Moderator:
Per Lorange, Managing Director, S. Ugelstad Invest
Panelists:
Peter Lorange, Chairman S. Ugelstad Invest; ounder, Chairman & CEO Lorange Network AG
Håkon Lund, Owner, Lund Gruppen (4th generation)
Tushar Singh, CEO & WTD, Sara International (2nd generation)
Carlo Longo, CEO Lonfil Yarns Solutions (2nd generation)
What seems particularly critical when it comes to making family businesses successful? And what are the pros and cons regarding a so-called heritage/legacy business versus a so-called portfolio business?
According to Peter Lorange, especially key are:
A clear understanding of customers and the value of the business offering to them.
Cost/benefit and healthy margins.
New consumer trends, new technologies and political realities.
The weight or importance of these critical issues depends on whether the family business is heritage or portfolio-oriented. Being pre-emptive in the face of challenge or adversity, staying simple and speedy are important for any kind of family business.
Håkon Lund stressed:
Although the tourism sector plummeted during the pandemic, his 125 year old family business survived thanks to its agility and ability to take a long-term perspective.
Using a “hypothesis mode” for strategy formulation, based on innovation and future-proofing, the company came through the crisis relatively well.
Scenario-planning before things happen (i.e. entry, exits, who, what, when, how).
Governance must be strong, structured and assure accountability.
Trust amongst family members.
What are some of the key challenges, opportunities as well as pitfalls, when it comes to generational change and co-operation?
Peter Lorange shared:
Next generations should have a chance to prove that they are worth it.
The matter of competence involves all the generations.
Older generations need to create a space for the younger generation/s to operate, preparing them and enhancing their abilities to create further value in the firm.
Harmony and good dynamics can build this terrain or playing field, whether it be allowing the younger generation to run a certain part of the business, enter a new market, start a new company or initiate a different investment.
Carlo Longo, who shares his company responsibility with his brother and has recently welcomed his son into the business, added:
Transmitting a voice of love and trust throughout the generational cooperation process is fundamental.
Confidence, multi-generationally and bi-directionally, is paramount.
Patience is also important.
Vision must be shared.
Having a mentor, coach or advisor can at times also help guide the process.
A long-term approach is favorable.
Resilience is central.
Remember that “this whole thing is not just about the business. It is life. It is honor.”
Sometimes it involves shifting who works on what, and how intense the other family member/s may be handling something in comparison to the other/s. In the case of his brother, Carlo shared how they each bring different skills sets and passions to the business, and how at times, they were able to cover for each other when one had a particularly full or challenging other situation to deal with.
Tushar Singh added that humility, as he himself experienced from a position outside the family firm before his return to the family business, was particularly significant to his faster trajectory there.
===Teaser ends here==
Additional contributions from Webinar participants pointed to the importance of:
When succession isn’t or wasn't planned, different scenarios can arise such as splitting the business into two. This may work.
There are shortcuts to succession, but all in all, planning for it is very critical.
There are sure carry-overs or learnings when a younger generation spends time outside the family business. For example, supply chain management, understanding of emotion, marketing know-how were all elements that one participant was able to bring onto the board, when he joined his family wine business (production and distribution) after years away in the completely different business sector.
What can be some models for successful intergenerational cooperation in family businesses?
Peter Lorange suggested:
Getting help from other family members to find that “space" for young talent to operate.
Focus on learning!
Transitions can take time, so leave enough time to do so carefully and well.
Tushar Singh mentioned:
Transitions have multiple phases.
Take the time to discuss issues.
Trust.
Be large-hearted.
Have that difficult succession discussion now!
Make sure there is “skin in the game” for the next generations going forward.
Carlo Longo made additional points:
Carefully split tasks among family members.
It's not always easy to find the right talent.
Many poor decisions are based on fear. This fear puts an enormous weight on the family, and on the business, which can prevent finding the right solutions to the problems at hand.
Communicate all the time!
Håkon Lund reported from his experience:
Freedom + trust + respect
Discussion of synergies need to occur (synergies between family members and business synergies).
Don't underestimate the need for confidence and competence. This can lift the ownership structure to a new level.
Address duty and obligation. Duty and obligation is not entitlement. We undervalue heritage, the story, the family story!
The younger generation may experience legacy as high pressure. The older generations must be aware of this fact and ameliorate through communication and space.
Peter Lorange concluded the Webinar with a few important words about cultural differences involved in successions and intergenerational relationships. Families today may operate in different countries, but a number one reality is that most have some degree of internationalization or globality. We need global competence! Make sure that your family business, albeit if it is based in one locality or more focused here than there, has a sympathy, knowledge and fluency of doing business internationally.
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