Three Luminary fellows. Three key pillars. Three new podcast episodes. This is Bright Insights.
Listen to our Bright Insights podcast on Apple Music or Spotify.
Throughout the past year, we’ve been on a learning journey, collaborating with accomplished Luminary Fellows to co-create innovative thought leadership. Our aim is to shed true light on topics that are currently top-of-mind for business leaders, providing genuine insights and clarity. And we’ve done so through our inaugural Luminary Lab Fellowship. Through the brilliance of our luminaries, we’ve uncovered different perspectives and methodologies to illuminate more paths to success for our clients and the world. We invite you to glean from some of our most interesting learnings through this podcast.
Our first episode is a unique approach to rethinking Diversity through the lens of cognition. In the midst of our exploration, the notion struck us: what better medium to unravel the intricacies of harmony in diversity than through the universal language of music? So our Managing Director and Global DEI Lead Dolly Meese teamed up with versatile cellist Okorie Johnson for a unique exercise in musical theory and the mind.
We continue our series with a focus on ESG. As the battle to fight climate change is heating up, the urgency for effective and sustainable solutions is intensifying. How can we harness the collective power of our employee base to unlock transformative change? Director of Strategy and sustainability author Emilie Prattico talks with Clinical Associate Professor at NYU Stern School of Business and sustainability expert Alison Taylor about how changing the planet for the better begins with changing corporate mentality and strategies in work and leadership.
Our third installment shines light on the significance of family-owned businesses. In Europe alone, there are around 14 million family-owned businesses, contributing to 50% of private GDP. (That’s a lot!) Can we apply what we’ve learned from the historic successes and contemporary adaptations of Europe’s family-owned business models to improve and sustain our global economy? Senior Associate and venture member at TechStars Francesco Frontani talks with Professor of Strategy Innovation and Family Business at Politecnico di Milano, Dr. Josip Kotlar about how we can unlock the keys to Europe’s family business models, how they’ve successfully supported the economy for generations, and how honoring purpose will keep these businesses alive.
Listen in on Apple Music or Spotify as we share these exclusive insights to improve how we navigate the intricate landscape of business.
Transcripts
Podcast Introduction
Jackie Lawyer
Last year BCG BrightHouse launched our inaugural luminary lab fellowship. The program is designed to shed light on topics, top of mind to business leaders across the globe, with the help of our luminaries, our most trusted partners that bring divergent thinking to familiar topics. Think of it like a creative think tank or a months-long Ted Talk, or a thought lab for experimenting with new offerings and methodologies.
We started our partnership by selecting three luminary fellows and set out to develop original thought leadership. That lights the way for our clients and the world in our 3 topic areas: Cognitive diversity, ESG and Legacy and Family Business. In this podcast series, we’ll bring you the highlights from our work with our luminary fellows.
So, let’s meet them.
First up is Okorie Johnson, a cellist, songwriter, looper, improviser, and storyteller. We’re working with him to expand our understanding of DEI through the lens of cognitive diversity, and how to unleash its full potential in teams and organizations. That music you’re hearing in the background is his. And you won’t want to miss how we’re using the metaphor of music to widen the aperture on how diversity is understood.
Next, we have Alison Taylor, a professor at NYU Stern School of Business, an expert on strategy and sustainability. And that sound you hear in the background is the historical adoption of the Paris agreement on climate change in 2015. A lot has happened since then, and in our conversation with Allison you’ll hear what it means for a company to be bold in ESG, how it can engage its workforce to advance its ESG efforts, and what it means to be a purposeful leader on these topics in times of rising stakeholder expectations.
And last, but hardly least, is Josip Kotlar a professor of strategy, innovation, and family business at Polytechnico de Milano School of Management. We’re working with him to explore the concept of legacy and family, and how they shape the business community and ways of working today. That sound you hear is a busy square in Italy, where 85% of the total number of businesses are family businesses, a number that’s in line with the rest of Europe. Keep listening to find out what we can learn from family businesses, about how to persist and create lasting legacies even in the face of disruption.
In the next three episodes we’ll double click on each of these areas and give you an exclusive look into our findings and their implications for business.
We hope you enjoy and thank you in advance for listening.
Okorie Johnson Talks Cognitive Diversity
Dolly Meese (Moderator)
Today’s diversity, equity and inclusion conversations tend to focus heavily on demographic fields of diversity, like gender, age, race and ethnicity. While these are critical elements of our identity, they often limit to a finite set of boxes that we can fit into. When we narrow our view of the DEI, we crop out details from a larger, richer and more complete picture.
By extension, when we fail to see each person completely as a whole. We don’t benefit from the fullness of their unique contributions and potential. And if this is true for an individual, it’s amplified for groups. That’s why we’re seeking to open the aperture on how diversity is understood by looking beyond the surface to what influences the ways we think or what we call cognitive diversity.
And to turn this into reality. We’ve created an offering that focuses not just on what makes us diverse, but how we understand and appreciate cognitive diversity on teams to unleash creativity, harmony, agility and even joy. Which brings us to our extraordinary luminary fellow, Okorie Johnson, Music: (Okorie’s cello music) an incredible cellist, looper and composer who brought us new insight into finding harmony with cognitive diversity through the metaphor of music. Welcome, Okorie.
Okorie Johnson
Hey, thank you for having me, Dolly.
Dolly
It’s great for you to be here. We’ve been working with Okorie for many years, and the last eight months we’ve developed a new perspective on cognitive diversity and put it into action through multiple sessions with a Fortune 500 and Forbes Global 2000 Company. Okorie, what’s been your biggest aha moment during this process.
Okorie
When it comes to making a case for diversity being an important part of making teams that optimally function, that kind of granular look at not just where you come from or who you are, but how you think, seems really compelling.
Dolly
As we widen the aperture on diversity, we thought it important to look at what are all the ways that not only are the visible ways in which we might be different from one another, but what are the ways that really influence the way we think, the way we make meaning, the way we imagine?
So, demographic diversity absolutely a part of that. But alongside it, cognitive and neurodiversities with how we think, our lived and learned experiences. And so, we started to think about how do these all shape the way that we think as human beings. Now, this sounds like a big heady idea.
Okorie
Yeah. Yeah.
Dolly
And we, we had lots of conversations around how do we make this accessible.
Okorie
Music is especially wonderful for having this conversation because of the fact that the various musical instruments that we know are all so different from each other. If you don’t know much about musical instruments, you probably don’t know about the ways in which they’re different. Much like the way our brains work, right? It’s not really until you start talking about how our brains work and how we think and, and what has informed how we think that we get a sense of, you know, maybe even understand how we could be different from each other and not so much just understand how we could be different, but how those differences might really complement each other.
Dolly
You can think about it from the rational side of the brain of why it makes for a good metaphor to talk about the diversity within a group of people. But the other thing that’s really interesting about music as a metaphor is the feeling that you get from music. Which is a bit more intangible, but is one of the really important things we talk about with cognitive diversity.
Okorie
Absolutely.
Dolly
It’s not just the unlock of the creativity or the ideas that emerge when you’re able to bring cognitively diverse groups together, but also the feeling of joy that it creates in that moment. So, I’m curious if you can talk a little bit about that.
Okorie
We’ve been working on this really for like almost a year now, and we’ve had so many, sometimes challenging and sometimes absolutely like beautiful and mind-blowing conversations about cognitive diversity. And before we start talking about how cognitive diversity can produce that experience, I think it’s important to say that in our conversations, looking at cognitive diversity from various different perspectives, looking at ourselves through this lens, we had these really powerful, joyful moments illustrating what we are suggesting that the work will do, right?
So, I was excited about that. The kind of joy is, is sometimes indescribable, except for it’s not, because I imagine that in groups when they really work well and when we’re really learning from each other’s differences and learning and learning how to incorporate those differences, I think the same kind of joy is certainly attainable. Right?
Dolly
I agree. Totally. Totally. But I think that’s important for us to realize, is that we often talk about let’s make the business case for DEI. Let’s talk about the rational reasons for why people should have more diversity amongst their teams, etc., but we don’t often talk about the emotional case.
Okorie
Mm, Absolutely.
Dolly
And right now, in this day and age, people are thinking about employee retention, recruiting, etc., we’re coming back from COVID, how are people sort of coming back together? How are we addressing things like isolation and feeling alone? And so, these feelings of happiness, inclusion, joy, creativity, these are at the heart, I think, of what a lot of organizations strive for, and can often pose great challenges for them.
So, talking about this in a sense of, not just why to do it from a business sense or the business case for it, but also the emotional case for DEI can be quite powerful, certainly for the individuals involved. But also, if you’re a leader, what that emotion can actually unleash for a group.
Now, what’s interesting about this is we’ve also talked about the roller coaster of emotions that happen. And we’ve talked about there’s a role that tension plays as well as harmony. And so, can you talk to us a bit about how those two things factor in from the musical metaphor?
Okorie
Yeah. So, I just want to play a—it’s not really bad chord—but the way it fits right now is basically a minor second. It’s kind of really uncomfortable. Minor third, I’m sorry, right. We probably wouldn’t describe this as pleasurable. There’s a certain kind of…angst to it. But if you kind of give yourself to the angst and just kind of sit with it for a minute—when it resolves, it feels so different and so good and it feels kind of like a deliverance of sorts, right? Like a return, right?
So, you know, this is a major third and a lot of times people kind of describe it is like a—like a Zen thing. You can kind maybe imagine meditating to it. It can be really good, right? But if this is all we hear, all the time, it’ll get boring. And so, what we find that music is—really good music is—that it’s basically the story of going from, that to that, from the discomfort, from the tension, from the angst to the release. Right?
Dolly
Mm.
Okorie
In some ways you don’t actually really get to experience joy unless you’re going through challenge. That, that happy is not quite the same thing as joy and a nice sound is not quite the same thing as a resolution as the release of tension that perhaps has been built up. That’s life, right? That’s work. That’s groups, that’s relationships, both personal and work relationships. And we oftentimes can forget how important the tension is and convince ourselves that tension is only evidence of the fact that something is broken, or something is bad, when more often than not, sometimes tension is just evidence of growth, and growth is ultimately a return home.
Dolly
How do you—from a music perspective—how do you go from that tension to the resolution, the harmony? So often when we think about something like diversity, equity and inclusion, the hardest part is the getting comfortable being uncomfortable, sitting in the tension as you as you talked about it, which as we are realizing and learning from you, is an important part of the process in order to get to the resolution and the harmony.
Okorie
Yeah.
Dolly
But how does one move from tension to harmony?
Okorie
I think sometimes the tensions and work groups often are, “Well, this is how we have always done it” or, “this is how it should be done” or, “this is what makes us feel comfortable or good, as opposed to, “what is this opportunity inviting us to consider.” Maybe even another way of saying it that just feels less, high stakes is just an invitation to discover.
Dolly
A big thank you for our BrightHouse Luminary, Okorie Johnson for joining us today. And you can follow him on Instagram. He’s, “OkCello.”
Okorie
That’s me. O-K-C-E-L-L-O. Thank you so much for having me, Dolly. This has been a joy.
Dolly
Thank you. We really appreciate it.
Alison Taylor Talks ESG
Emilie Prattico (Moderator)
Welcome to discussion on ESG and purpose. We explored this topic throughout our engagement with Alison Taylor. Allison is a clinical professor at NYU Stern School of Business, and she’s got expertise in many domains: strategy, sustainability, political and social risk, culture and behavior, human rights, ethics and compliance, stakeholder engagement, anti-corruption and professional responsibility. She’s also the executive director of ethical Systems, a research collaboration focused on ethical, organizational culture. And she’s written a book too, “Higher Ground, How Business Can Do the Right Thing in Turbulent World,” which will be published in February of 2024.
During our conversation we sought to dig deeper into what it means for a company to be bold in ESG, how a company can engage its workforce to advance its ESG efforts, and what it means to be a purposeful leader on these topics in times of rising stakeholder expectations.
So, Alison, let’s jump right in. First of all, can you tell us what we mean when we talk about ESG?
Alison Taylor
So, ESG is a catch-all term for high stakes debates about the role of business in society. We can see ESG treated as a reporting and disclosure exercise. ESG is a problematic term if it suggests box ticking on too many things vs. the strategic focus.
How do you set ambitious goals that are also credible? How do you drive accountability to meet those goals without generating impatience about incrementalism? How do you respond to these ideas about hypocrisy? How do you make it easier for corporations to admit to failure and challenges, which I think is needed for authenticity, but is clearly, very, very difficult, in this ESG scoring environment.
Emilie
Absolutely.
Alison
You know, pressure to say certain things that sound convenient, a feeling that you don’t really believe in that, but you’ve got to kind of say that, and that does open you up to being damned if you do and damned if you don’t, and so maybe again. If we think about goal setting, you need to be realistic and thoughtful with your whole workforce about what this is going to achieve, and what it isn’t.
Emilie
Yeah. Companies are setting many goals, sometimes clearly unachievable, sometimes blatantly unambitious. So, what does it mean to be bold in ESG today.
Alison
What does it mean to be bold in an era where, being bold, and making flagship commitments, is what everybody is doing. I would really like to think about some of the tensions around the notion of making bold commitments in ESG.
There’s a lot of commentary that these goals so far out, nobody is, really putting their weight behind those. At the same time, there’s a lot of very real and very understandable frustration with incrementalism.
How can you navigate that tension between a real kind of thirst that you do something very radical with the fact that maybe change can’t happen very radically. So, there’s a tension, I think, between big picture commitments and then kind of the incrementalism and the real-time change that actually needs to happen. How do you get the weight behind that real-time change.
Emilie
And what would you say are other tensions that companies face on this topic.
Alison
There’s a real tension between breadth and depth. Companies herd together for warmth; they herd together to avoid scrutiny. And they do the same thing. and what we’re seeing I think in the ESG space is a lot of breadth, a lot of ticking the box on thirty to forty things that to do something genuinely bold would probably mean saying, you know, “We understand all these issues are important. But here is where we’re going to focus. Here is where our organization can make the difference.”
It is about finding a way to be more focused, to be kind of bolder about what you’re not going to do, the problems that you’re not going to solve to have something more strategically authentic and relevant.
Emilie
Right.
Alison
The companies I see that are most ambitious are in some ways the companies that recognize that there are limits to what they can do on their own or limits to the problems they can solve on their own.
Another tension is that there is a sort of hypervigilance about hypocrisy. There is an obsession with consistency.
A company must be saying what it is doing and doing what it is saying. Arguably to adapt and drive change, you need more real-time adaptation. Should we be in an era of experimentation that is being undermined by the signaling of very bold commitments that you then need to stick to?
Emilie
You’ve mentioned a few tensions that companies are facing. But the question I want to ask is, how can they overcome these tensions?
Alison
Should this be about the ‘how’ rather than the ‘what?’ If you’re going to set bold goals, that implies directive authoritarian leadership. It implies you are setting direction as a leadership team, but that maybe is not what we need. A lot of this seems more about mindset and humility and curiosity.
Emilie
This all seems really key and important. But how do you from there define a bold ESG strategy? Is it one, then, that engages employees along the way?
Alison
Is it really valid on a topic like ESG or on a topic like Purpose to think of a strategy as something that the corporation imposes on its workforce? That’s antithetical to the ideals of ESG, which are exactly based on consulting and having genuine curiosity about the interest of your stakeholders.
Power creates blind spots. It’s very, very easy, I think, that ESG should be about the board and the C- Suite kind of sitting in a room, you need it involved in corporate governance. You need to set direction. You need to kind of get serious. But what are the things that your employees will be able to see, particularly in terms of your impact, that the senior leadership team, the board, they’ve got too much skin in the game. They are going to be missing, arguably, a lot of really important points about the impact of the business on the world.
What we are really looking for is to get employee engagement and employee culture of ESG to be a source of competitive advantage.
So, arguably you will never have a fully-realized strategy unless employees are on board and support that strategy, because it is your employees that are speaking to your investors, your suppliers, your customers, your communities, the general public.
Emilie
So, how we can best involve employees in an ESG strategy?
Alison
What we need to be doing is treating this as employee co-creation of strategy that would help a company survive and thrive over the long term. We first set direction. We set the purpose, and then we use ESG concepts and frameworks to flesh that out and figure out how to implement it. This is something that employees need to be involved in and to co-create with the senior leadership team.
Emile
Mm-huh
Alison
So, maybe It’s also thinking about how employees see their role in these ESG strategies and trying to leverage those internal networks.
Emilie
Mm, that’s interesting.
Alison
They have 3 different frames. A Green Change agent is someone that sees themselves as driving change in the organization that maybe has networks that can be leveraged. A rational manager is more a middle manager. Maybe it’s sustainability team lead that’s going to senior executives and making a business case that is working within the system as it exists already and trying to drive change that way. A committed activist rather sees their role as battling internal resistance.
And then what you need to do is to give people some freedom of agency to how to design and meet those goals, but you need to provide the structure where they’re getting rewarded for putting in that effort. You will have the best motivation, the best purpose, the best innovation, if you give individuals agency about how they complete their work. And so, therefore, any ESG initiative will fail unless it can engage and galvanize employees.
Emilie
I’ve heard, and I think our listeners will have also heard, lots of new perspectives on how things are changing for employees. We know that leaders are facing challenges around a variety of topics from remote work, disengagement, quiet quitting. So, what is the way forward for a leader that wants to succeed.
Alison
If we think of setting Purpose and ESG goals and commitments as an investor messaging exercise, then we are suggesting that this is an exercise in the senior leadership team, we set goals, we communicate the goals to investors, and then we incentivize employees to perform. That is a very, very, very old fashioned and inappropriate view of what leadership is like today.
These kinds of top-down initiatives no longer work. There is maybe a need for emerging strategies in collaboration with the workforce rather than imagining that you can impose this top down. There should not be conversations that are restricted to just the senior leadership team. So, a lot of it is thinking, maybe, about the sources of expertise and who you’re bringing in, and how you’re participating and allowing employees access to that knowledge as well.
What we want and expect from leaders is changing, and it’s much less barking orders from the top, and much more listening and working with your workforce, and how to do that well. So, a little bit more executive humility would be lovely.
Emilie
Good point.
CEO job descriptions have changed really dramatically in the past 15 years. So, it’s a lot less technical skills. It’s a lot less “you’re a former CFO”, “you’ve got these kind of financial things,” and much more social skills, stakeholder engagement, diversity and inclusion, people from different backgrounds.
I think we underestimate how many senior executives are moved either by their workforce or their teenage children at the dinner table, and how few are really moved because of what someone’s put in an excel spreadsheet about the return on investment of ESG. And maybe, we shouldn’t always need a business case to do the right thing. And I’ve just personally seen, here is where an organization can make the difference.
Emilie
Thanks for your time, Allison, and for such an inspiring conversation. You’re leaving us with a wealth of insights, and what will stay with me the longest is how to think about impact differently.
You underline the importance of being focused in order to be bold of sharing failures and also celebrating meaningful progress. You praised humility and leaders who make space for employees to be actors of change, and that, I think, will stay with me for a long time.
Thanks for your insights, Alison, and thanks for your engagement with BrightHouse.
Alison
Thank you so much.
Josip Kotlar Talks Legacy and Family Business
Francesco Frontani
(Italian Open) Ciao, Josip, grazie per essere qui con noi.
Josip Kotlar
Ciao, Francesco, un gran piacere esserci. Partiamo?
Francesco
Direi proprio di sì. We’re going to switch in English as we hope our listeners from all over the world will find this conversation insightful and useful.
So, Josip, within your years at Politecnico di Milano School of Management, you’ve been focusing your research on trying to understand how family businesses can innovate, so to establish a legacy that would stand the test of time across generations, right? Together today, we’re going to dig deeper into the role played by sharing a sense of purpose within the family and the business to help this process. But I was thinking, why don’t we take a step back and share more to our listeners about the relevance of this type of business today. Why are we talking about family businesses and why are they relevant for the economy?
Josip
Thank you, Francesco, it’s a pleasure to join this podcast. Family businesses are indeed a substantial portion of the world economy, from Italy to Europe to North America, but not to speak about emerging countries where family representation is even higher. Let me give you a few insights. For example, in Europe we know that there are around 14 million family-owned businesses which make basically 50% of private GDP in Europe. They give work to about 60 million people just in Europe, which means 40-50% of all the private sector.
Statistics range widely between country to country. We have countries like France, like Italy and Germany where the number and proportion of family firms is particularly relevant. We are talking about between 70 and 80% of all businesses. Reducing it a little bit down to 60-70% in the UK and similar figures apply to North America.
Francesco
So, at BCG BrightHouse we’ve been working with several family businesses all over Europe, in France, in Germany and more recently in Italy where we opened our latest office a year ago. And we’ve been observing an ability of successful family businesses to carry along an authentic story across generations, one that is attached to the roots of the company, to the sector in which it operates, or to the geography in which it was established at its founding. However, we do also observe a risk in such a dynamic. Almost a misconception that since we as a family have been values-driven over the years, then our business will be implicitly purpose-driven, no matter what happens in the future, right? What are your thoughts on this, Josip, and how to address this risk?
Josip
You’re very right. Family businesses have an innate advantage in working with purpose. If you think about it, the founders of the business have a very strong imprinting effect on the businesses, and so the families. So, as long as the founder and the founding group of the family members are involved day to day in the business, of course you get that sense of intimacy, that colloquial approach to discussing, interpreting, living purpose every day. When a family business grows, when a family grows, when it is passed down from generation to generation, it is inevitable that, some of these foundational identitarian elements tend to be lost.
Another worrying effect is the growing intensity of family conflicts. As the family grows, multiple interests emerge. Different nuclear families have different goals, and it becomes more and more difficult to keep the family together. So ultimately, if those things are not tackled, the family business tends to lose its identity as a family-owned and family-influenced business. It’s very important to assess the relevance, the clarity of the purpose and make sure that the new generations embrace it.
Francesco
So, what can family businesses do today, concretely speaking, following on your lines to make sure that they set the ground for the next generations to embrace that sense of purpose? Should they focus more on strategy and business direction or on culture and employee behaviors or is it more of a positioning and branding effort to be done?
Josip
So let me start from strategy. Family firms are well known for their longevity and we always celebrate longeve, multi-centenary family firms. But if you think about it, these companies must continuously balance continuity and change. They must continuously balance the past with the present and the future. And now the purpose of the family business can be very useful to do that because it gives meaning to the past of the family and it allows you to create meaning for the future of the company. We see that purpose many times inspires entrepreneurial endeavors. It inspires family companies to diversify, to change industry, to move away from declining sectors into new sectors.
Here in Italy, one of the largest banks, Banca Sella, owned by the family Sella since 14 generations. But if you look back into the history of this quite famous company here in Italy, it is that they changed the industry several times. They moved from textile, to manufacturing, and eventually, only in the last 120 years, they moved into the banking sector.
And then again, 20 years ago, there was a major shift in the position of the bank, moving from a regional traditional bank to one of the leaders in the fintech sector. In the meantime, the company has grown massively. Today, it counts more than 5,000 employees. It is one of the most healthy companies in the financial sector in Italy nowadays. If you speak with the family members, the family leaders, what they will emphasize is their values, their purpose, their foundation, and the need to constantly evolve the purpose to spur new entrepreneurial initiatives.
Francesco
Yeah, Banca Sella is such a great example of a player in a sector that is being urged to innovate, but also in a geography that is so close to us, right, Italy. So, we spoke about strategy, business direction, but also positioning. Is there anything else to mention about governance? How can governance levers be pulled in order to embrace purpose-driven change in a family business?
Josip
So let me focus on the family governance even more than the business governance. So most often this governance is very informal. It doesn’t exist, it’s not written anywhere. The most vivid example of a family council, for example, is the kitchen table, where in the dinner time, you know, the family reunites and discusses business matters and the relationship between the family and the business.
Now, is purpose relevant? Yes, of course it is because governance means setting a clear policy to govern, the architecture to govern the relationship between the family and the business. Maybe this is the most delicate aspect of a family firm. So, we have many examples of business families and family businesses, businesses who failed, unfortunately, because conflict at the level of the family penetrated the business with obviously negative effects. Those families who are able to embed purpose into their family governance are those who eventually are better able to manage conflict.
Let me give you an example. A family here in Italy that was particularly large at a certain point, the seventh generation. It moved from being a family in business to becoming a family office. And at that point, the decision making became much more complex. Where do we invest our money? How to deal with philanthropy? And so on. The different nuclear families, which comprise the family group, it’s almost 50 members, they eventually had divergent views. What should we do? What should we not do?
Having a family charter that clearly expresses the purpose, the values, the culture that the family wants to maintain was substantially important in order to reconcile any conflict. So, whenever the family is in disagreement, they take some time, read again the family charter and that really inspires them. And once they read the document, the charter with the purpose statement, typically conflict disappears.
Francesco
So as long-lasting businesses that were born many years ago in most cases, and in which different individuals from several generations work or collaborate with each other, family businesses are somehow and wrongly so perceived as less innovative than any other form of business. What are your thoughts on this misconception, Josip, and what links do you see between innovation and family businesses in your research?
Josip
You are very right, Francesco. There is this common perception that family firms are less innovative than non-family firms, but this is actually not true. In reality, if you look at the rankings of the most innovative companies, you will often see family firms ranking very high. And the reason is that family firms innovate differently. Family firms do not just look for the frontier technologies, for introducing new products and services that respond to new needs, they are actually able to delve back into their past. They are able to recover elements from the past and re-boost those elements. Some family companies are able to take that past, reinterpret it and relaunch it towards the future. And this is very much of a sense making and sense giving effort which revolves around knowing what your purpose is and the willingness to use your purpose to create something new.
A recent research showed that less than 5% of the offspring of entrepreneurial families have a clear intention to join their family business. If you look back just 20 years ago, that was about 50%. Which means that families need to change. They need to move to a broader view which is not limited to the family business, to the original legacy family business. They need to be able to broaden the scope of their activities and welcome new ideas from the next generation. So, that the activity of enterprising families moves from a core business into a diversified portfolio of businesses.
Francesco
Mm, and the question probably becomes how to embrace change without compromising on our family values, right?
Josip
How to shape the meaning of those families.
Francesco
And do you have an example of a family business that was able to enter an uncharted territory and prove itself to be successful in doing so without compromising or trading off with its founding values or vision.
Josip
There are several examples of families who are able to completely renew their competitive advantage and positioning over time, sometimes just moving from one business to the other. Let’s think about one of the main families in Italy, Falck, who moved from steel production to renewable energies and most recently it became a family office.
Think about the Stevanato family, started from textile and then expanded the portfolio of brands including brands like Valentino and many others that are now put under a broad portfolio of luxury brands. So many families actually over time, they change, their gravitational point and extend significantly their activity. Sometimes it’s just a serial sequence of different businesses where the family invests, grows and then maybe sells in order to move to the next adventure, maybe often with a new generation. Sometimes instead it’s more about portfolio building. So, every generation adds new businesses, and new areas of operation, and so new opportunities.
Francesco
Josip, thank you so much for being here with us. It was a pleasure and we hope to have you on our podcast again very soon.
Josip
Thank you.