By IESE Insight
A cabinetmaker in Nuremberg began producing pencils in the 18th century. Over 200 years later, Faber-Castell is the leading producer of wooden pencils in the world — and is still a family business. Meanwhile, over in Italy, family company Falck went from melting steel scraps in the early 20th century to becoming one of Europe’s leaders in renewable energies, clearly innovating along the way.
These are just a few examples that Professor Josep Tàpies, holder of IESE’s Family-Owned Business Chair, and coauthors, Águeda Gil and Elena San Román, examine in their book, 100 Families That Changed the World: Family Businesses and Industrialization.
They tell the stories behind 100 stories that shaped important chapters in the history of industrialization. Along the way, they also shed light on family businesses from a broad range of sectors that are still going strong today.
Two factors are said to be at the heart of these 100 success stories: dynamism and innovation. The enterprising families simultaneously contributed to industrialization and have been able to adapt to the ongoing changes this process has unleashed.
Dynamic and Innovative
In a move bound to raise a few eyebrows, the book debunks the myth that family businesses are a thing of the past. Not only are they here to stay, the authors insist, they wield important influence in industrialized European countries.
The book also confronts a 40-year-old stereotype that family businesses are averse to risk and to innovation. This image was reinforced by the apparently conservative nature of many family businesses that managed to preserve their business continuously, from generation to generation. Yet a concern with longevity also drove them to develop a long-term vision; “wealth creation within a family business is understood as a legacy that allows them to transform society from one generation to the next,” Tàpies explains.
Despite appearances to the contrary, innovation is deeply woven into family business DNA, the authors argue. It has also been the key to their survival. Businesses don’t survive by standing still; innovation has allowed them to develop and endure for centuries.
Dynamism and innovation — applied to products, manufacturing processes, marketing and organizational structure — have helped these businesses rise above the challenges of industrialization. Growth strategies based on developing new products and markets have also been important to adapt to new times.
Successful family businesses have often been drivers of change, taking on risks as necessary. Food and beverage giant Cargill was a wheat producer in the mid-19th century; today the company operates in 65 countries and four sectors — including agriculture, financial services and industry.
Looking Toward the Future
Family businesses thriving in the 21st century are recognized for their higher degree of professionalization — a professionalization that affects family members and outside hires alike — the authors note. Yet this process of professionalization is occurring without families giving up control and without straying from the core values that were fundamental to the company’s birth, growth and perseverance.
The book combines tips for the future with a historical overview that paints a vivid account of the emergence of industrialization. After all, “deep knowledge of the past is one of the most powerful tools for shaping the future,” the authors write.