Recognising the sparkle of family businesses

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Martin Moodie
Martin Moodie is the Founder & Chairman of The Moodie Report.

Not surprisingly perhaps, The Moodie Report has always had a soft spot for family businesses. So we’re delighted to see one of travel retail’s most dynamic retailers, Gassan Diamonds, recognised as the Best Family Business in the Netherlands (CEO Benno Leeser is pictured above, centre, collecting the award).

In a world where corporate giants dominate, where quarterly results and shareholder value are all-powerful, family businesses often remind us of simpler, better values. They remind us of the human qualities and human challenges. They are built by men and women putting in ‘the hard yards’, sometimes against seemingly insurmountable odds.

When I founded The Moodie Report from my garden shed (the Worldwide HQ as it was dubbed), I came from a powerful multi-national publisher for whom I ran an important subsidiary. Lars Johansson (Rest in Peace), a  great mentor of mine who had made a similar move in the drinks industry (from Allied Domecq to Imagination Unlimited International) told me I would have to be prepared to “lick the stamps”. As with Lars, there would be no personal assistants, no on-tap IT department, no finance director, no deputies with whom to share the workload.

It’s tough. One of the reasons so many start-up businesses fail, many of them family-owned, is that they take on big company infrastructure (and costs) too soon.  According to the most conservative estimate, something like 51% of new businesses fail in the first year in fact, some estimates put it as high as 70%. Some take a little longer to fail. By five years the attrition rate is really horrible. A Canadian study says that eight out of ten new businesses fail in the first three years.

As the famous entrepreneur’s motto goes, “I started out with nothing and still have most of it left”. [George W. Bush once pointed out that the French didn’t have a word for entrepreneur but I digress…]

So those that do succeed have to be made of something special. Gassan Diamonds is. The Dutch award is made in recognition of the fact that family businesses are the motor of the Dutch economy, and create economic growth and employment.

Benno Leeser told us: “This award is very important for the firm and the staff across the whole company. Our business is built on three pillars: quality, service until the end and being a 100% family-owned company.

“The man behind the prize is very proud of family-owned businesses. Normally in the press they get 10% of the attention, but 50% of the Netherlands economy is driven by them and they employ 70% of the workforce.”

Another great family business with a high profile in travel retail is Sisley, the high-end cosmetics-to-fragrances house, run by the d’Ornano family. One of the best and most stimulating interviews I have ever conducted was with Philippe d’Ornano (below), President International, at the last Cannes show (you can read it in this month’s Print Edition).

“We can be very careful about where we do and do not want to be, and how we want our brand to be sold,” he told me. “And we don’t need to cut our investments at the end of the year because we’re on the stock exchange.

“That’s important. There’s a family business association in France led by Yvon Gattaz [a famous French proponent of the merits of entrepreneurial and family-run businesses] which has conducted some interesting studies. Similar research has been done by financial firms in France, England, Germany, Spain and Japan. The results are very striking, and they’re the same everywhere: the medium-sized family business outperformed the market by +50% over ten years.

“There’s a fascinating book about this called La stratégie du propriétaire which was written by three professors [Iain Bloch, Nicolas Kachaner and Sophie Mignon]. It explains that while the over-performance is +50%, it’s not constant. In a period of economic growth , the performance of family businesses quoted on the stock exchange is more or less similar to non-family businesses, maybe even a little bit less. But in a period of crisis, it’s much more. My father often said ‘You take the market share gains in a period of crisis.’

“I saw this in 2009, for example, when we continued to hire people. There was absolutely no instruction to limit either our investment or our hiring. We were of course careful to do things right, and to question ourselves even more than usual, to ask ‘Are we spending this money well?’ That is a big strength, which allowed us to do what luxury brands need more than anything – to build our brand, and our brand image.”

That’s stirring stuff. And if you wonder why you see Sisley so prominent among the ‘big boys’ of travel retail’s beauty sector, you’ve probably just found out.

Look too at Gebr Heinemann, a supreme example of a great family company that has grown big – very big – but always retained its sense of proportion, of perspective and of tightly held family values. One suspects that its values today (inthe family’s fourth generation) are very much those of 1879 when the company was founded. I really like this statement on the company’s website: “The Gebr. Heinemann Group has more than 5,500 employees for whose well-being the owners of the company are personally responsible.”

Take a look, too at the company’s corporate values as outlined on their website at http://www.gebr-heinemann.de/en/company/values.html. You will learn much.

Another example is Ever Rich D.F.S., founded and run by Simon Chiang (above) in Taiwan. Inaugurated in 1995 and beginning with a single shop, the company is now one of the world’s top ten travel retailers by turnover. But it never, once, forgot the values that it started off with, including a deep sense of Corporate Social Responsibility. When the SARS crisis devastated Asia’s travel retail industry in 2002/03 and airports resembled ghost towns, Chairman Chiang refused to lay off any stuff, refused to return goods to hard-pressed local suppliers.

In a recent interview for a book on Ever Rich I am writing, Vincent Siew, former Vice President of Taiwan, summed up Mr Chiang’s philosophy adeptly, noting: “By using Buddhist teachings and serving as a model for others, Mr Chiang has built an enterprise based on morality. Most worthy of admiration is how everything society gives to him, he pays back in kind.”

So bravo to Gassan Diamonds. Here’s to their sparkling business and to the success of other family enterprises, big and small.

And let’s hear from them. Throughout 2013, The Moodie Report plans to put the spotlight on some of the family-held, independent enterprises that contribute so much to the tapestry of our industry. Please contact us and tell us your story.

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