Family Business Day
Ward Howell-INSEAD joint conference
October 27, Ritz-Carlton
Ward Howell and leading global business school INSEAD hosted a joint conference entitled Family Business Day on October 27, 2016 at the Ritz-Carlton hotel. The conference was dedicated to the particularities of running a family business in Russia and across the world.
Conference participants included business owners and their successors, as well as top managers from leading Russian companies. The conference included two panel discussions with representatives from leading European and Russian companies. Throughout the conference, participants discussed the specificities of corporate governance in family companies, the training of successors, relationships between business owners and hired managers and other issues related to family businesses.
After a short introductory speech by Ward Howell Senior Partner George Abdushelishvili, moderator of the Managing Family Business panel, Ward Howell Senior Partner and INSEAD Business School professor Stanislav Shekshnia shared a few words. He spoke about the theoretical basics of managing a family business, noted that family business to this day is still the predominant form of business across the world and mentioned that due to the significant role that interpersonal factors play in the management of a family business, there is no universal strategy for developing a family company – each one must assess its own advantages and obstacles along the way in order to determine the optimal strategy for ownership and management.
The discussion continued with Diane de Spoelberch and Gauthier de Biolley, representatives of AB InBev, one of the world’s largest consortiums, which resulted from the merger of Interbrew, one of Belgium’s oldest family companies, Brazilian company AmBev and American company Anheuser-Busch.
Gauthier de Biolley, former senior vice president of AB InBev, talked about the company’s remarkable success (it owns brands such as Stella Artois, Corona, Leffe, Beck’s, and others). Through major mergers and acquisitions, it managed to climb from the 50th beer company in the world to the first, with a capitalization of $204 billion. Since 1990, revenues have increased fifteen-fold, and EBITDA is expected to reach $24 billion in 2017. Gauthier noted that the board of directors has played and continues to play an important role in the company’s success. The board gathers 10-12 times per year and is primarily comprised of family members of company owners. “In fact, a large company is run by no less than twenty people.” Another key rule of the company is “Never take anything for granted,” which provides motivation to constantly be looking for new sources of growth.
The discussion about the company’s success continued with Diane de Spoelberch, whose family has owned the company for five generations. Diane shared an interesting story about the transition of operating responsibilities to hired management. At the end of the 19th century, two sisters, Elizabeth and Amelie, who were the heirs of the company, decided not to hand over the management to their husbands (who were more interested in hunting), and instead brought in a hired manager, 25-year-old Leon Verhelst. Leon formulated two fundamental principles of management: family members cannot be part of management, and the chairman of the board of directors should always be an independent director.
For a large portion of her presentation, Diane discussed the process of succession at InBev. According to her, one of the main priorities today is to maintain continuity and to transfer the current values and traditions to the next generation. In order to do that, the company holds special trainings as well as educational and social events, operates a charity fund and special website for family members, and much attention is paid to the education of successors. Diane admitted that it has become more and more difficult to bring children in to the company management, though she is certain that “they can’t choose any other path, it is simply not possible.” Finally, Diane listed four questions that owners of a family business must as themselves:
- Do we and our children still identify ourselves by our association with the company?
- Is it worth it to further expand?
- How do we keep control of our company?
- What is our next step?
The second panel discussion, entitled The Flip Side of the Family Business, began after the coffee break and was moderated by Stanislav Shekshnia. The speakers of the second panel were Sergey Petrov, founder of Rolf; Alexander Akopov, founder of Amedia and Cosmos Studio; and Dmitry Mints, chairman of the board at O1 Properties. During the lively discussion, speakers and guests talked about the main challenges of a family business, the relationships between successors, the role of hired managers, the connections between generations and succession planning. Alexander Akopov noted that the specifics of managing a family business in large part depend on the industry. For example, in Alexander’s opinion, it is practically impossible to pass along a media company by inheritance, as a lot depends on the charisma of the individual person and luck. Sergey Petrov said that he doubts that it is even possible to create a family business in Russia given the current economic climate. Dmitry Mints shared his experience entering the family business after successfully starting his career at a different company. He also noted that he does not agree with the widespread belief that a company founder needs to leave after a successor has taken his place.
In the closing of the conference, George Abdushelishvili and Stanislav Shekshnia thanked the speakers and audience for the lively and fruitful discussions. They also noted that such events, in which representatives of the best international companies and specialists in the field of family business are brought together, will continue to be a regular practice and will help increase the efficiency of business for Ward Howell’s clients.