at our site.” The next big step at Przemyśl will be extending the R&D facility. True to its roots, Inglot devotes huge resources to the scientific development of new products, often in collaboration with universities. The state-of-the-art O2M breathable nail polish was developed by Wojciech Inglot and tested in cooperation with the AGH University of Science and Technology. The revolutionary breathable formula, which was created specifically for health reasons, has quickly become a global success and coincidentally helped the company get a foothold in to the lucrative luxury malls in the Middle East. With the second generation now joining the management team, the roles within the team continue to be clearly defined: Elżbieta focuses on operations and new product development, and after the sudden death of Wojciech in 2013, Zbigniew has taken over full responsibility for strategy, investment, and international expansion. Since the first store opened in Canada in 2006, the company has established, owned or franchised Inglot outlets in nearly 80 countries, including 650 boutiques in some of the world’s smartest locations. They’ve also opened concessions in department stores like Macy’s in the USA, Edgars in South Africa, and Falabella in Chile, Peru and Columbia. Right now, they’re opening up to two new stores a week, all over the world. “We could grow quicker, but we can’t afford mistakes. And getting each new store right takes a lot of thought – it’s not ‘one size fits all’. We actually manufacture the fittings and furniture ourselves and employees from Przemyśl go out and install them.” E-commerce isn’t as fully developed as yet, but it’s coming: “We initially thought we wouldn’t need to sell online, especially in Poland, given we have such a big retail presence, but we know now that was a mistake, and we’re catching up. We’re lucky that cosmetics is a hugely active category online, and the items are small and easily shipped.” In fact, according to PwC’s 2016 Total Retail survey, 65% of the people who buy cosmetics products bought at least some of them online in the previous twelve months. So what does the future hold? “Product-wise, we’re looking at moving into face creams, lotions – what we call ‘white cosmetics’. That could be an amazing category for us. As for the brand, my dream is to make it the most recognised Polish retail brand in the world.” Given that one beauty website calls Inglot “the makeup-lover’s ultimate dream brand”, it looks like they’re well on the way. This feature forms part of the PwC Global Family Business Survey 2016 It has been reproduced with permission of PwC.

There are plenty of benefits of having the next generation work outside of the family business for part of their career progression. Australia’s next generation of family business owners should consider working in another company, and maybe even another field, before returning to the family brand. Each offspring, no matter how strong the bond with the family, should build on their formal education and test their skills in the open market, work for a new boss or two, and establish a threshold of responsibility to implement their own ideas. Outside experience is healthy for individuals and the business. The specifics of the outside job are probably less important than the journey away from home. Of course, professional positions in sales, production, marketing, human resources, research or other operational fields can be very constructive. Young workers need to understand the value of uncertainty and meritocracy, both of which might be lacking when your surname is written on the company building. If the new job is in the same industry, the future successor can develop his/her own personal network and learn crucial skills — maybe even gain first-hand knowledge of useful ideas from competitors. A job outside the same industry as the family business can be equally useful, especially if the next genner has always wondered what life outside the family industry is like. An added bonus: young people get the chance to be young and possibly foolish away from the eyes and ears of their future colleagues or employees. Most children share certain passions with their parents, but most have different interests, too. Much like a university experience, the next generation worker will benefit from being around those who share their interests and passions. They may even find someone of similar mind and talent to incorporate into the family business down the road. The larger the family business, the more important it is for future leaders to have a sense of working for someone you aren’t related to. No matter how objective and fair-minded the parent, a child won’t get a true sense of that independence and perspective while shaded by the family umbrella. In numerous surveys, Family Business Australia and KPMG have found that successful family businesses tend to have children who are more educated and worldly than the general population. “More than 75 per cent of respondents had completed some vocational or tertiary training after leaving school,” one survey found. “These figures are significantly higher than those of the population at large.” One participant said that businesses don’t just benefit in the long run when the next generation initially leaves the business. The short run benefits can be felt in the current staff. “It’s also good for the other staff in the business, who can see a clear prerequisite for family members to join the business,” said the unnamed participant. “In turn, it’s better for the culture of the business.” There are obvious benefits whenever the next generation eventually return to the business. “If a role is created just for you,” said another participant, “instead of a real business need, then it makes it more difficult to build respect with other staff.” Another study found “group participants agreed that entry rules regarding education and experience should be encouraged and even written up formally for future generations.” Stories Of Success Ross Brown, third son of John Charles and Patricia Brown, has known the wine trade his entire life. His family business, Brown Brothers Winery, has been an institution in northeast Victoria since 1889. Ross served as CEO for ten years before moving to executive director in 2011, and he stresses the importance of long-term planning — for business and for family. “In our business we plant a vine to make wine in five or six years’ time,” Ross said in an interview, explaining why family members must work a minimum of four years at another organisation before moving returning to the Brown family business. In a separate interview with Drinks Trade Insight, Ross reaffirmed his belief in the outside work requirement. “It has the potential to continue to bring outside skills and knowledge back into the business.” The Brown Brothers family formalised an outside work requirement into a non-negotiable clause, and it keeps their family values codified for each generation to share and keeps the next generation from becoming complacent. Sheree Sullivan, director and manager of Udder Delights in South Australia, said outside work was critical for the business’ early survival. Her father and mother, Trevor and Estelle Dunford, started the company in 1995 with just two goats. Sheree and her husband Saul bought 50 per cent of the company 10 years later and says her family’s success can be traced to its “migrant model”. Everyone, including her parents, worked outside jobs when the business was getting off the ground. There, they learned “a unique and very diverse skill set,” says Sheree, including business administration and equipment maintenance.

Family businesses are the engine room of economies the world over and they are all about the nature of the family and the values that underpin them. Due to the very nature of their ownership and the family dynamics within them, and the delicate balance between family, business and ownership, it is important to understand them and what makes them different to their non-family counterparts. This online training programme will provide a good insight into the world of family business, business models that help understand them and some of the drivers, values and purpose behind family firms. It will also discuss some of the unique challenges facing family firms today. This is an introductory programme that will be of benefit to those involved within a family business as well as those working in professional services advising family business clients. It is a top level overview and will help to build awareness of the family business as a business model and provide context and examples to help client discussions, and to appreciate some of the relationship matters associated with family businesses too. The interactive programme will provide plenty of opportunities to ask questions throughout. Spaces are limited so book early to avoid disappointment.

Instituting a family council can be a significantly positive step toward managing the business in a more rational and professional manner. In the majority of privately held multi-generational family firms, the family council is the main vehicle of family business governance. Instituting a family council is a significantly positive step toward managing the business in a more rational and professional manner. The family council is more formal than a family meeting. The purpose of the council is to present and discuss the family issues of running the business. The family council is where problems, concerns, issues, and opportunities are presented and discussed, alternatives are weighed, and decisions are made. In a family council, the family usually takes a vote, and decisions are made either by a simple majority or by consensus. Some families strive for unanimity, which can tend to delay decisions but has been found to increase family unity. For the family council to be effective, all members must recognize the council is the proper time and place to present their point of view. One of the major positive attributes of the family council is that family members agree to abide by the decision of the council (even if they disagree or are on the losing end of the vote) and consent to not grumble about it outside of the meeting, but instead show support and unity for the family decision. In smaller to medium sized firms the council acts as the governing body. In larger firms, most commonly public family firms, the decisions and positions of the family are presented by a member of the council to the board of directors. The family council elects at least one person to represent the family and sit on the board of directors. The creation of a family council can be difficult to manage initially. Research has found that for the council to work well, it often needs to be facilitated by a professional. This enables the meetings to be more productive, allows every member the opportunity to present their view, prohibits one dominant family member from taking over, and also holds members accountable for following through on decisions. The institution of a family council can be a tremendous adjustment for the owner- manager, who often leads in a paternalistic manner, to relinquish decision- making power and authority to the council. Moving to a more professional and rational method of decision making has been shown to increase family business longevity. By the third generation of family ownership and control, there are a large number of family members involved in the business. There are cousins working together, and some second- generation members are still active. With more people involved, often with differing goals, decision making is more difficult and conflict is common. This creates a need for a formal decision-making process. There are several corporate governance structures similar to the family council including: the shareholders assembly, comprised solely of stockholders; and the family assembly, composed of family members by birth and marriage, ranging from owners and non-owners to family employees, and family non-employees such as spouses and in-laws. Each family is unique and each business is unique. Families in business together should be aware of the various structures used to govern family firms for increased success and continuity. Reproduced with permission from Keanon Alderson and The Press-Enterprise (www.pe.com) Keanon Alderson Ph.D. is an associate professor in the Robert K Jabs School of Business, at California Baptist University in Riverside CA. His book “Understanding the Family Business” was published in 2011. He can be reached at kalderson@calbaptist.edu

Alfred Kärcher, like Robert Bosch, Gottlieb Daimler and Graf Zeppelin, was one of the inventors and entrepreneurs that Württemberg produced in such great number since the beginning of the industrial era. With the utmost commitment, he dedicated himself to bringing his ideas to fruition. In 1924, the then 23-year-old completed his studies at the Technical University of Stuttgart and worked first of all at his father’s agency, which he developed into an engineer’s office. In 1935 he founded his own company in Bad Cannstatt, Stuttgart so that he could produce and market his own products in the field of heating technology. Alfred Kärcher designed and built the “Kärcher salt bath furnace”, among other products, for tempering steel and light metal in industry according to his own patent. In 1939, the family-owned company relocated to Winnenden, where it still has its headquarters. By this time the company was also producing heating devices for aircraft engines and cabin heating systems. Following the Second World War, the company turned its attention to products for urgent, everyday use: round stoves, small cookers, handcarts and trailers for tractors. Move into cleaning technology Alfred Kärcher made his breakthrough into the cleaning technology industry in 1950 with the development of the first European hot water high-pressure cleaner (the DS 350 steam jet). The design of the water heater proved to be so pioneering that it still forms the basis of all burners today. Like so many, Alfred Kärcher did not live to see the global success of his innovation. When he died on 17 September 1959 at the age of 58, his wife Irene took over the management of the company and steered its fortunes for three decades. Today their children Johannes Kärcher and Susanne Zimmermann von Siefart are in charge of the family-owned company in its second generation. Internationalisation In 1962, Kärcher founded its first foreign subsidiary in France, followed by Austria and Switzerland. Internationalisation continued apace. In 1975, Kärcher opened a factory in Brazil; 10 years later, the company had founded 16 sales companies in North America, Africa, Australia and elsewhere. By 2012, Kärcher was represented by subsidiaries in 57 countries and generating 85% of its sales abroad. With 40,000 customer service points in over 190 countries, Kärcher provides comprehensive support to its customers all over the world. Growth through innovation After a phase of diversification, Kärcher turned its attention to high-pressure cleaning in 1974. During this period, the colour of the machines was changed from blue to the now world-famous Kärcher yellow. In 1980, the company expanded its product range to cover basic cleaning requirements, initially in the areas of transport and buildings. Step by step, the range was expanded with the addition of wet and dry vacuum cleaners, sweeper vacuums and scrubber driers, vehicle washing bays, steam cleaners, cleaning agents and drinking water and wastewater treatment systems. Among the milestones in Kärcher’s history was the introduction in 1984 of the HD 555 profi, the first portable high-pressure cleaner, and the subsequent expansion into the consumer market. In 1993, this range was expanded to include indoor products and Kärcher has since added steam cleaners and vacuum cleaners for private households to its range. The RoboCleaner RC 3000 was launched in 2003 as the world’s first fully automatic robotic vacuum cleaner. In 2007, Kärcher moved into the completely new sector of gardening, which includes pumps for watering, water removal and service water supply in households, as well as an extensive range of accessories. In 1986, Kärcher launched its pioneering roller brush technology for scrubber driers in the professional range. Thanks to the development of a new rotary nozzle (dirt blaster) in 1995, the cleaning effect of the high-pressure cleaner was almost doubled. The dust intake of commercial wet and dry vacuum cleaners was continuously improved, and in 2007 the innovative Tact filter cleaning system was launched. New procedures were also developed in the course of worldwide cleaning projects: the 284 travertine columns on St Peter’s Square in Rome were restored using a specially developed spray process over a total area of 25,000 m². Since 2009, Kärcher has been selling ultra-high pressure cleaners, which, at up to 2,500 bar pressure, not only clean but restore facades and strip concrete. In the same year, a multipurpose municipal sweeper was released onto the market and new target groups were gained with the launch of water dispensers. Kärcher becomes a global market leader Innovation has been and continues to be the most important growth factor. In 2011 alone, Kärcher launched over 100 new products. The global market leader in cleaning technology will continue to be characterised by its ingenuity, top performance and innovative problem solving. Top performance for cleanliness and value When it comes to quality and technology, Karcher are the leading provider of cleaning systems, cleaning products and services for leisure, households, trade and industry worldwide. Their customers benefit enormously from using their effective, efficient and environmentally friendly cleaning products. Karcher make a noticeable difference in the lives of their customers by providing effective, efficient solutions for everyday cleaning and watering tasks all over the world. Kärcher have come a long way since the business was formed by Alfred Kärcher and is now a global brand. It remains family owned to this day and continues to push boundaries through innovation, evolving as a family firm all the time. Find out more at www.karcher.com

The Mane Group is a fascinating business. Founded in 1871, it’s now a billion-dollar company, operating in 32 countries, with 92% of that revenue generated outside France. And it has built its success by applying the power of technology to the time-honoured skills of using aromatic raw materials to create scents for perfume, and flavours for food. The result? Market leading positions not just in fragrances and flavourings, but state-of-the-art pharmaceutical compounds too. Jean Mane is the great-grandson of the founder, and has a deep respect for the values and sense of social responsibility which have been passed down through the generations of his family firm, and sees his mission as “reaching (at least!) the 150th anniversary of the company still independent.” But he combines this with a passion for innovation and an extremely forward-looking approach to manufacturing. In fact, it’s rather like combining two different but complementary scents: tradition on the one hand, innovation on the other. Mane invests heavily in R&D, seeing it as essential to competitive advantage: with 15% of its range becoming obsolete each year, finding new and better products is absolutely key. One way Mane does this is by having 40 different R&D centres all across the world from Singapore to Mexico, which can spot new and emerging trends, and tap into the changing tastes of local consumers. And once you’ve created a new truly innovative product, you need to protect it: Mane has been extremely effective at developing its own proprietary production processes to defend its vital Intellectual Property. It’s also organised in highly diverse project teams involving people from departments as different as R&D, manufacturing, procurement, and legal. Research suggests that this sort of cross-functional working creates a flexible and agile culture which is much more likely to be good at new ideas. Culture is crucial to Mane in other ways too. The company puts a high priority on happiness and well-being at work, and backs that up with significant investment in development. Though Jean Mane acknowledges that the risk is that his company ends up training people so well that his competitors poach them: “a family business doesn’t just have the challenge of attracting the best talent, but retaining them too. That’s why our culture is so important – the relationships we build with our employees. In our latest employee survey 50% of our people said that family governance was one of the best things about working here.” This feature forms part of the PwC Global Family Business Survey 2016. It has been reproduced with permission of PwC.

Linfox has recently celebrated its diamond anniversary, and has long been one of Australia’s most successful and high-profile family businesses, operating in the transport & logistics, property, airport and cash logistics markets Momentous milestones: 60 years of growth in Australia, so how did they do it? How did they go from owning a single truck in 1956 to over AUD$3.5 billion dollars in revenue 60 years later? We talked to Peter D Fox AM, Executive Chairman, about some of the key milestones along the way. Milestone 1: From One Truck To Two “My father was a truck driver – in fact, I think I had diesel in my blood from a very young age. The business started when my mother lent him the money to buy his first truck. But the moment he bought a second one, you could say that’s when he went from being self-employed, to running a business. That was in the late ‘50s. And he never looked back.” Milestone 2: The first professional manager “In the ‘70s, we brought in an accountant called Sandy Murdoch, who set about introducing some structured processes and some financial discipline. He became a mentor for me personally, too, and gave me the best piece of advice I ever had which was to get myself some business qualifications to add to my practical experience: ‘then you can sit at the front of the room, not at the back’. He was soon joined by a couple of other external hires, and we ended up with a really strong senior team. In 1978 we were turning over AUD$18 million, which seemed pretty amazing, back then. Now it’s nearly 200 times that.” Milestone 3: International Expansion “We started expanding into Asia in the late ‘80s and early ‘90s. First Thailand, then Malaysia, and now we’re in Indonesia, Vietnam, Hong Kong, Singapore, and India, with plans to move into the Mekong Delta, which would give us access to Burma, Myanmar, Laos and Cambodia. In fact there are more people working for Linfox today in Asia than in Australia. We saw an opportunity in Asia and moved quickly. We were one of the first in our industry to enter the Asia market, and it’s become a key competitive advantage. That’s the advantage of being a family business – when we decide to do something, we can move really fast.” Milestone 4: Stepping Up “2000 was a big year for us – we managed the supply chain and all the inventory for the Sydney Olympic Games. It was incredibly exciting and rewarding to be working on such an iconic event. It really put us on the map.” Milestone 5: A Big Acquisition “In 2003, we bought Armaguard, which marked our first decisive move into cash logistics, which has since become such an important business for us. The process of identifying, buying and then integrating businesses of that size was a real learning experience, and it turned us into a billion-dollar business almost overnight.” Milestone 6: Streamlining And Refining “The next step for us was to take a long hard look at the business we had, and decide where we wanted to take it, both in terms of sectors and markets. One result was a much leaner management structure internally, and the decision to focus on our biggest customers externally. We had 300 customers in 2008; now we have about 80. That took courage, but it was the right thing to do. For us, it’s about quality, not quantity: our strategy is ‘less is more’.” Milestone 7: Looking Ahead “If I look ahead for Linfox, I see two key challenges for us. One is for the business, and it’s all about technology. People often think about digital in terms of the information it gives you, and yes, that’s important. But I look at it in terms of all the other things digital makes possible. There are some incredibly exciting developments in our sector using technology like driverless vehicles, robotics and automation to run warehouses better, manage deliveries more efficiently, and improve productivity.” “At the moment, our IT infrastructure isn’t as good as it needs to be, but we have to be the first into these new technologies just as we were the first into Asia. The second challenge is for the family. Our third generation is just reaching the age when they’re going to have to decide if a career here is right for them, and we’re going to have to decide the right management structure for Linfox in the longer term. That’s not a decision we can make yet; it may be a member of the family, but it might not. But what I do know, is that it will be the best person for the job.” This feature forms part of the PwC Global Family Business Survey 2016. It has been reproduced with permission of PwC.

If family enterprise is a mindset, then being more mindful seems fundamental to this effort. Awareness changes everything: You can’t address an issue or work on something until you are aware of it. So if you aren’t cultivating awareness as a leader, in your family, and your enterprises then you are at greater risk. As a family dealing with exponential change and interdependency, Stephanie Kilroy at the Traynor Family Enterprise (an organization that self-identifies as a family enterprise) after having roles on the Family Council, in Human Resources, and on the Board of Directors, has created with broad support, a new and compensated role of Governance Director. That ability to step back and reframe things beyond the conventional way of thinking is increased by mindfulness, something Stephanie practices. The world today is changing, that certainly includes the worlds of family, family business and the emerging model of family enterprise. Here are the factors that are deeply redefining family business and more broadly, our lives: Exponential change, complexity, and increasing interdependency. One thought leader posits that we will experience 20,000 years of change in this century measured by today’s rate of change. As change amps up dramatically in all areas of life from technology to genetics to national security and even how we define family, remember: everything affects everything. Innovation and entrepreneurship. There is a need to more rapidly incrementally improve all that we do (we get app updates daily) but perhaps more challengingly we have to work to learn to not unduly resist breakthrough innovation. Families have to maintain values but not mistake innovation for lack of loyalty to the values. Reframing shareholder value to shareholder values. The bottom line may be that the singular focus on the bottom line may be coming obsolete. Increasingly traction is being gained by notions such as the triple bottom line (profits, people, and planet), as well as in the family wealth field, Jay Hughes four sources of capital (intellectual, social, human, and financial) shows there is a growing need for a more holistic way to define success for families working together. We believe that all these factors are helping to necessitate the emergence of a family enterprise model (to paraphrase the old adage: necessity is the mother of innovation). Over a quarter century of solid research in both the academic and medical realms have validated—for the Western mind, the legitimacy and benefits of mindfulness. It has become mainstream as evidenced by its presence everywhere from Google to elementary schools to top athletes-even the Navy Seals. In this world that borders on chaos, we as family members, but especially those of us leading our family (business) through change realize there are risks attendant to this new environment: We, perhaps especially Gen Y’s, don’t have time to reflect. White space, so necessary for reflection and creativity is becoming rare. Intimacy with oneself, in ones relationships, the present moment, and even with ideas is being lost. A subtle but profound point is that our unproductive or even unhealthy attachment to things is easier to miss (i.e. a growing blind spot). The benefits of mindfulness have been relevant for millennia, but never as much as today. One meditation teacher I worked with described meditation; considered the most direct route to mindfulness, as solvent for the ego. Who doesn’t know a leader that could use a healthy does of solvent for their ego (really couldn’t we all)? That greater awareness cultivates the ability to step back from a situation or system be that your own ego, your own organization, or your own family. How do you cultivate mindfulness? A full discussion of that may well be beyond this article but simple, secular mediation is the most basic and direct approach. Innovation and entrepreneurship: Mark Peters, CEO and President of Butterball Farms, Inc., has been a bold social entrepreneur who reframed the role of businesses in doing social good in communities through his highly innovative social entrepreneurial program The Source. This program has reframed how (family) business leaders can help develop the talent, careers, and lives of people in the state of Michigan and has become a model the state and federal government are very interested in replicating. Mark is a life-long learner, meditator, and creates time daily for reflection. If Family Enterprise is a mindset, then being more mindful seems fundamental to this effort. Everyone, especially the leadership needs to have an ongoing practice. Then analogous to getting in shape, this needs to be ongoing. It helps to start with an assessment, ongoing benchmarks, and stated goals (both process and outcomes). What better place to combine these essential elements of life: innovation and intimacy? Redefining shareholder value to shareholder values: The Luck Stone Company has invested a decade of adopting values-based leadership and seeks to develop its people. This work has led to the creation of their leadership institute which champions mindfulness for everyone both inside and outside the Luck Company. Their company mission is “Igniting Potential”. They are driven by why, by doing good to do well, and have a culture where the values drive the numbers- not vice a versa. As the world becomes more complex our leaders will have to be more evolved, more mindful. Family enterprises will always be more complex by their very nature. Thus if you as a leader aren’t cultivating your awareness with a mindfulness practice, you are missing out on a way to help yourself, your family, and your enterprises. FACT: Family Enterprise an emerging model This is an evolving term that families, practitioners, and scholars will help define, but my perspective is that family enterprise is a mindset that puts greater emphasis on the family being aligned, cohesive and developing a practice to be more agile in dealing with the challenges facing all its enterprises (be it a family office, a foundation, and/or multiple businesses). The mindset will shift the emphasis from the business to the family and seek to capitalize the family’s involvement to make it a strategic and cultural advantage. Research shows that the top 5% of leaders tend to have a daily reflective practice. FACT: White space and reflection for innovation and intimacy. Ori Brafman, author of The Chaos Imperative puts forth that one of the three aspects of creating an innovative culture is white space that he defines as time to reflect. White space is vital to creating, which is what innovation is: creating change that creates value. Perhaps even more important is reflection and being present. Intimacy requires that you be present. Reflection is how we put meaning to our lives.

A look into why it can make sense for the next generation to succeed outside the family business first. Australia’s next generation of family business owners should consider working in another company, and maybe even another field, before returning to the family brand. Each offspring, no matter how strong the bond with the family, should build on their formal education and test their skills in the open market, work for a new boss or two, and establish a threshold of responsibility to implement their own ideas. Outside experience is healthy for individuals and the business. The specifics of the outside job are probably less important than the journey away from home. Of course, professional positions in sales, production, marketing, human resources, research or other operational fields can be very constructive. Young workers need to understand the value of uncertainty and meritocracy, both of which might be lacking when your surname is written on the company building. If the new job is in the same industry, the future successor can develop his/her own personal network and learn crucial skills — maybe even gain first-hand knowledge of useful ideas from competitors. A job outside the same industry as the family business can be equally useful, especially if the next genner has always wondered what life outside the family industry is like. An added bonus: young people get the chance to be young and possibly foolish away from the eyes and ears of their future colleagues or employees. Most children share certain passions with their parents, but most have different interests, too. Much like a university experience, the next generation worker will benefit from being around those who share their interests and passions. They may even find someone of similar mind and talent to incorporate into the family business down the road. The larger the family business, the more important it is for future leaders to have a sense of working for someone you aren’t related to. No matter how objective and fair-minded the parent, a child won’t get a true sense of that independence and perspective while shaded by the family umbrella. In numerous surveys, Family Business Australia and KPMG have found that successful family businesses tend to have children who are more educated and worldly than the general population. “More than 75 per cent of respondents had completed some vocational or tertiary training after leaving school,” one survey found. “These figures are significantly higher than those of the population at large.” One participant said that businesses don’t just benefit in the long run when the next generation initially leaves the business. The short run benefits can be felt in the current staff. “It’s also good for the other staff in the business, who can see a clear prerequisite for family members to join the business,” said the unnamed participant. “In turn, it’s better for the culture of the business.” There are obvious benefits whenever the next generation eventually return to the business. “If a role is created just for you,” said another participant, “instead of a real business need, then it makes it more difficult to build respect with other staff.” Another study found “group participants agreed that entry rules regarding education and experience should be encouraged and even written up formally for future generations.” Stories Of Success Ross Brown, third son of John Charles and Patricia Brown, has known the wine trade his entire life. His family business, Brown Brothers Winery, has been an institution in northeast Victoria since 1889. Ross served as CEO for ten years before moving to executive director in 2011, and he stresses the importance of long-term planning — for business and for family. “In our business we plant a vine to make wine in five or six years’ time,” Ross said in a July 2011 interview, explaining why family members must work a minimum of four years at another organisation before moving returning to the Brown family business. In a separate interview with Drinks Trade Insight, Ross reaffirmed his belief in the outside work requirement. “It has the potential to continue to bring outside skills and knowledge back into the business.” The Brown Brothers family formalised an outside work requirement into a non-negotiable clause, and it keeps their family values codified for each generation to share and keeps the next generation from becoming complacent. Sheree Sullivan, director and manager of Udder Delights in South Australia, said outside work was critical for the business’ early survival. Her father and mother, Trevor and Estelle Dunford, started the company in 1995 with just two goats. Sheree and her husband Saul bought 50 per cent of the company 10 years later and says her family’s success can be traced to its “migrant model”. Everyone, including her parents, worked outside jobs when the business was getting off the ground. There, they learned “a unique and very diverse skill set,” says Sheree, including business administration and equipment maintenance.

What does it take to build a successful multigenerational family business? Many of the world’s most enduring companies are family businesses. Coopers Brewery, Walmart, Samsung, and BMW all have a controlling family dynasty at their centre. But these successful family firms are a rarity; most family firms fail to survive multiple generations. The statistics are grim: only 30 per cent of family businesses survive the transition from first to second generation. Just 12 per cent reach the third generation. Why do so many successful family businesses fail after the founding generation? In my years of experience as a family business adviser, I have seen generational transitions fail for many business and family reasons, and I’ve seen several common threads connecting many failures. One major reason is a lack of financial education for children born into wealth. Heirs that are ill-prepared to manage money make poor decisions and squander their fortune. Perhaps the most famous example of dissipated wealth is that of the Vanderbilts, once one of the wealthiest families of the Gilded Age. During the mid-1800s, Cornelius Vanderbilt built the family’s fortune on railroads and shipping. At its height, his fortune totalled over $240 billion in today’s dollars, making him one of the wealthiest businessmen in history. While Cornelius was a self-made man, his descendants lived extravagantly, with little concern for preserving the family fortune. By the 1970s, there wasn’t a single Vanderbilt millionaire left. The Vanderbilts had also fallen prey to another common problem: the dispersion of wealth and control among many children, in-laws, and other relatives. This left the dynasty with too many decision-makers and not enough concentration of power to push through important decisions. Many families fail to nurture a sense of responsibility, history, and family values in the following generations, neglecting what we call the spiritual and family capital of the family business. Great wealth is a privilege and without a sense of stewardship and obligation, many rich descendants fall prey to ennui and boredom, failing to safeguard the family wealth or treat the business with respect. Many problems also happen at the intersection of family and business. One key issue that many fail to overcome is a culture of nepotism, which promotes unqualified relatives into positions of power simply because they are members of the founding family. Another issue is a lack of formal governance structures and succession plans that leave the business open to power struggles, family discord, and transition problems. A cautionary tale in this vein is that of the Anheuser-Busch company, which had been successfully run by five generations of the Busch family until it was bought in 2008 by InBev in a hostile takeover. The final years of the Busch family’s tenure were marked by family conflicts, power struggles, and financial mismanagement, dooming a 150-year-old company that had survived prohibitioners, world wars, and global competition. If you are the head of a successful family business, what can you do to ensure that your dynasty survives into the third, fourth, and fifth generations? A great deal. In my opinion, the most critical lesson is to take good care of the family side of the business and develop a long-term plan for your family’s future. Educate the next generations about wealth and responsible financial management as early as possible. Too many wealthy parents fail to teach their children how to responsibly manage their inheritance. Protect the family wealth by insisting on premarital agreements and separation of personal and family property. Cultivate a family culture around your family’s history and shared values. One way that many successful multigenerational families nurture a family legacy is by developing shared philanthropic ventures that help instil respect for family wealth and its future potential. Don’t make working in the business a requirement in the family; allow each member to find their own way in the world, within or without the business. Protect the business’ future by instituting formal governance and ownership structures that separate family control from the daily management of the business. These arrangements will make it easier for the firm to raise capital, bring in outside investors, and eventually navigate generational transitions. Professionalise the business by establishing employment standards for both family and non-family employees. Consider bringing in professional managers to run the business while retaining ownership stakes for your family. Most successful multigenerational family firms are largely run by professional non-family executives while members of the family focus on diversifying and managing their wealth. Begin planning for the eventual succession of your business. Whether you intend to train up an internal successor or bring in outside managers, proper succession planning takes years. Too many business leaders leave planning too late and put the business at risk of a sudden, unplanned transition. Family discord, power struggles, spendthrift grandchildren, and poorly qualified managers can all doom a family business. Ultimately, success requires many factors to align as well as a healthy dose of luck. Developing a successful multigenerational family business doesn’t happen overnight. It requires years of planning, careful management, and the cultivation of a family culture that prioritises stewardship and a family legacy of success.

What does it take to build a successful multigenerational family business? Many of the world’s most enduring companies are family businesses. Coopers Brewery, Walmart, Samsung, and BMW all have a controlling family dynasty at their centre. But these successful family firms are a rarity; most family firms fail to survive multiple generations. The statistics are grim: only 30 per cent of family businesses survive the transition from first to second generation. Just 12 per cent reach the third generation. Why do so many successful family businesses fail after the founding generation? In my years of experience as a family business adviser, I have seen generational transitions fail for many business and family reasons, and I’ve seen several common threads connecting many failures. One major reason is a lack of financial education for children born into wealth. Heirs that are ill-prepared to manage money make poor decisions and squander their fortune. Perhaps the most famous example of dissipated wealth is that of the Vanderbilts, once one of the wealthiest families of the Gilded Age. During the mid-1800s, Cornelius Vanderbilt built the family’s fortune on railroads and shipping. At its height, his fortune totalled over $240 billion in today’s dollars, making him one of the wealthiest businessmen in history. While Cornelius was a self-made man, his descendants lived extravagantly, with little concern for preserving the family fortune. By the 1970s, there wasn’t a single Vanderbilt millionaire left. The Vanderbilts had also fallen prey to another common problem: the dispersion of wealth and control among many children, in-laws, and other relatives. This left the dynasty with too many decision-makers and not enough concentration of power to push through important decisions. Many families fail to nurture a sense of responsibility, history, and family values in the following generations, neglecting what we call the spiritual and family capital of the family business. Great wealth is a privilege and without a sense of stewardship and obligation, many rich descendants fall prey to ennui and boredom, failing to safeguard the family wealth or treat the business with respect. Many problems also happen at the intersection of family and business. One key issue that many fail to overcome is a culture of nepotism, which promotes unqualified relatives into positions of power simply because they are members of the founding family. Another issue is a lack of formal governance structures and succession plans that leave the business open to power struggles, family discord, and transition problems. A cautionary tale in this vein is that of the Anheuser-Busch company, which had been successfully run by five generations of the Busch family until it was bought in 2008 by InBev in a hostile takeover. The final years of the Busch family’s tenure were marked by family conflicts, power struggles, and financial mismanagement, dooming a 150-year-old company that had survived prohibitioners, world wars, and global competition. If you are the head of a successful family business, what can you do to ensure that your dynasty survives into the third, fourth, and fifth generations? A great deal. In my opinion, the most critical lesson is to take good care of the family side of the business and develop a long-term plan for your family’s future. Educate the next generations about wealth and responsible financial management as early as possible. Too many wealthy parents fail to teach their children how to responsibly manage their inheritance. Protect the family wealth by insisting on premarital agreements and separation of personal and family property. Cultivate a family culture around your family’s history and shared values. One way that many successful multigenerational families nurture a family legacy is by developing shared philanthropic ventures that help instil respect for family wealth and its future potential. Don’t make working in the business a requirement in the family; allow each member to find their own way in the world, within or without the business. Protect the business’ future by instituting formal governance and ownership structures that separate family control from the daily management of the business. These arrangements will make it easier for the firm to raise capital, bring in outside investors, and eventually navigate generational transitions. Professionalise the business by establishing employment standards for both family and non-family employees. Consider bringing in professional managers to run the business while retaining ownership stakes for your family. Most successful multigenerational family firms are largely run by professional non-family executives while members of the family focus on diversifying and managing their wealth. Begin planning for the eventual succession of your business. Whether you intend to train up an internal successor or bring in outside managers, proper succession planning takes years. Too many business leaders leave planning too late and put the business at risk of a sudden, unplanned transition. Family discord, power struggles, spendthrift grandchildren, and poorly qualified managers can all doom a family business. Ultimately, success requires many factors to align as well as a healthy dose of luck. Developing a successful multigenerational family business doesn’t happen overnight. It requires years of planning, careful management, and the cultivation of a family culture that prioritises stewardship and a family legacy of success. About David Harland - A leader in the family business consulting field and Executive Chairman of FINH, co-founding the company in 1994, David is an expert consultant to families in business. David has facilitated multi-generational meetings of family business stakeholders to guide families through complex and emotional family communication challenges. His objective is to empower those families to long-reaching and sustainable communication processes across both family and family business communication models. David has worked extensively with family businesses across Australia, New Zealand and South East Asia, many of whom have transitioned into and beyond their second generations. By providing a process for the succession journey, David has assisted families to achieve measurable and specific outcomes. David holds both Australian and International Accreditation in Family Business Advising with Family Business Australia and the Family Firm Institute.

Royal Agio Cigars has been in the cigar business for over a century. In four generations it’s built a prosperous and premium business, ranking 4th globally and is continuing to evolve. But tobacco is a sector with limited growth opportunities, and the family who run Royal Agio has faced up to that challenge and used the most advanced modern technology to find a way forward. In this year’s PwC Global Family Business Survey, 54% of the respondents said they expect to be establishing new entrepreneurial ventures in the next five years. Royal Agio is a great example of how to do it. It started, as Jonas Wintermans explains, with a strategic review of all the possible options: “We are a very stable company with a solid balance sheet, so we had the resources to invest in diversification. My father and brother Boris, who is Agio’s CEO, started by looking at industries parallel to our own in fast-moving consumer goods. Chocolate, for example, or tea and coffee. The raw materials for those products come from the same countries as for cigars, and the sales and marketing channels are not that different. We looked at it in great depth but we realised the barriers to entry were relatively low, and competition fierce.” But high-tech and in particular 3D printing is worlds away from cigars – it seems a very unlikely choice. “Actually, it’s not as incongruous as it seems,” says Jonas. “About 30 years ago we founded ATD Machinery, now market leader in machinery for the cigar industry. So we were already familiar with developing and making very technical machinery. That’s what led us eventually to move into high-tech by acquiring NTS-Group, a tier-one supplier to optical and mechatronic machine builders. In that same year Additive Industries was founded, together with a non-family member co-founder Daan Kersten. Additive Industries has developed a modular 3D printing system to make metal parts for industry. Both the ideas and the opportunities were there; my next task was to convince my father and brother.” This is a challenge many next gens face, especially when the new idea is very different from the company’s previous activities. As Jonas says, “Differences in management style between generations can generate more ideas and it’s important for both generations to acknowledge each other’s style. For example, my father is somebody who thoroughly looks at new ideas from every angle, while I like discussing possibilities and brainstorming different options. So when I was developing the 3D printing proposal it was important for me to be well prepared before I talked to him about it. And when I showed him my idea, he asked a lot of questions, just as I expected, but I was well prepared and had all the answers ready. Then we looked each other in the eyes and he said: ‘if you can answer all these questions, it’s probably a good idea’.” One of the phases in executing the plans was to secure the funding. “That was where being a family business was a real advantage – because the funds were there. Just like most other family businesses, we had reserves on the balance sheet for these type of opportunities. And that made it easier in the early stages of Additive Industries too – we had much less stress than the average startup company, who typically spend 40-50% if their time looking for funding. That meant we could focus on the business all the time. We also benefited from the credibility that our association with Royal Agio gave us – a ‘halo effect’, if you like.” Three years on, and NTS-Group and Additive Industries are bringing a new value creation to the family firm, and giving Jonas the chance to grow a business of his own and make his mark. “The older I’ve got the more interested I’ve become in what my brother, my father, grandfather and great-grandfather have built. I wanted to find a way I could add something special of my own. I think I’ve found it.” This feature forms part of the PwC Global Family Business Survey 2016. It has been reproduced with permission of PwC.