Firms seek ways to live long and prosper

Family-owned companies recognize that brands can be handed down from generation to generation by Karen V. De Asis

Published in Philippine Daily Inquirer, Business Features Section, April 3, 2009

THE FAMILY IS NOT JUST THE basic political unit, it has also become the nucleus of corporations large and small.

In fact, quite a number of today’s global companies and brands are either owned or controlled by families.

In the United States and the United Kingdom, nearly 80% of businesses are family owned or family controlled. The same profile exists in the Philippines and much of Asia.

Among these are Microsoft, Toyota, Apple, Nike, Ikea, L’Oreal, Zara, Adidas, Starbucks, Hyundai, Marriott, Samsung.

Some Family Owned and Family Controlled Businesses and Brands 2008

Source: Interbrand 2008

So does the Philippines have its own family brands

The Philippines has its share of family owned and controlled business, now into their second and third generation management, originally fuelled by single brands and eventually, multiple brands.

Among them include the ubiquitous SM, Universal Robina Corporation (Jack n Jill snackfoods, Great Taste Coffee), Lamoiyan Corporation (Happee toothpaste), Jollibee Foods Corporation, United Laboratories (Ceelin, Neozep, Alaxan, Enervon, Medicol, Biogesic), Suyen Corporation (Bench), Liwayway Marketing Corporation (Oishi snack foods), Pascual Laboratories Inc. (PotenCee, Betadine), Max’s Restaurant (Max fried chicken), Goldilocks Bakeshop (Goldilocks cakes and pastries), etc. On the other hand, there have been and continue to be quite a number of family owned and controlled businesses that have relinquished their core brands as these companies enter into their second, third or fourth generation of management.

What makes family owned businesses become local or global brands

The Owners’ vision and fortitude inspire business-building activities that cut above the rest. Founders of businesses with local and global brands are visionaries, intent to differentiate their products and services from the rest. In so doing, they engage in business building marketing and branding activities. Rather than milk the business, it is not uncommon for these visionaries to plough back net earnings on marketing and branding efforts that should strengthen the brand. Samsung is the world’s largest conglomerate that includes Samsung Electronics, the world’s largest electronics company. Founded in 1938 in Daegu, South Korea by Lee Byung Chul, the Samsung brand has become a leader in many domestic industries that include electronics, engineering and chemical industries. From 1998, Samsung strived hard to become a global brand spending more than $6B on global branding activities finally edging Sony in 2005 from its long-held position. Samsung has been run by generations of one of the world’s wealthiest families pushing the brand to its optimal growth and performance by the founder’s second son, Lee Kun-hee.

Founder and successors view business success beyond the present. How one views success in business is relative to one’s comfort level. Not too many technologically superior products and services rise to become a brand thus, foregoing dominating the industry or category when it comes to market share. This is because the founder may have experienced his comfort level, so with the second and third generation not realizing that building a brand out of a relatively successful business is really helping sustain the brand beyond one’s present generation.

Succeeding generations share a passion for the founder’s vision. Myth or not, most family businesses subscribe to the belief that the fruits of most businesses are quickly dissipated by the fourth generation, believed to be the most spendthrift among generations. Not so, if the founder’s vision has been institutionalized in the Company family brand and his generational heirs. Interestingly, many successors have fortified their family businesses and brands to become global players.

While many globally successful businesses with multiple brands are into the second and third generation, some families have owned their businesses for the last two hundred years. Thirty-eight of these businesses belong to the Les Henokiens, an elite club of family businesses beyond two hundred years. Among these businesses include fifteen Italian companies, ten are French, one is Dutch, four are German, one is Belgian, two are Swiss, four are Japanese and one is from North Ireland.

Owners recognize that Brands are like legal assets that can be passed on from one generation to the next. More than liquid and tangible assets, brands guarantee a revenue stream for succeeding generations provided business-building and branding efforts are sustained meaningfully from one generation of consumers to the next. Brands are intangible assets that provide a never-ending potential for sustained earnings all depending on the level, width and depth that succeeding generations aim to grow and expand. The growth of any business and its brands ultimately depends on how far the vision of any generation’s appointed caretaker will take the brand.

Successful generational family businesses sustain the life of their brands recognizing that commodity products and services can not extend the life of their companies. Family companies are catapulted to success and wealth often by single or a few products that trigger substantial company revenues. Business building does not end here. The founders start the major process of building trust, positive associations and reputation around the names of their lucky products and services resulting in a branding effort that establishes a deep connection into future generations of consumers. Not surprising, consumers into the third or fourth generation continue to use the brands originally and long patronized by their grandparents and/or parents.

A family member is tasked to grow and expand the business in every generation. While family businesses recognize the valuable assistance of professional managers, owners of family businesses realize too, that accountability for firing up the business and its brands ultimately rest on the generation’s appointed caretaker and anointed leader who happens to be a family member. Like it or not, the passion, pride and emotional engagement for a family business by a family member who begins to understand his birthright and accountability is far, far different from a professional manager.

Family businesses with strong multiple local and/or global brands, not commodity products or services, know that it can survive any government shakeup, recession or protectionist markets. Successful family owned or controlled businesses well into their third or fourth generation survive because they have not dramatically shifted their focus from core brands that have catapulted them to success in the first place. While these companies may have extended into other businesses and categories, the original parent brand remains a priority in the day to day business building and brand activities of its generations of family members.

Family members of businesses must recognize birthright and fortify the company and its brands.

Call it luck, fate or destiny, but being born to a family with a successful businesses disassociates a future generation family member from the tremendous hardship, lengthened work hours and pain resulting from the peaks and volleys of a new, fledgling business. Thus, to some heirs, loss of passion and inspiration is common.

Ironically, companies with single or multiple brands that have been in existence for more than a decade and yet have not mounted a well-organized branding effort are more likely to be the companies that should have the resources to mount a branding campaign. And if the branding effort happens to be very successful, it is logical to expect a new set of loyalty from present and future generation consumers thus guaranteeing the life of the brand in the coming generation.