Family business model a key pillar in various economies across the globe

FIle: The Guptas have a huge business empire in South Africa, pictured here with Duduzane Zuma
FIle: The Guptas have a huge business empire in South Africa, pictured here with Duduzane Zuma
Africa too, can not afford to let the ‘Family Business’ model past it by.

The model has proved to be a huge success for many of the world’s biggest brands.

Dominant in Africa, are the likes Remgro, Pick n Pay, Dantata Organization, Ibru Organization, METL Group, Bakhresa Group.

And more globally are the likes of Phillips 66, Richemont, Foxconn, Nike, Volkswagen, Samsung Electronics, Facebook, Walmart, Novartis and Roche to name a few.

And in the 8th Price Waterhouse Coopers (PWC) Family Business Survey conducted recently, the future of the family business model is proving to be a viable solution for various economies globally. Not to forget the possibility of family renewal and development.
Consisting of interviews on firms approaching their first generational transition, the research also focuses on those groups that can measure their longevity in centuries.

According to Pwc, key issues stay constant every year, but with some changes to these.

“We’ve talked to founders, next gens, and professional CEOs. We discussed global megatrends such as digital and globalisation, and the challenges of ‘keeping it in the family.

In 2012, the dominant themes were skills, scale and succession.
By 2014, this evolved to a focus on the need to professionalise both the business and the family.

This agenda is far from complete, though progress is being made.

This year, the shift is perhaps more fundamental: from the short term and tactical, to the medium term and strategic.

The study also reveals that the challenge is in the middle, is having a strategic plan that links where the business is now to the long term and where it could be. “This is what we are referring to as the ‘missing middle’.”

In addition, the report highlights the, family firms are ambitious: “they want to grow and ensure the long-term success of their business, but it is clear that many of the issues they face derive from a lack of strategic planning. Some are doing this, and doing it well, but in our experience, a much higher proportion are so absorbed in the everyday that longer-term planning is neglected. Family firms may lack the skills to develop such a plan and some may assume that ‘thinking in generations’ means that the medium term will somehow look after itself.”

Moreover, family firms remain a vital part of economies across the world contributing the bulk of GDP in many territories.  “We’re committed to working with family firms and helping them make an even bigger contribution to growth and prosperity. ”

Recent global business research shows that almost half of entrepreneurs come from family run businesses highlighting that the spirit of entrepreneurship still lies at the heart of many family businesses.

Indeed, 54% of respondents told us they want to set up new entrepreneurial ventures.

Nishant Arya Executive Director, JBM Group, India notes,  “My father has always encouraged technology – he has always been prepared to invest in it, and takes risks to be a front runner in the field of technological advancement. He had a dream to create JBM as the equivalent of ‘Intel Inside’ for the automotive industry. He wanted ‘JBM Inside’ to be as powerful a mark of quality as Intel is. I think we’ve realised that and are now aiming beyond.”

Family businesses are especially important in Middle Eastern economies, contributing 60% to GDP and employing over 80% of the workforce. Many of the region’s largest companies are family-controlled, and in a sector like retail, some of the biggest Western brands are actually managed as franchise operations by local family firms.

The Seddiqi family has built its own successful legacy and brand; Ahmed Seddiqi & Sons has a reputation as a trusted destination for luxury watches and jewellery in the Middle East, representing more than 60 luxury timepiece brands across 65 locations in the UAE. The company was originally founded in the late 1940s, and four generations later, is still owned and run by the family, with new ventures in education, healthcare, services, and real estate co-ordinated through a holding company.

Osama Ibrahim Seddiqi is CFO of Seddiqi Holding, and first got involved in the family firm during school vacations, working as a sales assistant. “This is where I learned one of the secrets of our family’s success: we treat our customers as long-term friends, not just one-off clients. That’s as important now as it was in the 1950s. That’s why I sometimes make a point of delivering some of the client’s timepieces. That’s part of our culture.”

However, Osama didn’t go straight into the family firm. In fact, he followed a carefully thought-out career plan, beginning with a baccalaureate in Dubai, followed by a degree in Business Administration in Denver, and several years’ experience with the National Bank of Dubai. “This allowed me to develop all the specific skills I needed to take on a senior finance role in my family’s company, and I now sit on Seddiqi Holdings executive committee and Board of Directors. We currently have ten family members actively involved in the day-to-day operations of the business, but we recognise the value of bringing in skilled professionals from outside, and there are many in senior management or C-suite roles.”

Milaan Thalwitzer, Non-executive Chairman, The Bosveld Group, Citrus fruit producers, South Africa comments “One of the family firm’s great strengths is its rootedness in its community. We’ve interviewed companies for this survey in the past that have been going for over fifty years and have worked with the same suppliers all that time.”

He adds, “Many family firms turn these relationships into a unique competitive advantage, and take pride in the positive role they play in creating local employment, and supporting local communities.  The Bosveld Group, of South Africa, is a great example.”

Thalwitzer also notes that the company was founded in the 1960s, and is now South Africa’s largest private citrus fruit producer, exporting 5.5 million boxes of fruit to 50 countries across the world.

He, is the current non-executive chairman, and three of his sons-in-law hold management roles, with one as CEO.

Thalwitzer, was named National Farmer of the year in 2014, in recognition of the company’s commitment to land reform, and making the black empowerment agenda a reality.

Bosveld committed to Broad-Based Black Economic Empowerment thirteen years ago, and is now involved in a number of pilot projects in which the company leases land from black communities on long-term contracts, and then pays rent from the proceeds of the fruit growing business.

Training for local people is built into the scheme, so that the owners of the land get a chance to work on it too.

Thalwitzer continues, “If we can get this right, it should be a win-win for everyone. Land reform is a complex and sometimes divisive issue here, but we can find a way forward if the farmers themselves play an active part in finding the answers.”

Bosveld is committed to South Africa, because the family has always been committed to South Africa, “When people ask me why we’ve been so successful I say it’s down to three things: keeping pace with change, seizing new opportunities, and our commitment to this country. In the next five years our plan is to make the most of the energy the next generation are bringing to the business, and empower our local communities so we make a positive and sustainable impact. We have no plans to diversify our fruit production internationally. South Africa is a land full of potential and we must first invest in our own future and the future of our people.”

And how does  Milaan Thalwitzer, want to be remembered? “As someone who was lucky enough to combine his greatest passions: my love for my family, country and community, and my love for farming.”