Download complete issue as PDF US Edition - Egon Zehnder ...

Egon
Zehnder
International
THE FOCUS
VOLUME XV/1
Family
“We look at our investments
over decades rather than
quarters.”
William P. Lauder
Executive Chairman,
The Estée Lauder
Companies Inc.

www.egonzehnder.com/ipad

Editorial
“The most ancient of all societies, and the only one
that is natural, is the family,” wrote Jean-Jacques Rousseau,
one of the principal thought leaders of the Enlightenment,
250 years ago in his groundbreaking work
The Social Contract. Today, when politicians in particular
bemoan the demise of traditional family structures,
the family is nevertheless alive and well. Modified it may
be, and more diverse and patchworked, but still this social
institution stands for a sense of community, trust, and
mutual responsibility. These are values that our modern
society as a whole needs in abundance, explains philosopher
Michael Sandel, talking to THE FOCUS. Given the
prevailing lack of economic and political security, he argues,
it is time we all turned our backs on the excessive
individualism of market-driven societies.
In the business sphere too, family ties have always
played a key role. If the family is the nucleus of society,
family businesses are the nucleus of every market economy.
However, as a result of the hype over sheer size and
boundless growth opportunities for large public companies,
the genus “family business” had taken a back seat in recent
years. Criticized for their limited development potential,
family businesses were widely considered long on tradition
and short on transparency. A longer-term view, however,
reveals that well-managed family businesses are every bit
as successful as major listed companies, if not more so. In
the words of William P. Lauder, Executive Chairman of
Estée Lauder Companies and grandson of the founder,
any large family enterprise has to manage itself almost as
if it were public. That is one part of the secret recipe.
The other main ingredient is the family itself – at best
the prime asset of a family business. A strong family of
one accord provides a solid commercial footing. No less
“A Chief Emotional Officer
is as important for
the family as the CEO is
for the business.”
important, as researchers Sabine B. Klein and John L.
Ward have determined, is for the family to transmit its
values from one generation to the next, as well as cascading
them through the company. With these shared values
as a common roadmap, a successful balance between the
divergent interests of the family members and the business
can be readily achieved. If, however, emotions and family
ties are allowed to oppose a rational approach based
on economic necessities, the family can become a millstone
around the neck of the business: Nothing destroys
value more effectively than conflict.
In the interviews we conducted for this issue of THE
FOCUS it emerged time and again that those family
businesses which remain successful across generations
devote generous amounts of time and effort to ensuring
cohesion. Because every time the baton is handed over,
the family grows and with it the risk of members becoming
alienated from the business. Counteracting this development
is often the role of the patriarch who has withdrawn
from executive management. In other families it is
the women who organize family get-togethers to foster
dialogue, reinforcing the sense of togetherness. The presence
of a figure with pronounced integrative skills – let’s
call them the Chief Emotional Officer – is as important
for the family as the CEO is for the business.
I wish you a thought-provoking read.
Damien O’Brien
Chairman and CEO, Egon Zehnder International
1
The Focus Vol. XV/1

Imprint
The Focus
Contributors
Family
Volume XV/1
Publisher
Damien O’Brien
Egon Zehnder International AG
Editor-in-chief
Dr. Ulrike Mertens
Project manager
Markus Schuler
Editing
Brigitta Palass (Senior Editor),
Andrew Blechman, Charles Conte,
Mona Dirnfellner, Gisela Maria
Freisinger, Dr. Ralf Neubauer
English language editing
Paul Boothroyd
Production
MAC Studios, Düsseldorf
Art direction
Jörg Waschat
Graphic concept
Martin Dixon
Editorial office
Egon Zehnder International
Corporate Communications
Rheinallee 97
40545 Düsseldorf, Germany
Tel. +49-211-55 02 85-0
Fax +49-211-55 02 85-50
corporate.communications@ezi.net
www.ezifocus.com
Editorial board
Dr. Johannes Graf von Schmettow
John J. Grumbar
Bill Henderson
Justus J. O’Brien
Printed by
Dr. Cantz’sche
Druckerei Medien GmbH
Zeppelinstrasse 29-32
73760 Ostfildern, Germany
© 2011 Egon Zehnder
International AG
James E. Hughes, Jr.
Law firm founder and family
counselor James E. Hughes
revisits a classic anthropological
text book to sound out
the significance of rituals in
keeping families together.
His essay begins on page 67.
Eric Konigsberg
New York journalist and
author Eric Konigsberg is also
a close friend of photographer
Thomas Struth. Starting on
page 16 he analyzes Struth’s
masterful series of family
portraits that adorn the pages
of this issue of THE FOCUS.
Jesper Juul
The author of best-selling
books on raising children,
Danish family therapist Jesper
Juul displays a refreshingly
direct and unconventional
approach to common issues of
upbringing and early education
(read his article on page 42).
John L. Ward
is a thought-leader of the
highest order when it comes to
the topic of family businesses.
Together with his colleague
Sabine B. Klein, starting on
page 28 he sheds light on the
characteristic complexity of
this specific type of company.
2
The Focus Vol. XV/1

Letters to the Editor
Letters
Egon Zehnder International
Corporate Communications
Rheinallee 97
40545 Düsseldorf
Germany
corporate.communications@ezi.net
The Focus Vol. XIV/1 “Resilience”
Inspiring sustainability
I was positively impressed to read, in the article on “sustainability
and resilience”, a clear and proper vision of
what, I strongly believe, will be a distinctive management
factor. Very few managers fully understand the
importance and magnitude of inspiring sustainability
across their business and operational processes.
From my experience in charge of part of the company
operations, I can state that in my organization’s day-byday
activities the benefits for employees, vendors and
enterprises are tangible. Thanks so much for confirming
that my management style and vision are heading in the
right direction!
Lu c a Gu z z a b o c c a
Director of Procurement, Logistics,
HSE and Security Management
Banca Monte dei Paschi di Siena S.p.A., Italy
Enhancing leadership qualities
Thank you indeed for sending me the latest issue of THE
FOCUS. It surely makes inspiring reading and provides
an insight on how to enhance leadership qualities.
Vi j a y Ba t r a
Teva API India Ltd., Udyog Vihar, India
Responsibility as the root
I read the article by George Davis, David Kidd and Justus
O’Brien on “CEO succession” with interest. A strict
system for assessing managerial skills and a detailed
analysis of the corporate culture are essential tools in
identifying the right person for each context.
I work in banking and I find it unbelievable that while
banks use sophisticated tools to weigh up tangible assets
in assessing creditworthiness, hardly anything is done to
evaluate managerial quality and guarantee managerial
continuity. Isn’t it true that people manage the company’s
assets What’s the use of having a solid company if it’s in
the hands of the wrong people, or if the person running it
has no successor who can guarantee its future
People make the business, make it grow, creating
wealth and jobs, stability and a future. And people destroy
value, exploit situations, relationships and human
lives just to keep their heads above water, displaying an
ability to adapt that I refuse to call resilience.
One of my closest friends has a company in the biotechnology
sector. During the financial crisis he was advised
to close his production site in Italy and transfer it
abroad to increase profits. He did not do so, because he
believes that his role is to create jobs, not destroy them.
When he talks about the hundred or so people working
for him, he says: “I know them all, I know their families,
I have seen their children grow up.” So, even though he
knew he was taking a risk, he preferred to invest everything
he had to improve his plants, to make them more
efficient; he strengthened his marketing to increase sales,
he worked night and day to save every last job, accepting
that he would have to sacrifice part of his profit.
I believe that resilience is firmly rooted in this sense of
responsibility. When we clearly understand that the lives
of others can depend on our decisions and actions, we can
find the strength to respond to difficulties and fight to
overcome them and grow. My hope is that this sense of
responsibility will be a driving force for those who have
the power to change things and who, by making brave
choices today, can give future generations a better society.
Giulia Za n i c h e l l i
Head of Group HR Development
Intesa SanPaolo
Valuable insights
Thanks for sending me the latest copy of THE FOCUS.
I thoroughly enjoyed going through the issue on such an
apt topic as Resilience. The interviews and articles were
full of valuable insights on how to manage and tide over
uncertainties. Steering the organization through difficult
times is a true test of leadership and the issue was full of
such examples.
Thank you again.
Sw a d e s h Be h e r a
Head of HR, Merck Sharp Dohme, India
3
The Focus Vol. XV/1

The Focus Vol. XV/1 Family
Contents
1 Editorial
3 letters
Leadership
6 Interview with William P. Lauder, Chairman of Estée Lauder Companies:
“We are a meritocracy. Success in this company is not based on the accident of
your birth or your name. It is based on the ability to perform.”
16 Portfolio Family portraits by the photo artist Thomas Struth
19 culture How family businesses retain vitality across multiple generations
26 panel Business and opinion leaders on tradition and renewal
28 KEYNOTE Sabine B. Klein and John L. Ward on the complexity of a special kind
of business
34 EXECUTIVE SURVEY The findings of the 10th International Executive Panel on
the subject of “Family”
PARALLEL Worlds
36 Interview with philosopher Michael J. Sandel: “Choice flows from how I
interpret my identity, and part of my identity is that I am the son of my parents.”
42 viewpoint Therapist Jesper Juul considers how we deal with our children
46 encounter with Carlus Padrissa, founder member of the Catalan artists’
collective La Fura dels Baus
52 Interview Lord Jacob Rothschild on his family’s philanthropic mission
56 Essay Family portraits – a journey through art history
62 Dialogue between historian Deborah Cadbury and family business expert
Nigel Nicholson: “Family firms bind people together by the really fundamental
elements of being human.”
67 ESSAY James E. Hughes on the role of ritual
expertise
70 Interview with Marcelo Odebrecht, CEO of Odebrecht S.A.: “A business
cannot be run by a family. It can coincidentally be run by someone from the
family, but that person must be a professional manager.”
78 Crossroads Justus O’Brien and Jörg Ritter on the art of transitioning to
the next generation
83 BEST Practice A. Vellayan on the interplay of family and corporate
governance at Murugappa
88 Case studies Succession challenges for family businesses in emerging
and fringe economies
93 FORUM
94 adDresses
4
The Focus Vol. XV/1

The Focus Vol. XV/1 Family
70 Marcelo Odebrecht: “If we can identify and integrate the right people, then I think we can achieve any
goals that we set.”
36 Michael J. Sandel: “To reason in public about
big questions is a civic skill that needs to be
nurtured and cultivated.”
56 Family Pictures: Social change in the family
institution as reflected in masterpieces from the
world of art.
5
The Focus Vol. XV/1

Leadership
Interview
“We are a meritocracy. Success
in this company is not based
on the accident of your birth or
your name. It is based on the
ability to perform.”
With the second and third generations actively
involved in the business, The Estée Lauder
Companies is today an $8 billion public company.
William P. Lauder, Executive Chairman of the
company and grandson of legendary founder Estée
Lauder, talked to The Focus about the challenges
of balancing the company’s entrepreneurial heritage
with the demands of the global marketplace, and
the long-term view of the Lauder family with the
short-term pressures of Wall Street.
Photos: JÜRGEN FRANK
6
The Focus Vol. XV/1

Leadership Interview
“The best thing any family
company can do for
future generations is to set
up standards to which
all family members agree.”
8
The Focus Vol. XV/1

Leadership Interview
The Focus: Over the past 60 years, The Estée Lauder
Companies has grown from a small family business to
an $8 billion global enterprise. How were you able to
leverage the advantage of being a family-owned and
family-run company to drive that phenomenal growth
William Lauder: Number one, we perceive our competitive
advantage to be our people and the imagination we
encourage in them. Second, being a family-owned and
controlled company for a sustained period of time allowed
us to have patience from an investment perspective
– we looked at our investments over decades rather
than quarters. In 2007, at an investors’ conference, a
sell-side stock analyst said, in effect, “Because the
Chairman and the CEO are family members and large
shareholders, we don’t think that their long-term interests
are in line with those of outside shareholders.” And
she defined “long-term outside shareholders” as people
who held the stock for three quarters.
I looked straight at her and said, “I just want to tell everybody
in this room that our definition of ‘long-term’ is ten
years. If you want to talk about long-term horizons around
that definition, great. For us, three quarters are yesterday.
If your horizon is that short, that’s fine, too, but just so
there is no misunderstanding, that is not what we are talking
about from a long-term investment standpoint.”
The Focus: What advantages does that outlook create
for the company
Lauder: Our patience allows us to occasionally support
brands beyond what a public company might do. Our
long-term view has also allowed us to create a culture of
entrepreneurship and belonging. We encourage entrepreneurial
thinking. We encourage the creativity, imagination,
and energy that come up with unique ideas, and
we actually get behind them and invest in them. To the
extent that we can, the handful of family members in a
company of over 30,000 employees tries to make everybody
feel a part of a very large extended family. Having
deeply embedded that in our DNA over time, we have
created, I think, a competitive advantage over many of
our direct competitors.
9
The Focus Vol. XV/1

Leadership Interview
Resumé William P. Lauder
The Focus: How do you maintain those values
Lauder: We have a lot of long-time employees at many
different levels of our company who are loyal because of
the way they have been encouraged, nurtured, and stimulated
in what they do. And they in turn practice those
values with the people who are part of their organizations.
When you look at candidates for jobs one of the most
important elements is personality fit. We have had some
brilliant people who ultimately didn’t fit in from a personality
standpoint with the culture of the company.
A grandson of company founder Estée Lauder and
a son of Evelyn and Leonard A. Lauder, William
P. Lauder is Executive Chairman and Chairman of
The Estée Lauder Companies’ board of directors.
He joined the company in 1986 as Regional Marketing
Director of Clinique U.S.A. in the New York
Metro area. As Vice President/General Manager
and later as President of Origins, he led the introduction
and development of this lifestyle brand
in the U.S.
Under his leadership of Clinique Laboratories,
Clinique’s Dramatically Different Moisturizing Lotion
became the best-selling prestige skin care product
in U.S. department stores. He was instrumental in
increasing the brand’s market share in the hair care
category, spearheading the launch of the Clinique
Simple Hair Care System.
He has also served as Group President, The Estée
Lauder Companies and President, Clinique Worldwide,
and in 2003, he became chief operating
officer of The Estée Lauder Companies. In July
2004 he succeeded Fred H. Langhammer as chief
executive officer, a position he held until July
2009. He became Executive Chairman of the company
and was succeeded as CEO by Fabrizio
Freda, who, like Fred Langhammer before him,
was not a member of the family.
Mr. Lauder is on the Boards of Trustees of the
University of Pennsylvania and the Trinity School
in New York City.
The Focus: How would you describe the type of personality
that clashes with the culture of the Estée Lauder
Companies and with your preferred leadership style
Lauder: The cowboy, gunslinger types who make highrisk
decisions without consulting or collaborating with
their peers, or who, from a leadership standpoint, adopt
the style of the dictator. That is not a part of our culture.
Our style is inclusive, not command-and-control. We
really feel that collaboration, bringing people along in
a decision, and supporting people in decisions is preferable
to a more directed approach.
The Focus: How does the issue of personality come into
play in acquisitions
Lauder: In most of our acquisitions, we are buying
directly from founders, so we look at the underlying personality
of the founder. Like any large company that
buys other companies, we have a mixed record in maintaining
the presence of the founders. In a couple of
cases, we still have the founders involved.
When entrepreneurs suddenly find themselves working
for a company for a salary some remain motivated, some
need to be motivated, and some just say: “I am out; I am
going to do something else.” Often, they have a hard time
seeing their creation modified from their original vision.
Whether it’s a founder or a new hire, it comes back to
whether there is a natural personality fit. If you can contribute
your voice but at the same time feel comfortable
being in a place like this, you can be successful here.
The Focus: With five family members in major executive
positions, do you see any difference between the
opportunities available to family members in the company
versus non-family members
Lauder: We are a meritocracy. Success in this company
is not based on the accident of your birth or your name,
but on ability to perform. That certain members of my
family are successful is a testament to our parents – the
10
The Focus Vol. XV/1

Leadership Interview
“Our long-term view has
allowed us to create a
culture of entrepreneurship
and belonging.”
The Focus: Having joined the company in 1986, you
experienced the transition first hand. What differences
do you see in the way the company operated as a privately
held family-owned company and as a publicly
traded family-owned company
Lauder: Going public changed the way we actively managed
the company because you have to make and report
decisions about such things as dividend practices. Are
you paying quarterly or are you paying annually What’s
the dividend pay-out, and what are the guidelines on
that Where do you want to be considered in a spectrum
between a growth company and an income company
Going through that decision-making process allowed
everybody to find their own natural level of economic
interest in the company. But it’s complicated by having
to deal with sell-side analysts and the outside shareholders,
who are always in their own logic cycle about why
they invest and choose to invest.
upbringing and education they gave us. Not just academic
education, but also professional education and
development. Not every member of our family is involved
in the business. This too is a testament to parenting.
We were allowed to succeed at whatever we wanted
to do, not told that we had to come here.
The Focus: How helpful has it been to have family
members actively involved in the business, in terms of
preserving and maintaining the culture and having them
as, literally, embodiments of the brand
Lauder: The personal touch that certain members of my
family are able to bring to the business has been important.
But it goes beyond brands: Some of our strongest
retail partners in North America are family-controlled
retailers with their names on the door: Dillard’s, Belk,
and Nordstrom. The personal relationships we have with
these family-controlled companies are part of what
makes us successful with them, as well as with Macy’s.
The Focus: What motivated the decision for the company
to go public in 1995
Lauder: Every enterprise like this has different reasons and
routes to where they are in the process of ownership. Going
public gave various family members, who would not
solely engage in the enterprise, a way to monetize and diversify
their own financial interests. And it gave those who
wanted to stay in the opportunity to do so. It has now allowed
our many thousands of employees around the world
to participate financially in the success of our company.
The Focus: What has been the most difficult part of the
transition
Lauder: I would say the first four or five years of digesting
Sarbanes Oxley and everything that came with it.
Every private company should put itself through that
discipline, not necessarily to prepare itself to go public,
but for good-governance practice.
The Focus: To what extent, as a family-controlled public
company, do you have to meet the same governance
requirements as a fully public company
Lauder: There are New York Stock Exchange and SEC
rules or exemptions for closely held companies. We
manage our company according to all of the larger principles.
Our Audit Committee is fully authorized to have
the same breadth of responsibilities as that of any public
company. We have a Nominating and Board Affairs
Committee with its roles and responsibilities and a Compensation
Committee with its roles and responsibilities.
Those are the three active committees of the board that
exert a great deal of influence on the governance of the
company. Our Audit Committee is populated solely by
outside directors who meet all of the qualifications for
independence. On the other two, we have a majority of
independent directors.
Any family-controlled company, even if it is privately
held, ought to be putting itself through these paces in
order to protect the minority shareholders. Unless you
have a company that is solely controlled by one individual,
somebody is a minority shareholder, regardless
11
The Focus Vol. XV/1

Leadership Interview
of whether that minority is 49.9 percent or 0.1 percent.
Their interests ought to be represented. I certainly have
made it my mission to make sure that we are making
decisions that are in the best interest of all shareholders.
So occasionally, I have to have tough conversations with
family members and say, “I understand why you might
prefer that we make this or that decision, but we have to
do it this way because it is right for the company.”
The Focus: How do you think about family membership
on the Board of Directors, and what kind of criteria do
you as a family have for that
Lauder: Effectively there are four family members on
the Board and that is certainly not chartered.
company. You ask yourself what kind of expertise or
experience a director brings to the Board that the company
might need. It could be regional experience, category
experience, distribution, legal, or financial experience.
You ask what expertise you have inside the company,
specifically within the significant shareholders,
whether they are family members or not.
The Focus: What unique advantages can an independent
director bring to a Board that includes several members
of the controlling family
Lauder: Often, family members have a certain way of
loving each other and there is a certain logic to the way
they may talk about some things. A third party, with a
“Any large family
enterprise has to manage
itself almost as if it were
public, even if it isn’t.”
The Focus: Could that be an issue with the next generation,
with a larger population, if all were actively interested
and involved
Lauder: Perhaps, but we are a long way from that now.
Any large family enterprise has to manage itself almost
as if it were public, even if it isn’t. If it’s privately held I
would suggest that although you don’t have to have a
majority of outside directors, you should certainly have
enough outside directors who are influential enough to
bring in a different point of view and bring in some experience.
Any director has to add some real value to a
different viewpoint, might say, “You know, that is interesting
the way you’re thinking, but think about it in another
way.” So the discussion is not all about, ‘well, you
were mean to me when we were growing up and therefore
I will always say no to you.’ It is about the right
thing to do for the business.
The cultural piece is whether or not the family welcomes
and encourages outside feedback, how they process it,
and how they deal with it. If you really want substantive
outside feedback, you have to be prepared to listen to it,
digest it, and discuss it. And on a particular issue you
12
The Focus Vol. XV/1

Leadership Interview
might respond with your concerns and the outsider might
come up with a solution that works for both of you. Then
there is the approach where you simply say every member
of the Board has a full voice, regardless of whether
they are a shareholder or share your name.
The Focus: You have dealt with one of the most challenging
questions family-owned companies face – the
issue of bringing in outside management. In 2009, Fabrizio
Freda, the second non-family member to lead the
company, succeeded you as President and CEO. What
could other family companies learn from your experiences
with this issue
Lauder: Having a non-family member as CEO sends a
message to everybody inside and outside our company
that what we look for is the accomplishment and the ability
to lead our organization, regardless of who you were
born. It says that there is an opportunity for anybody who
is smart and capable to become a leader in our company.
The Focus: What went into the decision to bring him in
Lauder: I was in my role of CEO for about five years.
Being CEO of a public company in the United States
today is not what it was perhaps a few years ago. I’ve
been quoted as saying that in today’s world, being CEO
of a public company is a sentence. Being CEO of a family
controlled company is a life sentence. Some people
enjoy it, some people don’t; but you are a hamster on a
treadmill, and you can only do it for so long before you
get tired and break your stride.
I thought that I needed somebody with whom I could lead
this company over the coming years. I knew the players
we had on the field and I wanted to take a look at who
was out there as a free agent, someone who might add
something to our team and help us to perform better.
The Focus: What specific background or skills did
he bring
Lauder: Fabrizio spent the vast majority of his career at
P&G in fast-moving consumer goods. P&G is known
for its thoroughness and discipline in areas like consumer
knowledge, while we were considered a much
more entrepreneurial, seat of the pants, ready-fire-aim
kind of company. In our industry, we live with one foot
in the fashion world and one foot in the fast-moving
consumer goods world. The fast-moving consumer
goods world is aim-aim-aim; re-aim, and finally get it
right and go. Fashion is just go, go, go, go! And because
fashion moves quickly you can’t be yesterday’s story or
The Estée Lauder Companies
A cultural icon
In an industry known for extreme market swings
and short-lived endeavors, The Estée Lauder
Companies is now a leading manufacturer and
marketer of quality skin care, makeup, fragrance
and hair care products. Founded in 1946 by Estée
Lauder and her husband Joseph, the company
today sells its products in over 150 countries and
territories. For fiscal 2010, net sales were $7.8
billion and net earnings were $478 million.
With approximately 31,000 employees worldwide,
the company includes such well-known
brands as Estée Lauder, Aramis, Clinique,
Origins, Tommy Hilfiger, M·A·C, Donna Karan,
Aveda, Michael Kors, and Sean John.
A number of Estée Lauder’s descendents currently
serve as executives. Mrs. Lauder’s elder
son, Leonard A. Lauder, is Chairman Emeritus,
and her younger son, Ronald S. Lauder, is Chairman
of Clinique Laboratories, LLC. Leonard’s
wife, Evelyn H. Lauder, is Senior Corporate Vice
President. Among her grandchildren, William
P. Lauder is Executive Chairman of The Estée
Lauder Companies, Aerin Lauder is Style and
Image Director for the Estée Lauder brand and
Jane Lauder is Global President and General
Manager of Origins and Ojon. Leonard Lauder,
William Lauder, Aerin Lauder, and Jane Lauder
serve on the company’s Board of Directors, and
the Lauder family controls about 88% of the
group’s voting shares.
13
The Focus Vol. XV/1

Leadership Interview
“There is no secret sauce,
just hard work. It is sitting
down with everybody
individually, hearing them
out, hearing their thoughts.”
last year’s story. We were very good on that side and
less good at preparing the likelihood for success.
I had always felt that we’d need to move ourselves a little
closer to more consumer insight, more consumer
knowledge, and understanding what is likely to be successful
as opposed to betting on red and black and odds
and evens.
The Focus: As you move closer to the model of fastmoving
consumer goods with its time-consuming emphasis
on making sure that you give customers what
they want – instead of inspiring them by giving something
that they didn’t really know they wanted – do you
risk losing some of that entrepreneurial heritage
Lauder: We are not trying to move away from that, we
are trying to add more discipline. What allows Fabrizio
to work so well with the team and with me is that he
under stands and respects deeply those things and values
that have made our company what it is today – imagination,
creativity, and entrepreneurship. And he brings focus
and discipline in certain areas where we were perhaps
all over the place. Early on, we were working on a
project he was enthusiastic about and I had him take the
lead because I thought he would learn more about the
company that way. I suggested that he invite me to sit in
only on things he wanted me to be a part of and that I
would coach him in private. We had gone through a
meeting and afterward he told me that he didn’t really
like what had been presented. I said, “I didn’t like it, either.
But the presenter has two peers who are equally as
capable. And I don’t see why you couldn’t go to each of
them, give them the same brief, and see what they come
up with.” Two weeks later he showed me a short presentation
that one of those two people had created and told
me how much he liked it. He said, “At P&G this would
have taken 18 months and it would have been backed up
with 180 pages of data. Here I got it in two weeks.”
“Yes,” I said, “we do that all the time.” And he said,
“You kept telling me about the creativity and imagination
here – now I get it. I understand what that unique
competitive advantage is for our company.”
The Focus: How have your father and your uncle been
involved in Mr. Freda’s on-boarding and integration
Lauder: Fabrizio spends a good deal of time with each
of them one-on-one, and with my father and me when he
wants to talk to us about a certain general direction or
about things he sees. They have their own ways of dealing
with each other, and each of them has his own way
of dealing with me. We all try to figure out a way to get
14
The Focus Vol. XV/1

Leadership Interview
to the same place and get a certain comfort level. Ronald
also has his own opinions about certain things, and he
shares them with each of us, either individually or collectively.
We all have this commitment to getting to a
consensus where we either agree, or acknowledge that
there is more to be discussed or more to be learned before
we can reach a conclusion.
The Focus: Does that commitment to consensus help to
ensure the continuation of the business as a familyowned
company
Lauder: There are certainly examples of family companies
that have blown up because, ultimately, the different
factions of the family could not agree. We are all
very committed to the fact that this is a fabulous company,
which has given us all an extraordinary opportunity
in our lives, and we don’t want to mess it up.
The Focus: Is there a special formula for ironing out
differences
Lauder: There’s no secret sauce, just hard work. It is
sitting down with everybody individually, hearing them
out, hearing their thoughts. Occasionally, it involves
disagreement. A family member might say, “Let me tell
you why I am not enthusiastic about this idea.” And we
go through it.
The Focus: How do you balance tradition and renewal
in the business – the tradition and passion of the founders
and the renewal that must come through subsequent
generations
Lauder: The best thing that any family company can do
for the future generations is to set up standards to which
all family members agree. The generation that is essentially
in control should set up the standards before the
oldest member of the next generation comes out of college
or starts building expectations about working in the
company. No matter how many cousins, aunts, or uncles
there are, the eldest of the next generation becomes employment-eligible
in the company only after getting experience
elsewhere. There should be general guidelines
of what those criteria are – what qualifies as relevant
experience, how many years, and so on.
must go to work somewhere else first.” And that’s what
I did. Now it’s a matter of what standards the third generation
– my cousins and I – may wish to apply to our
children, so that if they are interested in working in the
business, they feel that they are being treated equally.
The Focus: Although 60 to 90 percent of companies in
the world are family businesses, the majority are still in
the control of the first generation. The Estée Lauder
Companies is now into the third generation, with the
fourth in the wings. Will it get more difficult to hold the
business together through the later generations, when
there are far more family members to consider
Lauder: In my generation, three out of the four of us are
involved in the business. My brother chose a different
path but I think he has a certain level of connection with
the company. Perhaps it does become more of a challenge
when you get to the next generation, when you
have cousins who don’t know each other quite as well or
are further apart in age. We’ll have to see.
Over time, the real challenge is whether or not we would
transform from a family company with a family active in
management to a family-controlled company without
management involvement. We don’t know yet, because
the next generation is still too young. And that may drive
decisions down the road that may be different than the
decisions that were made twenty-odd years ago. But we
are not there yet, and it is too soon to make a decision
that should be practical, not theoretical.
In the meantime, we still sell a lot of lipstick, we still sell
a lot of fragrance, we still sell a lot of creams, and we
still sell the aspiration of beauty to many women around
the world. That is the most important thing.
The Focus: Is that part of a family constitution
Lauder: We don’t have that codified. The company was
built under the second generation’s leadership, and my
father set that standard for me. When I was at university
he said to me, “If you want to join this company, you
The interview with William P. Lauder in New York was
conducted by (from left) Justus O’Brien and Kim Van
Der Zon, Egon Zehnder International, New York, and
Ulrike Mertens, THE FOCUS.
15
The Focus Vol. XV/1

Portfolio
An uneasy peace
The art of Thomas Struth’s family portraits
© Thomas Struth/courtesy Schirmer/Mosel
Thomas Struth’s remarkable family portraits,
the growing body of work from a project he
embarked on some twenty years ago, invite
intimate scrutiny. They engage the viewer, he
has said, in a sort of triangular relationship
with both the artist and his subjects. And yet
the most beguiling and meaningful tensions
which the works explore are those contained
by each photograph itself – the interplay
between the members of a family, there on
the page. With formal compositions and
revealing gestures, the pictures bring a sort
of clinicism to bear on the nuanced dynamics
among a group of relatives.
by Eric Konigsberg
In one work, we observe three generations of a
small Japanese family spread across a multi-tiered network
of flat rocks – each adult on a different planet from
the others, but all of them bound inextricably to the same
orbit. Another, in which fourteen adults of a large
Chinese family have arrayed themselves in a sort of
semicircle with the frail patriarch at the center, the open
posture and warmth of the men contrasts strikingly with
the prim watchfulness of the women. In a portrait of
Gerhard Richter with his third wife and two children in
2002, the son replicates his father’s pose that suggests
each is keeping the outside world at arm’s length, though
the years that separate them have allowed the young
boy’s tentativeness to become the elder’s self-assurance.
And mother clutches daughter with a similarly open
hand, though she pulls her in where the males push us –
photographer and viewers – away.
In still another, we see the adult children of a prosperous
European family standing aloof from one another
in a modish apartment, leaving their patriarch – a man
with an air at once stiff and curiously affectionate – to sit
among his grandchildren on a couch. Whatever pressures
exert themselves upon and between each of these
people we can only imagine.
Struth was born in Germany in 1954 and grew up near
Dusseldorf with the knowledge that his father had been a
soldier in the German army. “As a child, I knew about the
Holocaust,” Struth says. “There was the conflict, for my
generation, between knowing that our forebears had killed
six million Jews in concentration camps – and poor people
and mentally ill people and gay people and Gypsies
– and at the same time having this private interpretation of
personal atrocity: the idea that the entire country was
traumatized by what happened.” In other words, a child of
post-Holocaust Germany encountered two very different
sorts of grief competing to be heard: grief for the victims
of their forbears, and grief for the forbears themselves –
for what they had witnessed and what they had done.
“A child sees in his parents comfort, permanence,
security,” Struth says. “But growing up, I never felt what I
thought it would feel like to be part of a family. Because
16
The Focus Vol. XV/1

Thomas Struth, The Smith Family, Fife 1989
17
The Focus Vol. XV/1

Leadership Portfolio
of what I knew about my father, I felt overpowering
skepticism. For most of my early life, I felt very much in
revolt, very much against what my father represented
and what he stood for.”
What a source of terror and confusion family can be.
As a child, Struth was fascinated by a photo album of his
father’s time in the army, shots of him with other soldiers
in France and Russia, at home while on leave from the
battlefield, and, perhaps most compellingly, in uniform
for a series of studio shots. “He was a very handsome
man, with dark eyes and black hair, and his retouched
face looked very bizarre, as if there was a sort of flirtation
with the camera going on,” he recalls. “The whole mixture
intrigued me and opened endless questions about
what he really was, and what aspects of his experience
were revealed by the photographs but not by the stories he
told. I think that the portrait book, and the issues it raised,
were probably what drew me to photography.”
Photography is “mechanical reporting,” Struth says.
“It’s not something that you can bend. It’s evidence. It’s
an acceptance of the facts.” This is what his family portraits
strive toward as well. They mark families at a resting
point – between whatever has transpired to split and
realign the individuals and what will inevitably come in
the future to create further joys and problems – to capture
what he calls “an uneasy peace.”
You can look at “The Barlow Family,” for example, a
portrait Struth took in 2007, and a million unanswered
questions come to mind, all of them posed by the distance
we sense is possible between the image these people
mean to convey and the emotions that lie beneath the surface.
We see a middle-aged and comfortable-looking
couple with fair skin, their hands placed lightly on the
pair of pre-teen Asian children in front of them. We might
assume they’re adopted, but we can’t be certain. We see
trees casting afternoon shadows on a lawn, three black
Labrador retrievers, the jauntily mussed hair and upturned
collar of the man, the dual asymmetries of the
protective squint on the woman’s face and the sidelong
crease of her summer trousers, an ambivalently flexed
knee from the boy, the girl’s folded arms. We are left
to ask whether the boy slouches with affection or weariness,
if the aggressive stance of the girl (his sister)
reflects anything more complex than pre-adolescence.
What is shared by both the adults and the children
Sandy feet and dented knees; the affection – or perhaps
protection – of the dogs; a family created when one
pair materialized to answer the prayers of the other.
And vice versa.
To put the members of a
family beside one another
so that the differences
between them are on view
has a “soothing” effect.
“The story of every family, even a small family, over
time is like an epic Thomas Mann novel, and the dynamic
is always evolving,” Struth says. “There is no
standstill. But the portrait is like a scan of the family
dynamic at a moment in time, like opening the novel to
a particular page and reading only that page. The evolution
of the epic gets recorded at a particular instant,
never to be the same again.” To put the members of a
family beside one another so that the differences between
them are on view has a “soothing” effect, he adds.
“It’s as if they are letting go of the idea that whatever
their family is, it should have been a certain way, a different
way. We see the family in a moment of being able
to accept things as they are.”
ReSUMÉ
Eric Konigsberg
Thomas Struth:
Familienleben/Family Life
Schirmer/Mosel 2008
Eric Konigsberg is the author of the book
Blood Relation (HarperCollins, 2005). He has
written for The New Yorker, The Atlantic, and
Rolling Stone, and was formerly a reporter at
The New York Times. This essay is adapted
from his introduction to Thomas Struth’s book
Family Life.
18
The Focus Vol. XV/1

Culture
For better, for worse
How to keep the family business vibrant
across generations
Rajeev Vasudeva
Egon Zehnder International, New Delhi
rajeev.vasudeva@ezi.net
Andreas Zehnder
Egon Zehnder International, Zurich
andreas.zehnder@ezi.net
Gabriel Sánchez Zinny
Egon Zehnder International, Miami
gabriel.sanchez.zinny@ezi.net
If family firms want to sustain their dynamic
progress across multiple generations they need
to have a professional approach to governance
and management – a task that, in its multifaceted
complexity, poses a major challenge in terms of
leadership. It is all about balancing the interests
of the company with those of the family and efficiently
exploiting the special strengths of this kind
of business. In what follows, the authors describe
how the challenges of building a family firm over
generations can be mastered.
It was the takeover that proved fatal. Until 2006 the
Japanese construction company K.K. Kongō Gumi was
the world’s oldest enterprise, a family firm dating back
1,428 years. A 17th-century scroll over three meters
long documents the corporate history over many generations.
According to this time-honored source, the company
was originally founded in 578 A.D. by a carpenter
named Kongō, from what is today Korea, to fill an order
for the construction of a Buddhist temple in ōsaka. The
temple still stands. Over the centuries the family built
many more prominent edifices in Japan, specializing
in temples and shrines. Masakazu Kongō was the 40th
and final family member to guide the fortunes of the
firm. Shortly after being taken over by Takamatsu Construction
Group, in January 2006 Kongō Gumi was
wound up.
© Thomas Struth/courtesy Schirmer/Mosel
The longest corporate history in the world
It is surely no coincidence that the longest corporate
history in the world should belong to a family company.
And similarly it is no coincidence that this history
should come to an abrupt end with the loss of the firm’s
independence. The example of the long-standing Japanese
company teaches two obvious lessons: first,
longevity is not reserved for stock corporations but
is perfectly possible for family companies too; and
second, preserving the company’s independence would
appear to stand surety for a long life. Those that con-
19
The Focus Vol. XV/1

Leadership Culture
tinue for generation after generation produce superior
performance compared to publicly traded companies
and are not constrained by a ‘quarterly’ mentality.
Nevertheless, despite their very real economic significance,
many family owned companies fail after just a
generation or two.
The reasons are less likely to be of an economic nature
and will more probably be found in the conditio sine
qua non of this type of company – the family. At its best
the company’s biggest asset, unless managed with the
same care and attention as the company itself, the family
can rapidly become its most oppressive burden. Every
handover to the next generation, every major investment
decision, the appropriation of profits, the responsibility
for losses – these and many other potential sources of
discord among family members loom large around every
corner. After all, why should entrepreneurial families be
less quarrelsome than any other group of relatives The
consequences of their disputes, however, can be more
serious and far-reaching. Conflict is widely held to be
the greatest destroyer of value in family firms.
So in a family company, good management means
far more than having a far-sighted mission, formulating
a wise strategy, and deploying it superbly through a
carefully selected workforce. Family firms need all of
this and more if they are to survive and prosper in the
long term, but at the same time, management must devote
at least as much energy and attention to the cares
and concerns of the family shareholders. If familyowned
companies are out to sustain dynamic progress
across generations, they need to manage the inherent
conflict between family and business on a consistent
basis, a complex and multifaceted task. Finding an equilibrium
that leverages the best aspects of both family
and business is the art of family business management.
But while management of family companies is more
demanding, the results are often worth the extra effort.
The best of both worlds
Studies show that well-managed family businesses are
more profitable, more successful in the long run, and
more enduring than other types of company. The secret
of their success lies in the ability to combine the best of
both worlds: family and business. Their strengths doubtless
include the close emotional ties between the owning
family (and often the employees) and their company,
coupled with a degree of loyalty to the owning family
that public companies, for example, can only dream of.
In a crisis in particular, this combination will often
bring remarkable returns as the shareholders declare
themselves willing to dispense with dividend payments
for a prolonged period or perhaps even inject fresh
capital from their own resources. In the same spirit,
employees accept pay cuts and play their part in resolving
the problems. Management need not think in terms of
quarterly reporting but can generally afford to focus on a
longer-term horizon, which will lead to a more sustainable
company. CEO tenure also tends to be longer, making
for a high level of continuity and dependability. And as
employees remain loyal to the company for long periods,
they help build and retain a strong knowledge base that
ultimately endows many family businesses with immense
innovative capabilities and outstanding products that often
make them market leaders in their specific segment.
In addition, family companies often have a strong,
shared value base, combined with a greater sense of
social responsibility that extends beyond the welfare
of the workforce. They are deeply rooted in their home
region where they often act as patrons of the arts or
engage in politics.
The many strengths are offset by several typical
weaknesses, such as a lack of transparency within the
company and towards the outside world and a degree of
splendid isolation that invariably detracts from the
competitiveness of the business. There is often a lack of
clearly defined accountability and responsibilities as
the company transitions from the founder stage. In some
cases there is also a marked absence of clear-cut rules
and job descriptions that could distinguish the roles of
management, family, and owners. This may be understandable,
given that relatives rarely define codes of
conduct for their dealings with one another, but in the
worst case the cocktail of emotions, sympathy and antipathy,
personal interests, and different economic expectations
can drive the company into existential difficulties.
Family companies by their very nature will have
problems and those that don’t prepare in advance
to deal with these contingencies by defining rules and
a code of conduct find it very difficult to survive across
generations.
Three dimensions
In many cases, without outside help families are unable
to strike a balance between their emotional ties to the
company, the economic realities facing management,
and the potentially disparate personal interests of the
20
The Focus Vol. XV/1

Thomas Struth, The Ma Family, Shanghai 1996
21
The Focus Vol. XV/1

Leadership Culture
various shareholders. This is why independent, objective
and trusted external advice is often critical in handling
conflicts while maintaining family harmony. The
decisive goals for any professional governance system
in a family business must be to defuse potential conflicts
or, better still, prevent them arising in the first place, and
to ensure an ongoing increase in shareholder value. In
this respect, there are three key dimensions to consider:
• The family dimension – this is about reaching consensus
over the rules that govern family affairs and a
clear understanding of how and in what form these
rules are anchored in the company. Also, the family
should agree on a definition of their shared values.
The core goal of family governance is to ensure the
cohesion of the family.
• The ownership dimension – the structure of company
ownership should be such that there is an adequate
capital base for future growth while ensuring
that the family retains a controlling interest in the
company;
• The management dimension – the aim here is to
ensure well-structured corporate governance and
a dynamic, thriving business portfolio in line with
family values.
In practice, this means that the family draws up a set of
rules acknowledged by all of the parties concerned and
governing the conduct of the family and the management
of the company – rules that will minimize the potential
for family conflict yet increase the enthusiasm of
the family for business ownership.
The company and its owners must have a clear,
shared view of the commercial goals that the company is
out to achieve and it must be clear which managers are
responsible for reaching these goals. In addition, they
must act to safeguard the company’s long-term future by
engaging promptly in targeted succession planning.
These are demanding tasks and ambitious goals that
call for an integrated and above all unbiased approach.
Formulating and implementing an appropriate governance
framework is often made far easier by involving
external advisors. They have the advantage of not pursuing
a personal agenda within the company and – given
the right specialist qualifications and experience – can
provide objective and independent opinions and advice.
Of course every family must find its own answers, but
the search for those answers can be greatly facilitated by
an independent mediator who asks the right questions.
In complex decision-making situations in particular, an
external advisor who enjoys the broad-based trust of the
owners will greatly increase the chances of reaching a
consensus that the family alone could not – or could no
longer – achieve.
A framework for the family
If, as the World Bank’s International Finance Corporation
(IFC) reports “most family businesses have a very
short life span beyond their founder’s stage,” then even
surviving this initial critical phase is an ambitious goal.
More ambitious still is ramping up the business into new
dimensions, expanding into new markets and sophisticated
innovations that call for major investments. But as
the IFC Family Business Governance Handbook says,
“Family businesses can improve their odds of survival
by setting the right governance structures in place, and
by starting the educational process of the subsequent
generations as soon as possible.”
Egon Zehnder International – Global Alliance Partner of FBN
Egon Zehnder International’s long-standing commitment to family businesses is reflected in its recently
concluded strategic partnership with the Family Business Network (FBN). The network with its motto
“By families, for families” acts to support the long-term success of family businesses and currently unites
over 3,400 family-owned companies around the world.
As an exclusive Global Alliance Partner in the area of talent identification and development, and family
and business governance, Egon Zehnder International cooperates with 27 local chapters of FBN.
FBN’s other alliance partners include Credit Suisse, Ernst & Young, and the IMD business school.
22
The Focus Vol. XV/1

Leadership Culture
The lack of professional behavior and independence
on the part of the board is the decisive reason why
the first non-family CEO in family firms so often fails.
Given the major differences in size, structure, and
strategic direction of family companies, there can be
no such thing as a one-size-fits-all recipe for good governance
structures that meet the specific needs in each
case, but there are at least points of reference and
guidelines from which companies can take their lead.
The first step is to coordinate the interests of the family
with those of the business while keeping them clearly
segregated. The challenges involved should not be underestimated,
because the two parties are tracking the
target from entirely different viewpoints – preserving
the legacy on one hand, growing the company on the
other, as risk aversion clashes with calculated risk taking,
and that is just one example. Building a consensus
around the purpose and vision of the family is the essence
behind drafting a family governance code. This
serves as the basis for harmonizing the family and
business goals and is designed to complement corporate
governance guidelines.
To underpin the important emotional ties between
family and company, which would otherwise be diluted
from one generation to the next, the family governance
code should include elements that promote the integrity
of the family and foster its interest in the company.
These could involve regular shared events such as family
meetings, as well as precise rules governing communication
and information flows within the family.
Insofar as possible, there should also be rules on how to
resolve conflict. Without this framework it is all too
easy for the kind of power vacuum to arise that outside
corporations or investors seeking acquisition targets
love to exploit.
With a view to good family governance, every family
of entrepreneurs or owners should not only ask itself the
uncomfortable questions but also come up with considered
responses, because each of these questions harbors
potential hazards if they are not jointly discussed and
resolved before circumstances force the family’s hand.
It is important for every family to answer the following
questions in a collaborative forum that is best facilitated
by an outside advisor:
• What is it that makes us unique as a family What
values and principles do we stand for and how should
these be reflected in the culture of our company
• Do we have a vision of how our company should develop
If so, how can the family ensure that management
shares this vision and drives it forward
• Who decides on involvement of the family in business,
capital allocation, profit distribution, dilution of
the family holding, etc.
• What mechanisms do we have for reaching agreement
among ourselves What shape do our exchanges
with the management of the company take and
who is responsible for this
The outcome of these deliberations could be, for example,
the formulation of a family constitution, establishment
of a family council or the setting up of a shared
office that maintains close and continuous contact with
executive management.
The role of the board
The longer a family company exists and the larger it becomes,
the greater the need for a supervisory body with
at least an advisory remit, which at some point, however,
would take on a supervisory function.
A board of this kind makes little sense, however, if it
is initiated by the chairperson as a kind of organizational
must-have that exists to rubber-stamp his or her decisions,
or if the dividing line between the responsibilities
of the board and management are not clearly defined. In
our experience it is also problematic when the board is
made up entirely of family members. In a constellation of
this kind, a non-family CEO will have little chance of
overcoming an opposing family view, even with the most
rational of arguments. Similarly, with this kind of board
line-up, the CEO can hardly expect any objective assistance
in dealing with the owning family. In our experience,
the lack of professional behavior and independence
on the part of the board is the decisive reason why the
first non-family CEO in family firms so often fails.
23
The Focus Vol. XV/1

Leadership Culture
Besides bringing the much-needed wisdom and outside
perspective in today’s complex business environment,
outside directors help attain the vital equilibrium
between family and firm. A board that is carefully
compiled in line with considered search criteria and is
well networked can build bridges between owners and
management and help communicate to management
the values, visions, and strategic parameters defined by
the family – particularly important if the management
team is made up of non-family executives. The board
controls and oversees management in the interests of
the family and the business, but if necessary will also
intervene to protect management from excessive financial
claims or power games on the part of the owners.
But the board is no less important in promoting the cohesion
of what is, particularly in family business with
a long tradition, often a highly diverse group of family
shareholders. There will be highly active, deeply involved
shareholders here, and others who prefer to live
off their shares in a passive role. Here it is the board’s
integrative powers that are called for. The board is also
responsible for the single most important recruitment
decision at the company – the appointment of the CEO.
To that extent the board also takes on an important
strategic role for the company in respect of succession
planning.
So what does the ideal board look like As a result of
the board appraisals that we have conducted at Egon
Zehnder International for listed companies over recent
years, we have been able to arrive at findings on the
ideal composition of the board – results that can also
benefit family firms. The best boards demonstrate the
following strengths:
• Strong strategic skills and experience.
• A good blend of IQ and EQ that enables them to creatively
solve problems.
• Independent thinking and the courage to voice an
opinion on critical decisions.
• Results-orientation. The board understands what
drives the profitable growth of the company and fulfills
its responsibilities with diligence and discipline.
• The board members are aligned with the values of the
company.
• They engage in constructive give-and-take with one
another and have a natural orientation towards teamwork.
• They are curious by nature and willing learners.
• They see themselves as sparring partners for the CEO
and management.
A board of balanced composition and capable of forming
its own judgments can help management and owners
attain ambitious goals and create genuine added value.
Particularly when it comes to decisions on emotive issues
for the family of owners, a board whose objectivity,
professionality and wise judgment ensures it acceptance
among all concerned can help defuse potential
conflicts. One such situation arose when the CEO
of a family firm that we were advising, himself a family
member, wanted to abandon the company’s original
field of activity because it was draining vitality from
the business as a whole and the company had since diversified
successfully into other markets. Feeling that
they were betraying the legacy, some members of the
family hesitated to cut these roots and resisted the
move. The intervention of the board and the respect it
enjoyed with all of the parties ultimately led to a decision
in line with the CEO’s wishes, without causing a
rift in the family.
Ambitious goals call for talented leaders
As a company introduces new, ambitious goals, it is not
only the board members who face a more demanding
role but also – and in some cases by a whole new order
of magnitude – top management. Family firms show an
above-average tendency to recruit management talent
from within. Familiarity and trust play a big part in appointment
decisions. They are often driven by comfort
with the candidate and not necessarily by his or her
competence. And if rising stars are not family members,
then the feeling is that they should at least have
rubbed shoulders with the family in the course of a prolonged
period on the payroll. This blinkered approach
can lead to problems in ensuring that the right people
are in the right seats, with an ultimate knock-on effect
on the company’s performance.
Family businesses often have no objective standards
by which to measure the performance and skills of
their management team. They have no means of benchmarking
their executives objectively against other top
managers in the market. On account of certain introspective
tendencies, however, they tend not to notice
this shortcoming until it is too late. New objectives or
even just the aspirations of a new generation in terms
of size and scale or a change of strategic direction can
also mean that new competencies are suddenly needed
which the company does not have at its disposal. Worse
still, with no clear appraisal criteria in place, the com-
24
The Focus Vol. XV/1

Leadership Culture
pany may not even be aware that these competencies
are lacking.
As many family companies have reached out beyond
their domestic markets and today join battle in
the global arena, they need a top management team that
is experienced in dealing with the demands of such
scenarios and can act and react accordingly. Periodic
assessment of the management competencies to deliver
on the future objectives of the company is critical to
ensure that the right capability is being built to drive
the required business performance and outcomes. It is
equally important that family and non-family managers
are part of this process. More often than not, it is
the inability of family companies to focus in a timely
manner on building the talent pipeline in the company
that constrains its growth.
A proven methodology should be applied to arrive
at an objective appraisal of the existing competencies
and future potential of a company’s management lineup.
Once the company has defined the skills its management
will need in order to meet its short- and longterm
objectives, a management appraisal will clearly
point up the gaps that exist both in the personal competency
profiles of individual managers and in the cumulative
profile of the management team. Through the
appropriate development plans for in-house talents or
selective hiring from the outside, these gaps can then
be effectively closed.
Time for the next generation
The handover from one generation to the next is a razoredged
reef on which many a family has run aground,
causing their companies to sink without a trace. Excessive
expectations, false hopes, hubris, a patriarch unable
to hand over the reins, different branches of the family
vying for dominance – the potential for conflict here is
endless. Most families are aware of the challenges but
few are willing to proactively discuss and address this
issue in a transparent manner, until it is too late. Instead,
family businesses need to seize on this as an opportunity
to focus on the future and to realign the business and
governance structures to meet the future needs of the
family and the business environment. Are the current
governance principles likely to remain fit for purpose
over the next 30 to 40 years in which a new generation
will be controlling the fortunes of business and family
alike Will they prove a reliable source of added value
As we mentioned earlier, the selection of a CEO or
chairman of the board is the most critical decision for
any business, public or private. In family companies,
however, the influence of the CEO may well be greater
still, given that tenure is generally far longer than at a
listed company. This applies equally to a member of the
family and to an external top executive. With that in
mind, companies do well to choose with care.
Consequently, at family companies too, succession
planning cannot begin soon enough (see also the article
on Succession Planning on page 78 of this issue). The
more objective, transparent and timely the succession
process is and the more carefully selected and prepared
the potential candidates are, the less friction losses and
setbacks there will be. Above all, though, all concerned
must be clear about the fact that, at the end of the selection
process, the best candidate must win through – regardless
of whether they are family or not. If the transition
at the top goes off smoothly, the family business
will be ideally placed to benefit from the traditional
strengths that make this type of company more successful
in the long run and more enduring than others.
The Authors
GABRIEL SÁNCHEZ ZINNY joined Egon
Zehnder International in 1987. Based in Miami,
he is a member of the global Financial Services,
Board Consulting, CEO Succession,
and the Family Business Advisory Practices.
RAJEEV VASUDEVA joined Egon Zehnder
International in 1995. Based in New Delhi, he is
a member of the firm’s Executive Committee.
He was Managing Partner of the India office
from 1995 to 2002 and was also head of the
Technology and Telecoms Practice in India
until 2004. Since 2010 he had co-headed the
firm’s global Family Business Advisory Practice.
Andreas Zehnder joined Egon Zehnder
International in 2001. Based in Zurich, he is
a member of the global Consumer Practice.
He consults international companies from the
consumer and financial services sectors and
has a special focus in his work as a member
of the Family Business Advisory Practice.
25
The Focus Vol. XV/1

Panel
What was the single
most important thing
you had to change
when you took over
from the previous
generation
Balancing tradition and
renewal at family firms
Corrado Beldi
Entrepreneur,
Laterlite
My entry into the family company happened suddenly.
I had been working for eight years as a strategic
consultant for an American firm, enjoying my job
“My first desire
was to implement
family values
through contemporary
tools.”
and travelling around the
world. I was not even
thinking of going back.
Then one day my father
called me: “I’m tired,” he
said. “You must take a decision.
If you want to work here you are more than welcome.
If not, I will sell the company.”
I got to the company four weeks later, to discover
that my father had left his office the day before. He
would never come back again. The walls were green and
dusty. My first desire was to implement family values,
heritage and tradition through more contemporary tools:
social responsibility, teamwork, sustainability in processes
and products, social activities, wide knowledge of
our strategy, individual incentives, education of human
resources, and improvement of the internal climate. We
also tried to modernize the offices and workshops. And
I chose a new color for the walls. The old green was
covered with a bright orange. I thought that decision
would change our climate even more. I had forgotten
that green was chosen by my father and came from my
grandfather’s office. Five years later my father died.
Then one day I asked someone to scrape the paint until
we found the original old green. And the walls were
repainted. A young engineer asked me: “Why did you
change it” My answer was: “Because of all the changes
we’ve made, one was not necessary.”
Laterlite was founded in 1966, with production
plants in Parma, Retorbido, Lentella, and Enna and
its commercial offices in Milan. Today, the company
is the leading producer of expanded clay in Italy and
works closely with construction professionals in
their choice of lightweight and insulating solutions.
26
The Focus Vol. XV/1

Leadership Panel
Elisabeth Grieg
Board Chair,
Grieg Shipping Group
Fredy Knie jun.
Artistic Director,
Swiss National Circus Knie
We are four siblings who took over the Grieg Group
from our father in 1999. In the course of this generation
shift we felt a need to evaluate our values and who
we were as a group. Why
“In the course of
To make sure our company
the generation
culture and strategies were
shift we felt a
well founded and to enable
need to evaluate
our values.” us to deal with an increasingly
competitive and complex
business environment. And to make sure we had
the right competencies in place and an organization fit to
grow and prosper.
In a thorough process involving the entire organization
and other stakeholders we defined our values as:
solid, open, proud and committed. What do these values
signify We want to attract diversity to our company,
because we wish to reflect the society in which we live.
We want to have an organization with the ability to
change as we strive for better business performance as
well as industry improvements in all our companies. We
want both economic and social value creation ensuring a
sustainable footprint for future generations. We believe
that by defining our values – and living by them – more
people become aware of the Grieg Group and how we
operate. We attract hard-working and competent people,
and have doubled the number of employees and multiplied
our turnover and profits since 1999.
Basically we’ve been doing the same thing for seven
generations now: putting on traditional circus shows.
We’re as committed to this simple formula as we are to
“We look after
and present our
animals differently
from previous
generations.”
the inevitable process of
renewal. Every generation
must be up to the challenge
of translating proven
elements into the future,
coming up with new ideas
and making them work. The process of change is ongoing
and takes its lead from the tastes of our audiences
with whom we have strong ties.
In terms of the way we look after and present our
animals, for example, we take a very different approach
from previous generations. The perception of the animals,
the zoological findings in terms of how they need
to be kept and the aesthetic expectations have all changed
dramatically, which left us facing major challenges. I
am proud to play my part in mapping out the journey
through time of Switzerland’s most renowned circus. At
the same time I’m glad to note the same energy flowing
through the next generation. They too will doubtless do
many things differently.
The Grieg Group with headquarters in Bergen, Norway
has its roots in a long and proud maritime tradition.
Today, it is a string of companies operating globally in
shipping, logistics services, ship broking, maritime
information systems, investment consulting, and fish
farming. The Group has about 1,500 employees.
Fredy Knie jun. has for the past 20 years managed
what is Switzerland’s largest and most famous circus
together with his cousin Franco Knie. The company,
which will soon celebrate its centenary, enjoys great
international renown. Its horse training methods in
particular are widely considered exemplary.
27
The Focus Vol. XV/1

Keynote Topic
Keeping the family in family firms
What sets family businesses apart
Skeptics may consider them outdated
because of a perceived lack of rationality.
But family firms have proven both successful
and enduring – as long as their owners
understand how to leverage their specific
advantages and overcome their disadvantages
through clever management. Family firms
need a tailor-made governance system that
takes their unique complexities into account,
for example. In the end, their success and
their survival depend on one thing: a vision
based on values that are shared by all
members of the family.
by Sabine B. Klein and John L. Ward
Family firms are widespread and successful. Family
firms have continuity. Family firms are different because
their inner workings remain closed to outsiders.
They perplex many professionals, who consider family
businesses to be irrational. Indeed, family firms do not
follow simple business logic. But as Dan Ariely puts it,
sometimes the irrational is “predictably irrational.” 1
The family aspect of a family firm starts when the
entrepreneur and owner-manager realizes that his or her
“baby,” the business, is changing because of its newborn
sibling, the first child. This is the moment when the entrepreneur
decides – usually unconsciously – whether
the business should become a family business. There are
many pros and a plethora of cons. To start with the
downside, turning a first-generation business into a family
business restricts the firm’s discretion. Because family
businesses are built on the dominant influence of a
family, possibilities for leveraging its capital are limited.
Around the world, except on the stock exchanges of
market-oriented countries such as the UK and the USA,
families retain a dominant ownership share of their family
businesses to secure control. This applies even more
to privately owned companies, which represent the majority
of the world’s family firms; here, families tend to
have a qualified majority. In fast-growing, capital-intensive
sectors such as biotechnology and IT, therefore,
family ownership can restrict growth opportunities.
A generational perspective
© Thomas Struth/courtesy Schirmer/Mosel
On the positive side, turning a first-generation business
into a family business opens up long-term perspectives.
When viewed as a family business, the firm’s timeline
shifts from a focus on the fiscal year to a generational
outlook. The implications of this change are manifold.
First, stakeholder and shareholder perspectives merge.
Given a one-year perspective, the goals of different
stakeholders are in conflict – growth versus payout, investment
versus current profits, sustainability versus
profit maximization. However, once the entrepreneur
starts to look 30 years down the road, the needs of the
28
The Focus Vol. XV/1

Leadership Keynote Topic
employees, customers, local community, and owners
more or less merge into one perspective. It is only possible
to secure the long-term survival of the firm if the
management meets the needs of all stakeholders equally.
With this long-term perspective in mind, the owners
evaluate innovative activities as well as investment
projects differently. Because the cost of capital is lower
in family businesses and no one asks for returns on an
annual or even quarterly basis, a family firm can invest
in projects that will only show returns after several
years. This means innovations in family businesses can
both be radical and move along in increments. At the
same time, family business owners must be averse to
risk by definition. They cannot endanger the existence
of the family business, which rules out high-risk endeavors
– even if there is only a marginal probability of
the risk playing out. In the unlikely event that this risk
becomes reality, the company’s continuity would be
threatened.
Shared values are vital
Feuding family members are the downfall of the family
firm. From the Buddenbrooks to the Gucci family, we
have all heard horror stories of relatives fighting each
other until the business fails. It is one of the defining
paradoxes of a family business – that the family can be
both its strength and its weakness. A healthy family
business is rooted in the family’s shared values and
norms, making them vital to the survival of the business
as a family firm. During the first two generations these
values and norms are usually rooted in the personality of
the founder, which is deeply engraved into the corporate
culture. Norms originating from the founder’s values,
personality and behavior are transmitted from generation
to generation by stories and rituals, dos and don’ts.
When the common values and norms are transferred
soundly, even later generations will continue to share a
value base, giving the family firm a vital competitive
advantage. Consider the following example: The Merck
family of Merck Darmstadt discussed a potential merger
with Ernesto Bertarelli, who at that time owned Serono,
a Swiss-listed, family-controlled biotechnology firm.
Bertarelli asked when the negotiations could start. Jon
Baumhauer of Merck replied “immediately,” which
took away the breath of Bertarelli and his adviser. 2
Baumhauer was able to act quickly on the basis of discussions
within the family that had been going on for
the past six months. Although more than 150 family
members were involved, not a single word had leaked
to the market.
On the other hand, as family businesses grow older
and the group of family owners becomes increasingly
heterogeneous, the tendency for entropy grows if not
counterbalanced by shared values and norms. Even if
the owners are not fighting openly, their divergent intentions
and latent conflicts over goals open opportunities
for outsiders to benefit. In academia we have recently
started to describe the phenomenon of “expropriation
of family business owners by outsiders.” 3 For a family
firm, expropriation is the most dramatic form of loss of
influence over its own business. Expropriation starts
with a power vacuum within the owner family. This
power vacuum usually has its roots in a lack of shared
values and resulting contradicting visions, if not a complete
lack of vision. Over years, often over decades, the
overall cohesion of the owner family shifts from an
emotional cohesion of the family and the business towards
a more financial cohesion. 4 Family businesses
held by extended families, so-called cousin consortiums,
suffer from a high level of diversity in terms of the age
span of the multiple owners, their diverse cultural and
professional experiences and, most of all, a lack of communication.
Dispersion and disinterest are the greatest
enemies of older business families.
The challenges of survival
When Rupert Murdoch considered taking over Dow
Jones and the Wall Street Journal in 2006/07, his
chances from a legal point of view were close to zero.
The ownership was organized in trusts governed by the
29
The Focus Vol. XV/1

Thomas Struth,
The Shimada Family,
Yamaguchi 1986

Leadership Keynote Topic
Family Businesses require professional managers who
understand the dynamics of complexity – and family
owners who understand the dynamics of expropriation
and family values.
Family Business
Tree
Leaves = Interaction with
Environment/Market
Branches = Leadership
Trunk = Ownership
Root = Family
senior generation, who had no interest in selling. After
in-depth analysis he therefore approached the younger
generation, which at that time was a toothless tiger. In
private one-on-one talks with members of the younger
generation, Murdoch questioned whether it was fair that
the senior generation as trustees withheld the ownership
rights from the younger generation. He used these tactics
to urge members of the younger generation to put
pressure on their parents to agree on the sale, and finally
succeeded. After this lengthy process, the Bancroft family,
former owner of Dow Jones and the Wall Street
Journal, agreed to accept a 27-year-old European-based
opera singer, a family member chosen by Rupert Murdoch,
as a board member. Without the power vacuum
within the Bancroft family, the lack of shared values, and
the resulting lack of communication and trust, Murdoch
would have had no chance of taking over Dow Jones and
the Wall Street Journal.
Describing the family business as a tree helps illustrate
the survival challenges faced by family firms. The
tree’s leaves and the environment must correspond;
otherwise the tree will suffer a premature death.
Why is this the case The long-term perspective of
the family business leads to an increased dependence on
“good nutrition.” Healthy roots are needed to provide
the family firm with a vision based on shared values.
Only then will the trunk develop stability and support
the necessary strength and flexibility of the leaders. And
only then will the family firm meet the requirements of
its markets – and might even be able to act proactively in
shaping its future markets.
A tailor-made governance system
Governance of family businesses is more complex because
of the family. When it comes to designing governance
processes for a family firm, the family is often
neglected. A simple rule states that the complexity of a
family firm’s governance system should equal the complexity
of the corresponding family business system,
which is comprised of four subsystems: family, ownership,
leadership and company in the market. 5 A special
role is assigned to the level of trust which moderates the
relationship. Looking at this basic rule, what does “equal
complexity” mean in practice Here complexity is defined
as the number of elements constituting a subsystem and
the heterogeneity of the respective elements. Focusing on
the business family, it means that the more members a
family has and the more they differ in terms of age, where
they live, experience and professional training, the more
complex the family system is. A difference in expectations
(“I need the money from the family firm for my own
little business, for our family holiday” versus “I couldn’t
care less”) is perhaps the most significant complexity.
Governing a complex family requires a tailor-made
system of processes such as rules of membership (who
is “family” and what value should family add), rules of
representation (who speaks for us and how are they
elected) and rules of compensation (do family members
who are not active in the business get compensated for
the work they do for the family). Coming back to the
Merck family, they have a fascinating system for electing
their board. Out of the roughly 150 owners, any
family member who is elected by the majority of his or
her peers gets a seat on the family representative board.
Each family member can vote for a maximum of ten
representatives. One can easily understand that it is not
only a process of electing board members, but even
32
The Focus Vol. XV/1

Leadership Keynote Topic
more a process of facilitating communication and
mutual awareness within the group of family owners.
Another important element in the governance of family
firms is trust. Family businesses are governed by a
group of owners who are related by blood or marriage.
They spend far more time together than owners of other
types of companies, giving them the opportunity to build
trust among each other. If they succeed in doing so, their
firm will require much less complex governance mechanisms
than would be needed in a company with a comparable
level of complexity, but no trust among the owners.
Informal processes can replace formal ones, reducing
cost to a certain extent. Family businesses with a high
level of trust therefore have lower governance costs.
family owners grasp these powerful forces, the family
business can maximize its performance and unique
competitive advantages.
1
Dan Ariely (2008). Predictably irrational – The hidden forces that shape our decisions.
HarperCollins: London
2
The new Merck: Beating the odds. IMD Case 3-2137
3
Klein, S.B. & Decker, C. (2011). The sale of the family firm: A holistic alternative.
Paper accepted at the Academy of Management Entrepreneurship Division. San Antonio
2011
4
Pieper, T.M. (2007). Mechanisms to assure long term family business survival: A
study of the dynamics of cohesion in multigenerational family business families.
Peter Lang Verlag: Frankfurt
5
Klein, S.B. (2009). Das Komplexitätstheorem der Corporate Governance in Familienunternehmen.
Zeitschrift für Betriebswirtschaftslehre Special Issue 2/2009: 63-82
Managing complexity
During succession in early generations, the level of
complexity can also change significantly. Take the example
of a manager who owns 100 percent of the voting
shares in his company and has four children. If he divides
ownership equally among these children, one
owner will be succeeded by four. With these four different
sets of expectations, etc., the level of complexity
rises dramatically. If the former owner-manager did not
anticipate this situation by installing an outside board or
drafting buy-sell agreements, for example, the complexity
of the governance system will no longer equal the
complexity of the new ownership system. How should
he cope with the situation There are two possible solutions:
to draft a governance system that anticipates the
increase in complexity prior to succession, or to hand on
the business to only one of the children.
Governance in family firms is a challenge far beyond
that of non-family businesses. Generally speaking, family
businesses either outperform their non-family counterparts
or fail dramatically. They require professional
managers who understand the dynamics of complexity
and long-term advantage. They also need family owners
who understand the dynamics of expropriation and family
values. When both the non-family executives and the
Resumé
Prof. Dr. Sabine B. Klein holds the INTES
Endowed Chair of Family Business at WHU (Otto
Beisheim School of Management) in Koblenz/
Vallendar. A third-generation family business
member, she was Professor of Strategy and Family
Business at the European Business School
in Wiesbaden until 2009. She is a founding
member and past President of the International
Family Enterprise Research Academy (ifera).
Prof. John L. Ward, Ph.D., teaches and
conducts research on strategic management,
leadership and continuity in family businesses.
A Professor and Co-Director of the Center for
Family Enterprises at the Kellogg School of
Management in Evanston, Ward has written
several publications on family business. He is a
graduate of the Northwestern University (B.A.)
and Stanford (M.B.A. and Ph.D.).
33
The Focus Vol. XV/1

Executive Survey
Family businesses – best-in-class
with minor flaws
The 10th International Executive Panel survey
A long-term perspective, value-based decisionmaking
and independence from the capital market:
these are the characteristics that continue to give traditional
family businesses a genuine competitive edge in
the marketplace. But there is also a downside to family
firms that can impact on their commercial success. The
main factors here are inter-generation rivalry, a lack of
transparency in communications and preference for
family members over external candidates. So if family
businesses are going to play to their strengths in the
global competitive arena, they will have to adopt an
even more professional approach. Such are the findings
of a survey conducted by Egon Zehnder International
among 720 top executives and family business owners
worldwide.
That family businesses have their strengths is beyond
doubt. For the majority of survey respondents (53
percent of executives, 64 percent of family business
owners) their longer-term outlook means that family
businesses can afford to be more innovative than other
companies. A strong value base and their independence
from the capital markets are further advantages
that rank high in the survey. Also, the nature of family
businesses helps them cope with economic downturns,
as two out of three family business owners know from
experience.
A balance of interests
When it comes to balancing the interests of the company
and the family, a closer look reveals that this is indeed a
potential source of conflict. The big strategic issues are
mostly decided by a family council (51 percent), while
top management gets to make these decisions in only
one family business out of five. Asked who provides the
big, bold ideas, however, only 26 percent assign this role
to the family.
Almost two-thirds of the panel members are aware
of cases in which family conflicts have hindered business
decisions. No less than one-third of executives
from this type of company describe collaboration with
the owners as “marked by major conflicts.” And in Asia
in particular, conflict between management and owners
seems to be a common occurrence (44 percent).
Over 1/2
of respondents consider family businesses
more innovative than others
So what are perceived or known to be the main areas
that could give rise to conflict Shortcomings are found
to exist in respect of transparency but also in terms of
meritocracy. Only one-third of all respondents describe
decision-making at their company as absolutely transparent
and comprehensible. The most common cause of
conflict is doubts regarding the merits of family members
who work at the company (60 percent), followed
by a lack of agreement on the vision and future strategy
of the business and dissent between owner(s) and nonfamily
management. The very appointment of family
members to management positions leads to conflict in
more than one case out of four.
The crucial question for top executives, therefore, is
whether or not in a family business their career prospects
will develop in line with their performance and
potential. While the majority of owners (55 percent)
claim to make management appointments solely on
merit, only one executive in three on the panel (36 per-
34
The Focus Vol. XV/1

Leadership Executive Survey
cent) has the impression that top management posts at
their company are awarded without consideration of
family membership.
Succession planning leaves room for
improvement
This deficit is particularly striking when it comes to the
most important appointment at any company – that of
the CEO. In terms of CEO succession, three-fourths of
those surveyed consider that family members are at an
advantage over non-family top executives. That said, in
Europe at least, CEO succession is a more realistic option
for non-family members than in the USA or Asia.
And despite the fact that the majority of respondents say
they think it is important to take external professional
advice on succession planning, only one-third of executives
claim that professional succession planning is a
Only 27%
of the companies represented engage in
professional succession planning
cent of the executives surveyed indicate a limited scope
for decision-making while 40 percent name a lack of
career prospects. In terms of integration, too, there is
clearly room for improvement. Over 70 percent of the
top executives and company owners surveyed believe
that formal integration processes for non-family managers
are particularly important. On the same topic,
however, only one owner in four reports that such integration
processes are in place at their companies.
Family business are as popular as ever but
could be even more so
2 businesses out of 3
report that family conflicts have been
known to hinder important decisions
reality at their companies. No wonder that 31 percent
identify succession planning as one of the main causes
of conflict they have experienced.
One of the biggest challenges for family businesses
is recruiting top talents and integrating them into structures
that have evolved over the years and that are often
perceived as being short on transparency. Asked to say
why they would not work for a family business, 43 per-
But while family businesses are indeed facing great
challenges, they remain as popular as ever. 76 percent
of the top executives on the panel could imagine working
for a family business, with numbers in the Americas
being slightly lower. Their robust value base is considered
a major asset. As the study shows, three key measures
would help family businesses make the most of
their unique competitive strengths and boost their attractiveness
for high-caliber and currently skeptical talent:
strict separation of family and company interests,
transparent and comprehensible decision-making paths,
and attractive career prospects.
Visit www.egonzehnder.com to read the full findings of
the study.
35
The Focus Vol. XV/1

Parallel Worlds
Interview
“Choice flows from
how I interpret my
identity, and part of my
identity is that I am
the son of my parents.”
Political philosopher Michael J. Sandel talks
to THE FOCUS about community and family,
parents and children – and why The Godfather
is his favorite movie. Any philosophy that sees
the individual primarily as a member of various
communities will have plenty of positive things to
say about the family. The family is a school for
responsibility and civic virtues, the nucleus of the
state, and a corrective to the individualism of the
free market. Last, but not least, it is also a school
for humility.
PHotos: Jürgen Frank
36
The Focus Vol. XV/1

Parallel Worlds Interview
The Focus: You are seen as a “communitarian” but you
don’t feel too comfortable with the label. Could you tell
us why
Michael Sandel: Well, let me begin by describing how
that label does fit. I have argued against what I see as the
excessive individualism of market-driven societies. And
I have argued that a good society requires a stronger
sense of community and of mutual responsibility than
we often find in such societies. So I have argued for a
“To reason in public about
big questions is a civic
skill that needs to be
nurtured and cultivated.”
greater emphasis on citizenship, civic virtues and the
common good. In that sense, it would be fair to call me
a “communitarian”. However, the term “communitarian”
sometimes refers to the idea that we are all obligated
to adhere, uncritically, to whatever values the majority
favors. I reject this idea. In many times and places, community
has been invoked to defend uncritical conformity
to hierarchy and tradition. Community, understood in
this way, can be suffocating. I don’t want to be seen or
interpreted as a defender of the oppressive aspects of
community. My work attempts to articulate a corrective
to the excesses of American-style individualism, and
that corrective has to do with a greater emphasis on the
moral ties of family and community.
The Focus: Are we to understand community as a place
where the important questions are already settled and
resolved
Sandel: No, by no means. One of the central questions
of political philosophy is to figure out how to live together
when we disagree about values, about morality,
and about what the “common good” consists in. And
there is no society in the world where this question
doesn’t arise.
Some political philosophers say that because we don’t
agree about big moral questions, the way to organize society
is to try to come up with laws and policies that are
neutral with respect to morality. In my book Justice:
What’s the Right Thing to Do, I challenge this idea. I
don’t think it is possible or even desirable to try to be
neutral towards the competing moral convictions that
citizens bring to public life. I think instead that the way
to contend with the pluralism of modern societies is to
welcome all moral convictions and to engage with them
in public dialogue.
The Focus: But doesn’t that require a highly-developed
culture of dialogue
Sandel: Yes, and creating a culture of civil dialogue
isn’t easy. We need to learn the art of democratic discourse.
It doesn’t just happen; it is an educational project.
What we need is a kind of civic education that includes
not only knowledge and interest in public affairs but also
the ability to engage in reasoned argument and debate
about public questions and the common good.
The political parties have by and large failed at this, and
the media now encourage the lowest form of shouting
matches rather than reasoned deliberation about the
common good. Our schools and universities need to see

Parallel Worlds Interview
it as part of their mission to educate young people to be
active, critically-minded citizens capable of engaging in
public discourse about morally contentious questions.
And the family is another institution that can shape and
cultivate the ability of all of us to develop these civic
capacities.
The Focus: So in your view, the community is a framework
for debate. But how should a community deal with
an individual who feels fenced in and wishes to break
out and do something completely different
Sandel: I’d say that what you are describing is similar to
what happens in a family quarrel. There can be conflicts
across and among cultures and civilizations, but the
deepest conflicts and disagreements are often within
cultures and traditions, or even families. Those are disagreements
about how best to interpret shared histories,
experiences, and life stories.
Think of a more mundane example. If you are engrossed
in a novel or in a movie that is rich and compelling, you
might have a disagreement with someone who is equally
engrossed about what should happen next. You may
even come to the end of the novel or the movie and say,
“That is a terrible ending! Really, if they had understood
what this story is about, they would have had a different
ending!” And you could have a reasoned argument about
that with someone. But it would be an argument within
and about a shared narrative. The disagreement would
be about how best to make sense of the story. You couldn’t
have that argument with someone who lacked familiarity
with the characters, who didn’t in some way identify with
them, or who wasn’t absorbed by the story.
The Focus: So despite that shared experience, we defend
our position because we have chosen what we think
is right for us. Isn’t that closer to a more liberal position
than you are suggesting
Sandel: No, because our disagreement involves a clash
of competing interpretations, not choices. The disagreement
is not about what I want or prefer but about what is
the best interpretation of this character, this story, this
narrative. If it were just a matter of personal choice, then
you could use the image of a smörgåsbord, where you
choose what you like and I choose what I like – and
there’s nothing to argue about. But when we argue about
what a particular character in the novel or in the movie
should have done or would have done, we are really arguing
about what is the best interpretation – of the person
and the story, taken as a whole.
RESUMÉ
Michael J. Sandel
Michael J. Sandel was born in Minneapolis in 1953.
He studied at Brandeis University near Boston
and received his doctorate in 1981 from Oxford,
where he was Rhodes Scholar. His early writings
helped launch the “communitarian” movement,
although Sandel prefers to see himself as an
exponent of “public philosophy”, which seeks to
strengthen moral and civic engagement in the
public sphere.
Sandel, who has taught political philosophy at
Harvard since 1980, himself operates very much in
the public sphere. His recent book Justice: What’s
the Right Thing to Do has been translated into
fifteen languages and sold over 1.5 million copies.
His lectures on justice, which attract up to 1,000
students each time they are offered, have become
the first Harvard course to be made freely available
online (www.JusticeHarvard.org) and on television
around the world. Michael Sandel regularly gives
guest lectures and talks, including the prestigious
Reith Lectures on BBC Radio 4 in 2009. In 2010, China
Newsweek named Sandel the “most influential
foreign figure of the year” in China. He is married
with two grown-up sons.
The Focus: How does that help in deciding what to do
Take, for example, somebody inheriting a family business:
does he or she have to accept the inheritance Is
he or she bound to continue the business in the timehonored
tradition
Sandel: Not necessarily. The person faced with the decision
clearly has a choice to make. The interesting
question is how one’s past, and one’s sense of obligation
to parents and family, should bear on that decision.
Such major life choices often require us to wrestle with
competing aspects of our identity – our identity as the
child of our parents as against our identity as having
a certain calling that cannot be fulfilled if we take over
running the business. Suppose, for example, that a child
really has a gift as a musician: that calling is an important
part of his or her identity. But so is his or her
39
The Focus Vol. XV/1

Parallel Worlds Interview
identity as a son or daughter, or the grandchild of this
long family tradition. That involves a clash about what
is the fullest realization of any individual’s identity.
One of my favorite movies is a story about a family –
The Godfather. In many ways, it is a story about the
American immigrant experience, but it is also a story
about the pressure that family and tradition exert on
identity. There’s a scene where Michael Corleone tells
his fiancée that he wants to break free of the family business.
But then circumstances conspire to draw him back.
What makes this a fascinating story is that it says something
deep about this human experience. You see
“Michael Corleone
struggles to break free,
and in the end he
doesn’t, and that in a
way is his tragedy.”
Michael Corleone struggle to break free, and in the end
he doesn’t, and that in a way is his tragedy. I find that a
poignant tale.
The Focus: What is it that enables families to resolve
their conflicts despite deep divisions Many companies
would love to create that kind of cohesion in their
workforce. Is it about creating a shared context
Sandel: The most successful global companies that I
have observed go beyond a shared context and manage
over time to develop a culture. I think that what is required
is finding a way to translate a context into a
shared culture. The term “culture” is borrowed from the
world of anthropology and sociology, and we often think
of cultures as histories of countries and peoples. But the
shaping and creation of cultures is also an educational
project. What distinguishes a context from a culture is
the presence of some shared values, and those values have
to be cultivated and developed. And this takes us back to
the idea of education; developing a culture requires civic
education – shared values don’t just bubble up.
The Focus: When you talk about education, it has a ring
of rational planning to it. But many families experience
life as a sequence of twists and turns. In your book
The Case against Perfection, you yourself called parenthood
“a school for humility.”
Sandel: Yes. That book grew out of a worry that bears
directly on the question of families and new technology.
I served for four years on the President’s council on
Bioethics at a time when we were discussing new genetic
technologies that would enable parents for example to
choose the sex of their children, or to improve their height
or their physical strength and ultimately to influence their
children’s intelligence or athletic prowess or musical
ability. I think what is wrong with the aspiration to use
biotechnology to create stronger, smarter, more handsome
children is that it risks turning parenthood into an
extension of the consumer society. It risks turning children
into commodities. This is at odds with the ideal of
unconditional love of parents for children. In the wider
context of human life it is important that parenthood
should consist of surprises, of the unpredictable.
The Focus: You can hardly blame parents for wanting
to do the best for their children.
Sandel: Yes, we want to do the best for our children, but
it’s an important fact about parenthood that we can’t
control how our children turn out. Did you ever see the
movie Gattaca It plays out a science fiction scenario of
parents routinely choosing their children’s genetic characteristics.
Parents go to a genetics counselor to pick and
choose the hair color, eye color, height, and skills of
their children-to-be. Later on in the movie, there is a
brilliant piano concerto being played, and you see that
the pianist has six fingers on each hand, not five. You
can imagine the parents saying “I want my child to be
the world’s greatest pianist.” But what if that child really
wanted to be a baseball player, and it is very hard to do
that with an additional finger Parenthood is, and should
remain, a moral education in humility.
The Focus: What moral obligations do you see in families
And how do we find the right balance
Sandel: Well, it is interesting that the question of obligations
in families has now been reversed in many ways,
focusing on the parents’ obligations towards their children.
There is relatively little attention paid to the question
of children’s obligations to their parents. I think that
is connected to the individualism that we were speaking
about earlier.
40
The Focus Vol. XV/1

Parallel Worlds Interview
If we think of obligation as flowing only from consent
or choice or contract, then it is actually very difficult to
make any sense of an obligation that the child would
have to the parent, because there you do have an asymmetry:
parents choose to have a child but not the other
way around. That idea explains the asymmetry of obligation
that we observe in Western societies. And yet
there may be something troubling about that idea and
that practice.
The Focus: Which is not one that you favor
Sandel: No. I have argued instead that certain obligations
may flow from a sense of belonging to a family or
community that can’t fully be captured by the language
of consent or contract or choice. If there are obligations
of membership, then children do have obligations to
their parents. And the way to try to work them out is to
work out the story, the tradition, the terms of membership
that have evolved within that family over time.
The consent-based, contract-based idea begins with
choice, asking “What do I want” The idea of obligation
based on membership or belonging produces a
choice: “Should I turn this way rather than that” But
that choice flows from how I interpret my identity,
and part of my identity is that I am the son or the daughter
of my parents. This is where tradition comes in,
and memory.
The Focus: In your book Justice: What’s the Right
Thing to Do, you discuss memory and moral responsibility.
How far back should memory reach
Sandel: The hard question is “Do I have a special responsibility
to right the wrongs that a previous generation
may have carried out, my parents’ or my grandparents’
generation” This raises the question of collective
responsibility across time. I believe we do have such
obligations.
In Germany, there have been very serious and sustained
discussions about the moral weight of memory and
about responsibility reaching across generations. That
debate would make no sense unless you believed that
obligations can arise from our history and collective
identities as well as our individual choices.
To go back to your earlier question, I didn’t quite tell
you how the child faced with the dilemma of taking
over the family business or following his or her own
ambitions should decide. There is no formula. But
there are more or less morally responsible ways of addressing
history and of facing up to its consequences
for the present.
The interview with Michael Sandel in Boston was conducted by Greig Schneider,
Egon Zehnder International, Boston, and Ulrike Mertens, THE FOCUS.
41
The Focus Vol. XV/1

Viewpoint
Lessons for parents and teachers
Why we can only win in our family relationships –
not conquer
If there is one thing all parents can agree on,
it is that they want the best for their children.
But what is truly best This is where opinions
start to diverge. Some believe discipline and
a focus on achievement are necessary to prepare
children for success in our competitive
society. Others think children must have the
freedom to find their own paths to happiness.
Ever since childhood was “invented,” people
have attempted to weigh the interests of society
against those of the individual, obedience
against freedom. Danish family therapist
Jesper Juul urges us to stop thinking in terms
of opposites. To him the family is a place for
living out relationships, while schools and
other institutions are tasked with education.
Adults and children should share the goal
of learning from each other and developing
each other’s competences.
by Jesper Juul
A book that recently provoked bitter controversy in
the USA is now attracting widespread attention in Europe
as well. In her Battle Hymn of the Tiger Mother,
author Amy Chua sings the praises of the traditional
Chinese mother over the typical Western one. In a
broader sense, she uses these archetypes to advocate
stricter regimens for children. Chua, a professor at Yale
University who comes from a Chinese-Filipino family,
bases her advice on her experiences raising her two
daughters, from whom she demanded high achievement
starting at an early age. Her older daughter succeeded,
the younger rebelled.
Amy Chua’s book is not only well written but also
well timed. It arrives at a point in our history where there
are more questions than answers regarding the upbringing
and education of children. The way we raise children
within the family used to be based on a moral consensus,
but this has vanished in many countries. At the same
time, our scientific knowledge about the development of
children and their brains has grown tremendously and is
still growing every day. This has led to varying degrees
of insecurity among the majority of parents. Some are
what I call “constructively insecure” – curious, engaged
and willing to rethink their own parents’ methods –
while some are quite simply lost in their effort to do the
right thing, to be good parents and raise happy children.
Performance and achievement
© Thomas Struth/courtesy Schirmer/Mosel
Battle Hymn of the Tiger Mother is interesting and relevant
insofar as Chua compares two nations that share
similar values and goals: raising and educating winners
and accumulating power, wealth and control, both
nationally and internationally. The highest priority is
placed on performance and achievement, which serves
as moral justification for almost unlimited use of force,
manipulation and punishment.
It might surprise many of my readers to learn that I
consider Chua an excellent parent. She wholeheartedly
does what she believes to be right and commits herself
to spending much of her time and energy with her
42
The Focus Vol. XV/1

Thomas Struth, The Barlow Family, New York 2007
43
The Focus Vol. XV/1

Parallel Worlds Viewpoint
“Children as well as adults are competent
individuals. They can be disciplined and obedient –
if treated with respect and dignity.”
daughters. Her convictions and strategy are successful
with her first-born daughter, and when the younger
sister rejects the regime, Chua responds appropriately
– by reflecting and modifying her ways. The traditional
alternative would have been to call her second child
wrong, impossible, guilty and naughty and maybe even
search for a diagnosis.
Relationships in families and education
in schools
Would I recommend that other parents follow Chua’s
approach No, definitely not! As a family therapist and
professional educator I have met far too many “project
kids” suffering from very painful existential problems
that affect not only the individual but also their relationships
with their partners, children and parents in very
painful and destructive ways.
As the reader may have noticed, I make a careful
distinction between raising children in families and education
as something that takes place in an institutional
setting. There are and should be important differences;
the two bodies should influence, support and guide the
child at very different levels in order to serve its best
interests. This of course raises an old question: Do the
best interests of children conflict with the best interests
of society Historically, this has been a concern – but the
fact is, they do not. The answer depends on the kind of
society we want and how we define our objectives as
parents and educators.
Gains for society
As a father, grandfather, citizen and professional my
answer is to emphasize mental and physical health as
well as psycho-social competence. This is without a
doubt the best for the individual, and the gains for society
are enormous – even from a cost-benefit perspective.
Measured by these standards, the raising and education
of children has been a near-disaster for the past three
hundred years at least. I invite those who doubt this
conclusion to look at the statistics on alcoholism, mental
illness, crime, physical and sexual abuse, consumption
of illegal as well as legal drugs, psychosomatics – the
list goes on and on.
Assuming that we want to avoid emotional abuse and
physical violence (the two most costly phenomena we
know) when raising our children, the formation of their
individual personalities and personal characteristics is
difficult to plan and predict. The first-born child always
tends to be the most cooperative, i.e. the most likely to
submit to any style of parenting. The second child – regardless
of gender – tends to be very different and is
often considered difficult. Number three will often develop
into a more creative and free spirit. In other words,
if you want one of your children to follow in your footsteps
and fulfill your dreams, pick the first born!
Thinking in alternatives instead of opposites
Since the first PISA study on the achievements of
schoolchildren in different countries was published,
governments all over the world have reacted with panic,
putting pressure on schools, teachers, students and parents.
This has coincided with growing dissatisfaction
among teachers and school administrators, who are
finding that children and parents today are less willing
to conform to a school system that was meant to serve
an early industrial society and its need for disciplined,
obedient and submissive workers.
The fact is our school system is going through a severe
crisis. The majority of schools in the Western world
are moving further away from fulfilling their educational
potential as well as the intellectual potential of their
students. This is not being caused by parents and children,
but by the schools themselves – and by politicians
with no political vision. Governments seem to believe
that an extra hour of mathematics will be enough to improve
their nation’s math skills and ensure its ability to
compete on the world market.
Even some professionals in the field of pedagogy and
education are calling for more discipline and obedience,
44
The Focus Vol. XV/1

Parallel Worlds Viewpoint
for more rules and stricter consequences for children
and parents. In other words, we are living in a reality
where fewer and fewer parents are willing to imitate the
methods Chua used with her firstborn, while our educational
system continues to think in opposites instead of
seeking alternatives. The fact remains that today’s children
and teenagers are coming into the educational system
as people, not merely as pupils – and the same is
true for adults who enter the job market. Unless the
Western world is faced with a severe recession that lasts
several decades, this development will continue.
Faced with a similar situation, the corporate world
seems slow to change its old attitudes and realize that
employees have families and that these families are not
in competition with the employer. All our research and
experience tells us that employees with families work
more and better than those who live alone. It also tells us
that family crises and especially divorce tend to lower
performance and create dangerous situations at worksites
where security is a top priority. Even the very common
insecurity which parents feel about their parental
role tends to influence efficiency and focus. In my company,
Family-Lab International, we are now in dialog
with companies that wish to support the family unit
by offering seminars, lectures and counseling to their
employees as a preventive measure.
New paradigms, old certainties
There is no doubt that discipline, in the form of selfdiscipline
and obedience by choice, is an important
quality not only for schoolchildren, but executives,
bookkeepers, drivers, and secretaries as well. Joy in
learning is not something which children have to be
taught, but we urgently need to find new ways of encouraging
this joy and keeping it alive past the third
grade. Brain science and the psychology of human relationships
are currently showing us the next steps forward.
What Chua forgot in relation to her older daughter
was the importance and significance of choice. Children
as well as adults are competent individuals. They can be
disciplined and obedient in order to serve their country,
their employer, their teachers and their parents if treated
with respect and dignity. The old-fashioned substitute
for this is fear and anxiety – whether it is fear of punishment
or of losing love.
The first rebellion against management by fear came
in the 1960s and 70s. The movement was carried by
strong “anti” feelings and opinions, which in hindsight
were productive in several ways, but limited by their
oppositional nature. This comes only too naturally to
our brains, which are constructed to think in opposites
– unless taught otherwise. We are now in the process of
internalizing a completely new paradigm, strongly supported
by several scientific disciplines. In the meantime
we must live with ourselves, our children and employees
without the support of old and outdated absolutes. It
is time for creative thinking. This is what all levels of
society need the most.
ReSUMÉ
Jesper Juul
Jesper Juul was born in Denmark in 1948.
After completing secondary school, his jobs
included ship’s cook, excavator and barkeeper.
He went on to study history, religion and the
history of ideas and then worked as a teacher
and social pedagogue before qualifying as a
family therapist. He is co-founder of the Kempler
Institute of Scandinavia and founder of the
Family-Lab International program, which is
offered in six countries (www.family-lab.com).
He has published numerous works that aim
to support parents in raising and building
relationships with their children. His influential
book Your Competent Child appeared in 2001.
45
The Focus Vol. XV/1

Portrait
“Disloyalty is something we will not tolerate.”
How the artists’s collective La Fura dels Baus
developed from Catalan street theater into a global
cultural benchmark
Photos: Michael Hudler
What processes, what pent-up energy, what
motivations fuel artists’ collectives In fact,
isn’t the concept of an artists’ collective an
oxymoron, given that the traditional image
of the artist is that of the genius who walks
alone The Furistas, Spain’s passionate
theater-makers, subscribe to that definition,
yet over the past few years, they have concentrated
increasingly on opera – the very
genre considered to be the last bulwark of
the bourgeois establishment. But the ‘family
business’ the Furistas represent has no time
for such clichés even though, for them, music
is the highest art form of them all. The ties
that have bound this ‘family,’ with its origins
in the theater of street brawls, for over thirty
years remain a unique experiment in the art
world – and perhaps one of its best-kept
secrets. Carlus Padrissa, one of the creative
forces behind the Furistas, offers a rare
insight.
It’s a typical, swelteringly hot July day in the Catalonian
town of Peralada. “Water” asks Carlus Padrissa,
quite unnecessarily. Apart from his brown exercise sandals,
he is – as befits a purist – dressed entirely in black.
He reaches for the water bottle and, in theatrical slow
motion, empties it over his bald head, for all the world
as if this were a solemn baptism. Perhaps, though, the
gesture is more like the showman’s prologue to a dazzling
self-dramatization. Then again, it could be just the
primitive reflex of a hot and thirsty man. Or it could
be all of these things and more: With his head bowed,
his eyes half-closed and his mouth half-open, the sighing
figure of Padrissa could well have stepped straight
out of the pages of a Greek tragedy or an avant-garde
mystery play.
Here we are, then, with the master craftsman and
spiritus rector of La Fura dels Baus; or, as Padrissa
might put it, estamos aquí. The setting is a modest sports
hall next door to the renowned late medieval Peralada
Castle, the voices of singers and actors from across the
world ringing in our ears. Yet regardless of the language
being spoken or sung, it is immediately obvious that
wherever Carlus Padrissa is in charge, communication is
channeled through images as well as through the exhilaration
of music in a multi-media, cross-disciplinary
blend. So, before everything gets turned upside down,
jumbled up and made into something new, and while we
still have control over our senses, let’s set the scene.
There are just a few days to go until the premiere of Orpheus
and Eurydice, with the Georgian mezzo-soprano
Anita Rachvelishvili, who is singing one of the title
roles, having to compete for attention with the cuttingedge
interactive multi-media technology used in the production
– not to mention the storks nesting in the castle’s
ancient walls. People attending one of La Fura dels
Baus’s performances are no ordinary opera-goers; they
are pilgrims to the domain of the Furistas, and where the
Furistas are, there is always a promise of spectacle.
In fact, Peralada is itself has become a place of pilgrimage,
with its castle hosting an international music
festival from mid-July to mid-August each year. The
46
The Focus Vol. XV/1

Parallel Worlds Portrait
47
The Focus Vol. XV/1

Parallel Worlds Portrait
“We are all as hard as
nails, and what has kept us
together for so long is the
freedom to stay together.”
48
The Focus Vol. XV/1

Parallel Worlds Portrait
festival is the acknowledged climax of Spain’s summer
cultural offering. But the involvement of La Fura dels
Baus has lent this embodiment of Spanish – or, to be
more accurate, Catalan – culture iconic status.
So who exactly are the Furistas Since the late 1970s,
the group has been behaving like a fractious but inseparable
family, occupying the streets first of Barcelona and
then of the rest of Spain and conquering its theaters before
going on, with unstoppable momentum, to storm
the bastions of European and international theater and
opera. And not just that: over the years, they have also
managed to turn our definition of ‘culture’ upside down.
Thirty years ago, no-one could have imagined that these
street-brawlers would one day conquer the Bavarian
Staatsoper – perhaps the ultimate stronghold of bourgeois
opera-going culture. Yet that, in December 2011,
is where Padrissa will be producing Turandot under the
musical direction of Zubin Mehta.
Mehta and Padrissa are, in fact, an established partnership.
To huge public acclaim, they collaborated on
the Ring of the Nibelung for Valencia’s new opera house,
the first Spanish production of the Ring cycle for many
years. The production – a light-footed and modern take
on the world of classical music as a cross between Star
Wars and Harry Potter – was the result of Padrissa’s
intensive reflection on Wagner’s universe. Observers
testify to the iron discipline with which he approaches
works but also to the benevolent paternal authority with
which he directs his team. Is this combination perhaps
part of the secret of his success Be that as it may, the
Furistas have come a long way on their journey from the
dusty streets of Catalonia to the cultural Mount
Olympus they occupy today.
A family without parents
Their story has little of the divine about it, though. It all
began in a tiny, one-horse town in Catalonia, near Barcelona,
with the melodious name of Moià. A dried-up
river-bed ran through it, every bit as useless as the old
donkey the mad street theater boys were offered as local
transport. “To start with, there were just five of us, but
once we got our VW bus, that grew to nine.” Why nine
They couldn’t get more on the bus.
Thirty-three years later, the glue that holds this small
dramatic clan together is as strong as ever. “We are a
creative collective, a family, and each member has his
own part to play,” says Padrissa. But it would be quite
wrong to see the group as a cozy nuclear family. Quite
RESUMÉ
Carlus Padrissa
The street theater company La Fura dels Baus was
founded in 1979 and includes three members who
have been friends since childhood. Carlus Padrissa
was from the outset, and remains, one of its leading
figures, despite the group’s collective nature in
which everyone has equal status. Roughly translated
from Catalan, La Fura dels Baus means ‘the sewer
rats.’ The name recalls Dada, the Bauhaus and Pina
Bausch, resonances that the members of the group
– known as the Furistas – are entirely happy with.
In over three decades of shared project work, the
group has grown into something akin to a family.
Its members jointly discuss all new productions,
working through emotions and rivalries. The group’s
language is uncompromising and direct: There is no
beating about the bush. And everything is negotiable
bar one thing: Each individual must be absolutely
loyal to the group.
the opposite, in fact: Carlus Padrissa tells us they feel
more like a bunch of orphaned brothers and sisters, a
little lost and, perhaps, a touch neglected, like circus
kids who have always known that “together, we are
stronger.” And suddenly, the conversation turns to
wolves, who can die of fear when isolated but who inspire
that same fear from the safety of the pack.
Homo homini lupus: Man is a wolf to his fellow Man.
So is Man his own worst enemy In the 1970s, this toxic
philosophy was undoubtedly the life-blood flowing
through Spanish society. And who better to have experienced
first-hand what that meant than the founders of La
Fura dels Baus, who all grew up under Franco They
came of age just as the Generalíssimo died, but the repression
a country suffers when it has been suffocated
for so long lingered on. So was it just a natural reaction
when La Fura dels Baus burst on to the scene, using all
their pent-up energy to consolidate freedom Padrissa
recalls their destructive approach to the work they presented:
It was all smashed-up cars and actors hanging
from meat-hooks. “Repression was a trigger,” he muses,
“but drama was just a pretext, really. What we really
wanted was adventure, some excitement in our lives.”
Wasn’t this, though, a little over-the-top, just for a bit
of fun “Making theater was also a kind of therapy for
49
The Focus Vol. XV/1

Carlus Padrissa (left) in July 2011 during rehearsals for the premiere of Orpheus and Eurydice at the Peralada Festival.
us, something we had to do to fight against what the
Spanish call vergüenza,” says Padrissa – the word means
inhibition, or perhaps prudery.“ And then we wanted to
reinvent ourselves.” It goes without saying that large
amounts of testosterone were involved, too: The founders
of La Fura dels Baus were all angry young men, “so
it was really all about physicality, youth, and narcissism
– all the things that we’ve now stopped being so obsessed
with.”
Even the company’s name is something of a manifesto.
“The word Fura is related to ‘furore,’ to the passion
of creativity, and that sums up our identity. Fura is
something that we all carry inside ourselves, an unbridled
part of our ego. Fura means ‘anger,’ and that’s
something else we try to do – to release the anger inside
ourselves.” The collective still includes six of the original
nine angry young men on that VW bus. One of them
is Germany’s Jürgen Müller. Inevitably, the nature of
the group has changed, but, says Carlus Padrissa, there
has been an organic pace to that change. And he has an
accessible metaphor for it: “Thirty years ago, we were
on peak form. And then we faced what every professional
footballer faces. You can play as a forward in
your twenties, as a defender till you’re 35, and as a goalkeeper
until you turn 40. But from then on, you’re well
advised to become a coach. And that’s what we’ve
done.” These particular coaches, though, haven’t exactly
set the bar low in terms of their creative ambition: They
want to “create a Gesamtkunstwerk,” a synthesis of all
the arts. Yet while their goal is ambitious, their sense of
their own identity is firmly grounded: “We’re flexible
and we regard ourselves as learners.”
The creative collective has become a collective of
creative individuals. La Fura dels Baus is now the only
theater company that has not one but six directors. And
those directors operate as a global ‘culture factory,’ with
special local productions and local partnerships. Along
with Carlus Padrissa and Jürgen Müller, the artistic directors
today are Àlex Ollé, Miki Espuma, Pep Gatell
and Pera Tantiña. Four out of every five productions are
staged abroad, throughout Europe but also in Asia and
even in the USA, where audiences for mainstream culture
tend to be nervous about sudden outbreaks of primitivism.
The huge wave of popularity that La Fura dels
Baus is currently riding began with The Damnation of
Faust, its production of Berlioz’s setting of part I of
Goethe’s Faust. The production won critical acclaim at
Salzburg in 1999 and was followed by an equally celebrated
production of The Magic Flute for the Recklinghausen
Ruhrfestspiele. Then La Fura dels Baus wowed
audiences in Valencia with its Ring cycle and staged its
acclaimed productions of Carmina Burana, and Stockhausen’s
Licht opera cycle. The former anarchist group
was turning into a thoroughly professional company. In
an interview with the Spanish newspaper La Vanguardia,
Jürgen Müller has argued that it is now “a collective
of individuals who respect each other more than they did
15 years ago because we are now surer of ourselves.
50
The Focus Vol. XV/1

Parallel Worlds Portrait
We’ve grown, we’ve had lots of successful partnerships
with other artists, but we’ve also given each other the
freedom to put on our own individual productions.”
Art is, of course, also part of the economy, as Padrissa
bluntly acknowledges: “We’re a family business and
we’re constantly on the move.” But what exactly is the
place of the individual in this small but globally active
artistic concern Each member is a headstrong character,
he says: “We are all as hard as nails, and what has kept us
together for so long is the freedom to stay together.”
Freedom, of course, also means committing to the
complex discussions and decision-making processes that
the group regularly engages in, particularly when the
phone rings in manager Rosa’s office or the post brings
an invitation to stage a production. Is anyone willing and
able to take on a particular challenge Or do two people
want to do it Then it will be a two- or even three-man
project. The only condition is that everyone knows
what’s going on, that nothing is done behind the backs of
the others, and that everyone is happy with the project.
The discussions around the concept for any particular
production are often so long and hard-fought that it is not
unusual for them to involve tears. Each member has to
express his opinion, even when – especially when – he
doesn’t like an idea. The balance between artistic individuality
and the group is constantly being recalibrated.
Nothing is considered irrelevant and all ideas are articulated,
even where the result is chaos. Says Padrissa, “The
way we do things reflects a rather anarchistic view of the
world.” But on one thing the group is agreed – that music
is “the highest of all the arts” and subordinates all other
disciplines to itself. And the way the Furistas interact
with each other and with members of other groups
throughout the world is based firmly on respect: “We
start from the principle that every artist is a genius and
must be given the opportunity to demonstrate that.”
The boys who founded the group – all now grown
men with a wealth of experience – have virtually all
known each other since they were six years old, so “We
are family” is more than just a cliché here. And their
decision not to accept any new members, despite their
self-professed openness, is easy to understand. Building
a street theater company into an iconic global brand in
mainstream cultural life is a unique achievement. But
while individual freedom remains essential, there is one
vital condition without which the group’s usually impeccable
teamwork would break down, and that is loyalty
to the group – to the family: “Disloyalty is something
we will not tolerate.”
“We are a creative collective,
a family, and each member has
his own part to play.”

Interview
“Philanthropy is part of our family tradition,
part of the family’s DNA.”
The patriarch of the British branch of the Rothschild
family on the importance of philanthropy
The term philanthropy – “love of humanity” –
dates back to the ancient Greeks, and today
generally refers to private initiatives for the
public good. Few surviving historical families
are as closely associated with large and sustained
charitable causes as the renowned
Rothschilds. As patriarch of the British branch
of his family, Jacob Rothschild is very much
aware of the importance of carrying on his
family’s tradition. As he explains, philanthropy
not only benefits the people and institutions
it helps; it also benefits those who give by
promoting closer family ties and a sense of
responsibility in the world that can be passed
down through subsequent generations.
LIKE HIS legendary family, the Fourth Baron
Rothschild is known for many things: as the patriarch of
the British branch of Rothschilds; a brilliant and innovative
banker; renowned art collector; as well as the selfeffacing
manner with which he speaks of his many
achievements. But it’s difficult to ignore what is perhaps
the most prominent reason for Baron Rothschild’s fame
– his devotion to philanthropy, which closely reflects his
family’s historical dedication to good citizenship and
generous giving.
While stories of wealthy families fighting amongst
themselves and squandering their family fortunes are legion,
the Rothschilds have not only set an admirable example
of how a family can remain intact, but how to do so
via a common sense of greater purpose. “Philanthropy has
a lot to do with our family’s values,” Rothschild told The
Focus in a recent interview. “Beginning particularly with
the 19th century, members of my family were brought
up, once they’d made money, to give a lot of it back.
They did an enormous amount of philanthropic work,
both in this country and in France and Central Europe.”
It’s a lesson that was firmly instilled in Jacob Rothschild
himself. His own philanthropic involvement is so
extensive that it could take a page just to list it all. Highlights,
however, include being chairman of the Trustees
of the National Gallery, chairman of the National Heritage
Memorial Fund; and chairman of the British National
Heritage Lottery Fund, which allocated more than
1.3 billion euros to National Parks, historical churches,
museums, cathedrals, and for the preservation of natural
habitats.
Close to the heart
Two of Rothschild’s dearest philanthropies are directly
related to his desire to carry on cherished family traditions:
the restoration of the Rothschild family’s French
Renaissance chateau in Buckinghamshire, Waddesdon
Manor, which has been donated to the National Trust
52
The Focus Vol. XV/1

Nathaniel Charles Jacob Rothschild, 4th Baron Rothschild (‘Man in a Chair’) by Lucian Freud, oil on canvas, 1989
© Lucian Freud; private collection; on loan to the National Portrait Gallery, London
53
The Focus Vol. XV/1

Parallel Worlds Interview
“It’s an important part of the family
vocabulary to do some good in exchange
for the benefits of wealth.”
and which receives 350,000 visitors annually; and Yad
Hanadiv, the family’s philanthropic trust in Israel, which
is responsible for building Israel’s Knesset (parliament
building), the Supreme Court building, and now a National
Library.
“A big influence on my life was my late cousin, Mrs.
James Rothschild, who left me with the responsibility
for the two things that she really cared about,” Rothschild
says. “For the past twenty years or so I’m been
very deeply engaged and taken that responsibility very
seriously. She was very influential in teaching me about
philanthropy.”
Such philanthropy for Rothschild is indeed learned
and passed down. “It’s partly family tradition, which my
late cousin made me very aware of, and partly an obligation
that I grew to feel over the years toward civil society
and putting something back in this country that I
thought was worthwhile,” Rothschild says. “I’ve tried to
bring my children up to be very aware of our family’s
tradition. It’s something I’ve tried to make my children
feel strongly about, and in fact, they are all involved in
philanthropies. My daughter Hannah is a trustee of the
National Gallery and very active in the Hay Literary
Festival; my daughter Beth is deeply involved in horticulture
and land conservation, as well as our work in
Israel; and my son is a trustee of the Yad Hanadiv and a
significant benefactor to Wadham College, Oxford.”
A dynasty of giving
The Rothschild family dynasty began with Mayer Amschel
Rothschild (1744 – 1812), who lived in Frankfurt’s
Jewish ghetto. Mayer became the first notable banker in
the family after earning the patronage of local German
nobility. One of Mayer’s biggest innovations was to
place his sons in cities across Europe – London, Paris,
Vienna, Frankfurt, and Naples – to diversify and internationalize
the family’s banking business and thereby
strengthen and preserve the family’s intellectual and financial
capital. And when an immediate direct heir is
not apparent, the Rothschilds typically look for a blood
relative elsewhere in the family, as was the case with
Jacob and his distant cousin-by-marriage, Mrs. James
Rothschild. Despite an international depression, two
world wars, and the Holocaust, thanks to Mayer’s forethought,
several branches of the Rothschilds – particularly
the British and French – survived and continue
to prosper. They own major investment institutions in
England, France, and Switzerland; three world-famous
vineyards; as well as numerous investment holdings
around the world. According to Jacob Rothschild, an
emphasis on philanthropy has played a large role in
keeping the Rothschild family intact all these years and
across so many national borders, and with preserving its
enviably good reputation.
The family’s DNA
“The family motto is Concordia, industria, integritas,”
he says. “As for Concordia, in the earlier days, the family
worked very closely together. In this day and age,
they, to quite a significant extent, have gone their own
separate ways. It’s a big family after all these years.
There’s almost a proliferation of Rothschilds. We had a
gathering in Frankfurt a few years ago, when the 250th
anniversary of Mayer Amschel was being celebrated,
and I think about 125 members of my family came.
Many of them are independent and doing their own
thing, which is perfectly natural after eight generations.
And yet there is a sort of clannish feeling amongst my
family that helps keep us together.
“Philanthropy is a way of keeping a family together.
There are certain common standards, which we all implicitly
adhere to. We have a common objective of doing
some good with the advantages that we have inherited,
and have created as well. Philanthropy is quite important
to us. It’s part of our family tradition, part of the family’s
DNA, that we go on doing these kinds of things. It’s an
important part of the family vocabulary to do some good
in exchange for the benefits of wealth.”
54
The Focus Vol. XV/1

Parallel Worlds Interview
Making philanthropy an integral part of a family’s essence
is something that differentiates philanthropy in
Europe, and the Rothschilds in particular, from American-style
giving, according to Rothschild. “On my side
of the family, there are two significant philanthropic initiatives
which don’t die with me, which will continue to
have a life after me. If you take some of the great foundations
in the United States – Frick, Mellon, Carnegie –
what have they become They have really ceased to be,
in any way, family philanthropic foundations. They have
become bureaucratised, albeit well run institutionalised
foundations. I think I’m right in saying that there isn’t a
Getty or a Mellon that serves on their foundations.
Whereas the European tradition is rather different and
applies to our family. We intend that our family foundations,
even though they are in part bureaucratised, will
still have the character of being Rothschild foundations.
Our intention is that they should have a perpetual life.
Our policy is not to be a “sunset foundation” run by others
with little or no family involvement which spends its
capital over a certain period of time, but rather a foundation
that will be continued by my children, my grandchildren,
etcetera and etcetera.”
Regardless of how a family foundation operates,
Rothschild believes that economic conditions today are
particularly ripe for philanthropic generosity, particularly
in his own country. “The UK is going through a
difficult period. We are a country that is indebted, will
have to have quite high taxation, isn’t going to have very
high growth over the next decade probably, and in those
circumstances, those shortfalls which are emerging in
our society can in some measure be met by more
phil anthropic initiatives. I see philanthropy increasingly
filling that gap. I hope it will become a larger part of
society here.”
The interview with Lord Rothschild in London was conducted
by John J. Grumbar, Egon Zehnder International,
London, and Ulrike Mertens, THE FOCUS.
Resumé
Lord Jacob Rothschild
Lord Jacob Rothschild is the Fourth Baron and
current patriarch of the British branch of the
House of Rothschild. For nearly 250 years, the
Rothschilds have been offering discreet advice
to many of Europe’s wealthiest industrialists,
kings, queens, and emperors. They have cultivated
a legendary reputation for good citizenship
and generous philanthropy that has historically
supported the arts, the poor, medical care, education,
and Jewish causes. The London branch
of the family helped fund the Napoleonic Wars;
helped England avert a liquidity crisis in 1825
using their own money; and financed the
purchase of the Suez Canal. Jacob Rothschild
attended Eton and Oxford, and got his start
in banking at Morgan Stanley and his family’s
bank, NM Rothschild. He further proved his
investment mettle by establishing his own successful
investment firm RIT. Rothschild is a
pro minent patron of the arts in Britain, serving
as chairman of the Trustees of the National
Gallery, the National Heritage Memorial Fund,
and the British National Heritage Lottery Fund.
He also oversees Waddeson, his family’s restored
chateau in Buckinghamshire, which is run
by himself and the National Trust as a museum.
© Anna Clopet/CORBIS
55
The Focus Vol. XV/1

Essay
Family portraits
A journey through art history
PHotos: picture alliance/united archives (Velazquez); picture alliance/Artcolor/A. Koch (Goya); picture alliance/akg-images/Erich Lessing (Steen);
picture alliance/akg-images (Bazille); Philadelphia Museum of Art/CORBIS (Peale); CORBIS (Rockwell)
In the bourgeois era the family, as society’s
primary unit, became socially acceptable as
the subject of a picture; until then it had been
the nobility who left their mark on this art
form. The family’s changing political and social
status is therefore reflected in the images
passed down to us in painted form – images
which at the same time bear the distinctive
hallmark of the creative minds that shaped
them. At times when status-boosting hyperbole
was the order of the day, artists sought
out and explored the cracks in the image;
elsewhere, domestic intimacy is appropriated
to serve patriotic ends. These are just some
of the conclusions to be drawn from the six
family portraits – all major works in terms
of art history – selected and presented here
by Wibke von Bonin.
by Wibke von Bonin
1.
They kept hunting dogs and court dwarfs; the ladies
curtseyed in their big hooped skirts, the men wore ruffs.
They ruled over countries far and near and enjoyed the
fruits of their conquests. Wealth and splendor combined
with stringent etiquette: Life at the court of Philip
IV, depicted in fabulous detail in the painting “Las
Meninas” (1656, The Maids of Honor) by court painter
Diego Velázquez (1465–1524), offers no hint of the
fact that elsewhere in Europe the consequences of the
Thirty Years’ War were still unraveling and that the
power of the Spanish royal family was steadily dwindling,
hanging like a sword of Damocles over Madrid.
The succession was at risk. Of the king’s eight children
born in wedlock only one daughter was still alive in
1649 when he married his second wife: Maria Anna of
Austria, previously the fiancée of his own son and heir,
who had died not long before. He was 42, she was just
15 – and his own niece, into the bargain.
The first child born of this marriage was Margarita,
shown as a five-year-old at the center of this painting
– known as “La Familia” from the 18th to the mid-19th
century and one of the most admired and debated paintings
in the history of art. We know the names of the
young noblewomen who lean towards the princess, and
of the dwarfs to the right of the picture and the people
behind them. Yet the viewer’s interest is focused on
the two bright rectangles at the far end of the room.
Here we can make out – the identification is almost
undisputed – a reflection in a mirror of the king and
queen, while the backlit figure of court chamberlain
José Nieto appears on a staircase to the right. Nieto’s
job as the king’s attendant was to open doors for his
royal master; his presence in the family picture is regarded
as evidence that the two reflected figures –
shown as half-length portraits – are indeed Philip IV
and his wife, even though it was not really the proper
thing to show their majesties in anything other than
their full-size glory.
Diego Velázquez could clearly afford a breach of
etiquette – which he compounds by including himself
56
The Focus Vol. XV/1

Parallel Worlds Essay
Masterful breach of etiquette: “Las Meninas” by Diego Velázquez
57
The Focus Vol. XV/1

Parallel Worlds Essay
as painter in the picture, and larger than all the other
figures. The king had granted him a residence and studio
in his palace of Alcázar – where a chair was specially
reserved for the king’s own frequent visits. The
most probable theory, therefore, is that the royal couple
is located – along with the viewer – in front of the picture,
being immortalized by Velázquez on the enormous
canvas while the figures depicted in the painting observe
him at work. The princess was married to Leopold
I, Holy Roman Emperor, at the age of 15 and died at 22.
An heir, Carlos II, had at last been born ten years after
Margarita Teresa; when he died in 1700 the Spanish
Habsburg line – weakened by intra-familial marriages –
came to an end.
2.
Exactly one hundred years later Francisco de Goya
(1746–1828) painted his king and the royal family in a
work entitled “La familia de Carlos IV” (Carlos IV of
Spain and His Family). The king was considered mentally
retarded; he left the business of government to his
wife María Luisa de Parma – also his first cousin – and
a senior officer in the Spanish army, Manuel de Godoy,
who was also her lover and fathered the youngest of her
14 children. Goya was the king’s First Court Painter
from 1799 onwards and was commissioned by him to
produce this large-format family portrait at Aranjuez
palace – a painting whose unsparing realism makes it
one of the iconic works of portrait art. Like Velázquez,
Goya also included himself in the picture, although in
much more restrained fashion – he stands in half-shadow
to the left, behind the future King Fernando VII.
The latter looks confidently out of the picture, the only
figure whose face is picked out by the light which falls
from the left. This light also illuminates the full bosom
of the lady next to him, whose face was deliberately left
anonymous, leaving space to add the features of the
prince’s spouse – who had not yet been selected. The
queen dominates the center of the picture with her shimmering
gold robe and a positively impertinent expression.
Her arms reach down to the children fathered by
Godoy; little Francisco de Paula peeks out of the picture
with a terrified, beseeching air, while the huge, insignia-bedecked
king gazes listlessly into the distance.
Also portrayed are his siblings and their children, the
future rulers of Portugal and Parma. The course of European
history was determined, or impeded, by these
people – and Goya’s merciless candor provides art history
with evidential proof that the concept of a domi-
nant elite ruling over its people would have to come to
an end. As an alert, critical citizen of the revolutionary
era he could take the liberty of unmasking the nobility
in their portraits.
3.
In the 17th century, while other nations were engaged
in wars with each other, the Dutch – freed now from
Spanish rule – were able to concentrate on business,
trade, knowledge, and culture. The Dutch had no king
ruling over them; an urbane upper class of bankers,
merchants, ship owners and senior officers held sway.
In the cities art flourished, an educated bourgeoisie enjoyed
their economic success and savored the luxuries
captured by painters in the popular still-lifes and portraits.
Jan Steen (c. 1626 –1679) – son of a brewer from
Leiden and a bohemian character whose fortunes fluctuated
during his career – was not the most important of
58
The Focus Vol. XV/1

Parallel Worlds Essay
these painters but he was one of the most industrious
and amusing. In his genre scenes he liked to depict ordinary
citizens enjoying festive occasions.
His “Merry Family” displays the entire dramatis personae
of a typical, much-varied scene: men and women
of all ages enjoying themselves, eating, drinking and
playing music; a happy throng of juxtaposed family
members, right down to the baby on the mother’s lap –
cared for, marveled at, petted – and a little dog in the
foreground.
4.
By contrast there is nothing turbulent about “Réunion de
famille”, an upper-class family gathering in the French
provinces, as painted by Frédéric Bazille (1841–1870)
around 1850 – two hundred years later. More significant
in art historical terms is that the scene takes place out
of doors. The artist from Montpellier has arranged his
Relentless depictions
of the ruling class
and the self-assured
bourgeoisie: While
Goya furnished
unflattering character
studies in his portrait
of Carlos IV and his
family, the works
of Jan Steen (above)
and Frédéric Bazille
give an impartial
view of a prospering
bourgeois society.
59
The Focus Vol. XV/1

close relatives in groups on a countryside terrace, in the
shadow of a large tree. His parents sit in the left foreground,
behind them stand his brother Marc and – at the
far edge of the picture – Bazille himself. We know the
names of the individual figures and their relationship to
the artist – the sister-in-law, the cousins, the Doctor and
his wife. Yet they are of interest chiefly to this genteel
family’s descendants. Contemporary viewers of this
large painting enjoy the young ladies’ gossamer-light
summer dresses, the patches of sunlight on the ground
and the magical little still life of hat, stick and bouquet
in the foreground. And marvel at the solemn seriousness
of the faces – almost all looking towards a point
outside the picture, beyond the foreground. Had the picture
been painted a few decades later we might see a
reference to a quasi-photographic perspective here.
The painter was a friend of the Impressionists, especially
Claude Monet. Three years after depicting this
peaceful summer idyll, in November 1870, Frédéric
Bazille was killed in the Franco-Prussian war, never to
turn 30 years old.
5.
It was not possible to survive as a portrait painter in
early 18th-century America. Talented artists also
worked in a craft profession – as house painters or gilders,
for example. As trade prospered, great fortunes
were made in cities like Boston and Philadelphia, yet it
did not occur to the newly affluent middle class to patronize
the arts. Only later generations, and generally
the descendants of English colonists, managed to overcome
the limitations of colonial painting through their
contacts with master painters in the homeland of their
forebears.
Charles Willson Peale (1741–1827), a self-taught
artist who studied for several years in London, was the
first painter confident enough to return home and seek
his fortune there. At that time Philadelphia was the biggest
city in the United States, with 70,000 residents,
and the wealthiest, too. And by this stage a prosperous
citizen like John Cadwalader was more than happy to
put this wealth on display. He commissioned no less
than five works for his family residence from Peale,
including the “Portrait of John and Elizabeth Lloyd
Cadwalader and Their Daughter Anne”. This family
portrait with his wife and daughter was painted in
1772. The head of the household adopts a forthright,
assured pose, while his wife – wearing a sumptuous
silk dress, her hair arranged in the rococo style – looks
Virtue, decorum, an idyllic world: Peale‘s
small and Rockwell‘s extended families depict
the idealized nucleus of American society.
60
The Focus Vol. XV/1

Parallel Worlds Essay
up to him confidently. He is handing a ripe peach to his
little daughter and gazes thoughtfully down at both of
them. The painting radiates a calm satisfaction. The
couple do not look beyond the picture but are occupied
with their child – who will profit from their wealth and
will probably be raised in accordance with the moral
principles of the age.
The rigorous realism of Peale’s style reflected his
self-appointed mission as an artist. The country needed
pictures of its eminent citizens and heroes. The artist
was a fervent patriot: He joined the civil militia in the
War of Independence, fighting with them from 1776
onwards and quickly forging a military career. He became
the fledgling republic’s first painter of historic
scenes, producing pictures of battlefields and victors,
and numerous portraits of George Washington – the
first of which dates from 1772.
6.
Norman Rockwell (1894–1978) was also a presidential
portraitist. Yet long before his portraits of Dwight D.
Eisenhower, Richard Nixon and John F. Kennedy were
published for a mass audience on the title pages of the
Saturday Evening Post, the artist was already a household
name in America, his characters as popular as
those of Walt Disney. Rockwell was 22 years old when
his first illustration appeared in a popular magazine in
1916; there would be nearly 300 of them in all over a
span of nearly 50 years. People love his pictures because
they idealize the average American family – with
a touch of gentle humor.
One of his most famous pictures is “Freedom from
Want”, painted in 1942. An extended family gathers
around the table on Thanksgiving Day, chatting and in
high spirits, while the housewife serves up the traditional
turkey, which will imminently be carved by the
head of the family. There is no want here – but no highliving,
either: the glasses are filled with water. This is a
puritanical, healthy world, viewed from a standpoint at
the end of the table which also includes the viewer. The
viewer might be a guest at the table, might feel included,
invited by the man in the right foreground. At any
rate there seems to be enough space and food for everyone.
The idyll of sufficiency is depicted with such precision
that this might be a photograph.
This is one of the “Four Freedoms” illustrations inspired
by President Franklin D. Roosevelt’s eponymous
State of the Union address to Congress in 1941.
The artist came up with memorable images to express
freedom from want and from fear, freedom of speech
and freedom of worship. These freedoms – it is implied
– were worth fighting for; the American public, the
majority of whom were at this stage opposed to the
USA’s intervention in World War II, should stand up
for them. The Saturday Evening Post printed the Four
Freedoms in February/March 1943. Norman Rockwell,
who was unable to take part in the battle for the American
dream of freedom and prosperity for everyone,
saw his freedom illustrations as persuasive endorsements
of President Roosevelt, whose economic program
called for significant sacrifices on the part of the
American people.
Powerful images of the family have come down to
us, spanning long periods of history, and mediated in
particular by works of art. Whether they were produced
against a backdrop of dynastic or bourgeois aspirations,
these works stand out, above all, when they also
reveal the artist’s personal viewpoint. Today photographers
have joined, but not replaced, these artists. Because,
contrary to the early adage which equated photography
with objective reproduction, this medium too
is used in a highly artistic way. Thomas Struth’s family
portraits are just one example – albeit an extraordinarily
original one.
ReSUMÉ
Wibke von Bonin
Wibke von Bonin has a PhD in art history.
As arts editor for German broadcaster WDR
she documented the international art scene
with films and series on art historical subjects
spanning all ages and cultures. Her TV
series on “100 masterpieces from the world’s
major museums” – for which she also edited
an accompanying series of books – was
especially popular. Her articles on art are
published in books, magazines, and exhibition
catalogues.
61
The Focus Vol. XV/1

Parallel Worlds Dialogue
Dialogue
Illustration: Noli Novak
“Family firms bind people together by the really
fundamental elements of being human.”
Family business expert Nigel Nicholson speaks with
Quaker Capitalism historian Deborah Cadbury on
the importance of values and ethics in corporate life.
62
The Focus Vol. XV/1

Parallel Worlds Dialogue
In an era of cascading financial scandals, it’s
not only topical but refreshing to hear two
corporate ethicists discuss the importance
of old-time values in a modern workplace.
Deborah Cadbury has been widely praised for
her recent history of the Cadbury chocolate
family and its emphasis on what she calls
Quaker Capitalism. While she’s more skeptical
of how well such progressive business values
can be incorporated in today’s globalized
world, Nigel Nicholson, one of the leading
experts on family businesses, is more confident
that strong values and ethics can be instilled
in both private and public companies.
Nigel Nicholson: Deborah, after so many books on such
diverse topics as the Seven Wonders of the Industrial
World and the Lost King of France, how did you decide
to delve into your own family’s history
Deborah Cadbury: As a more distant family member, I
didn’t grow up in the business, per se. But I’ll never forget
the first time I visited the family’s chocolate factory
in Bournville as a youngster. It looked like an ordinary
factory from the outside, but when we opened the door,
I couldn’t believe what I saw. There was chocolate everywhere.
There were conveyor belts with rivers of chocolate
flying across my head. It made a big impression.
There was something so delightfully other-worldly
about the religious values that inspired the business in
the nineteenth century that I wanted to delve more
deeply for my book. For generations, family members
were passionate about applying Quaker values in business.
They had an emotional attachment to it, much like
the “emotional ownership” that you’ve written about. I
find that concept fascinating, and very relevant to what
I’ve written about.
Nicholson: Well, emotional ownership is about the state
of mind of a person that involves elements of being attached
to something – that you are actually part of something,
and of something that has to do with your identity.
In other words, it is part of you, and you are part of it, so
yes, it most certainly does seem to apply in this instance.
Today it is an old-fashioned concept, but it was very
common in the nineteenth century.
Cadbury: I wonder if what you had with the Cadburys
and the Quakers was even more than emotional ownership,
because actually it was an entire social system.
What amazed me as a historian was just what a huge
movement this was, as the Industrial Revolution was
taking off. The Quakers had a whole set of rules about
how they operated that facilitated business affairs. There
was a higher purpose and everyone could see it was for
the good, so everyone could buy into it. I strongly suspect
that that very much facilitated what you have termed
‘emotional ownership.’
Nicholson: It is that you can create and sustain a sense
of community that recognizes more than just the material
interests of the people who are part of it. It binds
people together with a sense of a greater good. There is
something rather special about family firms because
they bind people together by the really fundamental elements
of being human. The boundaries between work
and non-work are less rigid, there is a sense of permanence
in contract, and that the firm is not just a bundle of
assets but something that is a part of the family’s blood
line or part of the family’s existence – something to be
passed on from generation to generation.
Cadbury: And in the Quaker case, those connections
were even more strongly emphasized because as nonconformists,
they were denied positions in society. They
could not work in the army or the Civil Service, run for
Parliament or teach at university. There was a real need
to make their businesses work.
Nicholson: I think the outsider experience explains a lot
of entrepreneurship. A lot of entrepreneurs are outsiders.
That is why they are motivated to get entry to a society,
and how they build.
Cadbury: When I started to delve into the history, I went
into the Quaker archives and discovered that the people
who were really instrumental in turning the business
around – Richard and George Cadbury, the second generation,
who had inherited a loss-making chocolate
works in 1861 – had kept a scrap book, keeping an account
of everything that was going on. I thought ‘oh
great – the scrapbook is finally going to reveal the magic
ingredient that turned a struggling chocolate company
into what became by the end of their lives the largest
chocolate company in the world.’ And to my amazement,
the whole book was filled with how to apply
Quaker values in the Birmingham community. It was
absolutely clear that for Richard and George, making
a lot of wealth was not really driving them. What was
really driving them was how to apply Quaker values in
the community.
Nicholson: Was it guileless, or was there a suspicion of
self-interest in keeping the workforce happy
Cadbury: They really believed. And you have to imagine
a business culture where this wasn’t just the Cadburys.
63
The Focus Vol. XV/1

Parallel Worlds Dialogue
“You have to ask
yourself ‘what are people’s
goals in business’ ”
There were many Quaker business leaders who believed
that ‘your own soul lived or perished according to its use
of the gift of life.’ That was the guiding principle.
Amongst the rules on plainness, truthfulness, love and
war, etc., were rules on conducting trade. The Quakers
were effectively evolving a code of business ethics,
which set out very clearly defined rules like “You don’t
contract extravagant debts”.
Nicholson: The Quakers would do business with a
handshake because they shared a set of values.
Cadbury: Yes, that’s why I felt that this set of guiding
principles was so important, and deserved a name in its
own right. That’s why I came up with “Quaker Capitalism”.
It’s important to realize just how very successful it
was. And it wasn’t just the Cadburys; this was replicated
across a large number of businesses.
Nicholson: I think it is a step change to say that if we
can build communities of trust, it actually takes a lot of
the cost out of business. Currently, if you look around
the world, there are countries and economies being ruined
by corruption. This code is actually a code of lowest
costs of doing business.
Cadbury: I thought it was very interesting to see how the
Quakers would come together to collaborate on certain
issues, even though it was very clear that Cadbury, Fry,
and Rowntree were definitely rivals in a competition to
create the nicest chocolate bar. Nonetheless…
Nicholson: ... They still shared their apprentices.
Cadbury: Exactly. And they also shared their ideas. But
more than that, when they were faced with an issue that
was bigger than any individual company, for example,
the discovery of slavery in the plantations in São Tomé
where they were buying their beans, they teamed up to
organize a boycott. This led to the development of the
entire cocoa business in Ghana, free from the Portuguese
slave owners. If you apply that today, that would be a bit
like Kraft, Hershey, and Mars getting together and saying
‘we are going to solve the problem of child trafficking
on the Ivory Coast.’ There are definitely companies
today that aspire to these values, and they try to do what
they can. But I feel there was a world of difference with
the Quaker firms of the nineteenth century.
Nicholson: To some extent, as they were lowering the
cost of doing business, they were also engaged in a
primitive form of social services to make good the deficiencies
of the state. It was an enlightened self-interest,
helping to secure for themselves healthy and committed
workforces. We now live in an age where that kind of
paternalism is no longer necessary, and yet, there are
family firms that I deal with that have a strong paternalistic
ethos. They take care of their people, embracing
them, as it where, as part of a wider family. They care
about their health, and don’t let people just come and go
according to the price of labor. I think a lot of those principles
are really intrinsic to this communitarian set of
values that drives family firms.
Cadbury: The whole method of building business in
Quaker Capitalism was built around the idea that the
workforce was as important as the employer, and that
you tried to benefit whole community – right from the
start, when they were barely profitable, and they were
trying to work out how to apply Quaker values. Richard
and George undertook practices that appeared
counterintuitive. For example, when the orders were
slack they took the staff on outings to improve their
health.
Nicholson: Somebody once said that profit is like health:
The more of it you have, the better, and you wouldn’t
want to be without it. But it is not the reason that you are
alive. You have to ask yourself ‘what are people’s goals
in business’ It is very interesting, because I work a lot
with bankers. If you ask them today if they only exist for
shareholder value, they say ‘no, that doesn’t work.’
64
The Focus Vol. XV/1

Parallel Worlds Dialogue
Shareholder value is an ephemeral ratio, and it evaporates.
The shift in focus for the new world of banking is
going from bottom lines to the top line, the top line being
who are the customers, who are the people you are
serving, what are their interests And if they don’t have
a coherent vision about how they are going to add value
in the world as an industry, then they don’t really have a
reason for existence. Of course these banks want to
make money. But they no longer believe that this is the
only index of their worth out there. They have to distinguish
themselves in the marketplace, because the profit
you make reflects the value you add.
Cadbury: But I do think that size is working against some
of the things that you are talking about. When you have
such fragmentation in businesses – as you have with some
of these huge conglomerates, where you have got the
management rank in Chicago, and factories all over the
world – it is much, much harder. With Cadbury – where
you saw the management on a daily basis, and where you
were directly involved in what was going on – that sense
of buying into a common purpose, that sense of easy access
to the business leaders who were a visible presence
on site, made a big difference.
Nicholson: My concept of adding value is really about
just that – values. What every person needs in employment
is some sense that they are a part of something
bigger. I don’t believe you have to be a family firm to
cultivate that feeling. I don’t believe you have to be a
nationally owned firm to cultivate that. You need to be a
well-run firm; you need to be a firm that is run by enlightened
principals that have a value base. And that is
not exclusive to any domain. You don’t have to be religious,
you don’t have to be a family firm – you just have
to have some people who are at the head of the enterprise
that have a vision of some kind that realizes everybody in
that enterprise is contributing to the value of the business.
Cadbury: But when managers know perfectly well that
they have to deliver shareholder value or they are out,
how can they also wear this second hat Managers today
are much more constrained.
Nicholson: Of course when you are answerable to shareholders,
you are more constrained because the balance
sheet has to be accounted for – and quite rightly, too. I
think it is the virtuous cycle. I see where the firms do
good for others in order to help themselves. They do
good by doing well, and do well by doing good.
Cadbury: I wonder whether, in the same way that the
Quakers were the precursors of all those wonderful early
twentieth century liberal reforms that brought in the
“I wonder whether
what is needed is a set
of global rules.”
national minimum wage, and many other labor reforms,
what is needed – and this is looking far to the future and
being very idealistic – is a set of global rules. Because
businesses are so global now, it is just too easy for the
leaders and management in some top public corporation
to say ‘here is our one percent of corporate social responsibility.’
But if there were to be a set of global rules – and
I don’t know how this will be implemented – then things
like the ratio between the highest and the lowest wage
across a given sector, fairness in the way resources are
used, and things like that could genuinely be addressed.
And I just wonder whether you feel we could ever arrive
at a situation where this could be done
Nicholson: We are now in a globalized economic world,
and I think we can have principles and standards. I think
setting standards is one of the tools you can use to try to
stop exploitation.
Cadbury: I think it is quite interesting how you get the
right person in the right positions in the family firm. Because
there could be so many competing interests, and as
you were speaking, I was thinking of the last generation
of Frys. Because Frys, of course, was the first large British
chocolate enterprise in Bristol, and fantastically inventive.
They were the first to use steam technology in
65
The Focus Vol. XV/1

Parallel Worlds Dialogue
the process of manufacture. It was such a novelty, and
talked about all over the country. But after several generations
it fell to someone called Joseph Storrs Fry II to
run the company. He thought he could rest on his laurels
and devoted his time to biblical scholarship. Of
course, during his period of ownership the business lost
its competitive edge.
Nicholson: At the second generation, you have the problem
about what are the roles of siblings, how will they
collaborate, and who is going to lead the company Once
you get to a cousin consortium stage, you have the issue
of how you get the cousins to work together instead of
dividing into different branches, and how you are going
to enforce that collaboration. Once you get beyond that,
it is a multi-generational family firm, and what forms of
governance do you need to have to make sure that the
shareholders of the family shareholder group are brought
together. A family constitution could specify how the
next generation is introduced to the business.
Cadbury: Well, the Cadburys I thought were very fortunate
in that being in chocolate in the late nineteenth century
was a little bit like being in mobile phones in the
1990s. That meant for those three generations you are
talking about – the father, sons, and cousins – the business
was just growing exponentially. I got no sense at
all of conflict, and the family members that didn’t want
to go into the business didn’t go. But there were plenty
of jobs for those that did. Even by my father’s generation,
it was possible for those who had an interest in the
business to express that interest, and then it was just up
to whether or not they had the ability.
Nicholson: A lot of family firms have within their various
agreements and constitutions well-developed systems
for making sure that people can cross the threshold
– and helping and equipping them once they do. I
believe in what is called ‘family capital.’ To have a
family member in the firm adds value. It is a symbol of
a family’s commitment.
Cadbury: How could a good stewardship and generosity
of spirit be introduced into business culture today, apart
from the sort of inspirational leaders we’ve talked about
Nicholson: It is only if you try to turn your firm into
a machine that you lose this spirit. The hierarchy models
where men slug it out for a position in a very competitive
pecking order, where only the strongest will survive
– that doesn’t create loyalty, and creates as many losers
as it does winners. It destroys value as much as it creates
it. Rather, what we need are collaborative models – more
‘female models’ you might say – that are flatter and
more team-based. There are some very excellent and
enlightened firms out there succeeding at this. I see them
all the time in business.
RESUMÉ
Deborah Cadbury
RESUMÉ
Nigel Nicholson
Acclaimed journalist and historian Deborah
Cadbury is the author of seven books, including
most recently Chocolate Wars: The 150-Year
Rivalry Between the World’s Greatest Chocolate
Makers. A distant relative of the Quaker family
that ruled the world of chocolate with a potent
form of ethical capitalism, Cadbury is also wellknown
for her book The Lost King of France:
Revolution, Revenge and the Search for Louis
XVII, which tells the tragic story of Marie
Antoinette’s favorite son. She has been making
documentaries for the BBC for more than twenty
years and has received many awards for her
work, including an Emmy.
Nigel Nicholson is a well-known evolutionary
theorist and professor at the London Business
School, who specializes in Organizational
Be ha vior. His is the co-author of Family Wars, a
biography of family firms that took a turn for
the worst. Nonetheless, he remains an advocate
of family businesses and hopes that people will
learn from the errors of those profiled in his
book. His studies of leadership, culture and
emotional ownership in family firms show there
are many concrete steps firms of all kinds can
take to increase the commitment, well-being
and cooperation of their employees, owners and
managers.
66
The Focus Vol. XV/1

Essay
marking the milestones
Reflections on the art and practice of ritual within a
family governance system
What is the quintessential glue that holds
families together And how can a common
family story be supplemented over generations
while doing justice to the unique character of
each family member Ritual has an important
part to play here, as witnessed across centuries
and cultures. The classic text book on this
topic, Rites of Passage, was written by the
French ethnologist Arnold van Gennep in the
early years of the 20th century. In the following
essay, U.S. family counselor and attorney
James E. Hughes, Jr. considers what conclusions
we can draw that will help sustain the
continuity and identity of families over multiple
generations.
by James E. Hughes, Jr.
“From shirt sleeves to shirt sleeves in three generations”
runs the old adage that reflects the failure of
many families to progress and develop from one generation
to the next. In my work with families I have noted
that those families who recognize the important passages
in their members’ lives with rituals seem to do better
in overcoming the old “shirt sleeves” proverb.
Perhaps this should not be surprising, since the creation
and practice of rituals to recognize the important
developmental steps in the life of a human being, and of
the family and tribe to which they belong, are at the core
of what anthropology teaches us is essential to successful
tribal life. Anthropology further teaches us that tribes
are the result of a family in its second and third generations
forming clans and then those clans in the fourth
and fifth generations electing to stay together. Tribes,
then, are the extended generations of an original family.
From such beginnings many tribes have successfully
continued for dozens of generations, thus overwhelming
the proverb. The Iroquois are a good example. Clearly,
such a tribe is not based on shared DNA, given the very
small amount of unique DNA its individual members
share from a common ancestor. Rather it is the stories of
the experiences and practices of the earlier generations
that link these individuals as a tribe. These linkages are
part of what defines them as a family of affinity rather
than of blood. The rituals the tribe creates, often unique
to itself and representing its “differentness”, are the outcome
of tribal stories and experiences. These rituals offer
the members of the tribe a way of linking themselves
to their ancestors and to their stories, as well as to the
uniqueness of their tribe and their special place in it.
Tribal transitions
What is the nature of ritual and what is its place in the
development of an individual and of the family or tribe
of which they are a part
Arnold Van Gennep in his book, Rites of Passage,
explains that family or tribal rituals, as rites of passage,
67
The Focus Vol. XV/1

Parallel Worlds Essay
“Rituals help strengthen
the whole family in its own
process of development
for many generations into
the future.”
support an individual member’s successful development
at various stages of life. They do so by providing within
the community a process for that individual to pass
through three stages: first, to break away from an earlier
developmental stage; second, to be introduced to and
learn the new information needed for the next stage of
their development; and third, to be reintegrated into the
community armed with that new information, ready to
begin the next step of their personal development. All of
which contributes to continuing the successful life of the
family or tribe.
Ritual thus serves two purposes in the life of a family
seeking to thrive for many generations. First, it offers a
process for helping individual members of the family to
develop from one life stage to another and second, it
helps the family itself succeed by assisting the necessary
development of its members. As a result, the whole family
is strengthened in its own process of development
from family to clan to tribe, and then for many generations
into the future.
Major milestones
What are some of the important life stages of individual
family members and of the family as a whole that rituals
might be created to honor
Coming of age – All tribes and many religious communities
recognize with ritual the coming of age of their
members. Often such rituals involve the young person
being taken away from their parents and taught the
tribe’s or religious community’s secrets, its mysteries.
In many earlier societies this role was assigned to the
child’s aunts and uncles as well as to the tribal elders. In
religious communities it was assumed by the priests and
priestesses. Such ritual processes often involved the
child living apart from the tribe with others of the same
age. This is Van Gennep’s “breaking away” stage. While
living apart, the young person received knowledge about
the tribe’s special wisdom, as well as discovering their
own special talents and how these could be used to help
the tribe as a whole – Van Gennep’s second stage.
Finally, when ready, the newly fledged adult member
was reintegrated into the tribe (Van Gennep’s third
stage), often acquiring a new name as their life as a
member of the tribe began. Elaborate tribal and religious
rituals were developed to recognize the completion of
this process of reintegration.
Creation of a new elder – All successful families and
tribes recognize the need for elders for good governance.
The creation of a new elder marks an extremely
important point in the development of a family or tribe
since it recognizes the willingness of the group as a
whole to grant an individual the authority to mediate its
disputes, to help enforce its rule of governance, and to
maintain its stories. The evolution of an individual member
to this status is also a major developmental step for
that individual, since it is often a reflection that they
have finished their individual work and are now seen as
wise and ready to act for the group as whole. Many
tribes recognize this step in an individual’s development
with rituals to announce the granting of the tribe’s authority
to the member concerned.
Arrival of a new member – Rituals recognizing the
birth of a new family member or the marrying in of a new
member are very important. All families, tribes and religious
communities recognize with elaborate celebrations
the birth of new members. These rituals not only announce
the individual’s arrival but offer the community
a way of reaffirming the many prior generations from
which this child springs. More important still, this gives
all current community members a means to celebrate and
reaffirm the possibilities for their future. Ritual is also
important in this case to give the community a way of
committing itself to the legitimacy of this child and thus
of its right to nurturing and future membership.
The marrying in of a new member is another important
developmental step in the life of the individual entering
the community and of the community itself. All
families, tribes and religious communities elaborately
recognize a marriage. The rituals celebrating the entry of
68
The Focus Vol. XV/1

Parallel Worlds Essay
a new member celebrate the growth of the community
and legitimate the new member’s right to be a part
of that community. Such rituals recognize that this
new member is breaking away from another tribe, needs
new information about the mysteries of the tribe he or
she is joining, and most importantly offers a process
for the new member to integrate into a new set of relationships.
Death of a member – The death of a member is ritually
observed by all families, tribes and religious communities.
Rituals to help the individual members honor
the life of the deceased not only assist the survivors in
their individual grieving but also offer them a way to
integrate the deceased’s life into the stories that bind
them together as a community.
Introduction of new outside members – Families
seeking to ensure that they are well governed introduce
into their midst Trustees, Protectors, and Advisors. Rituals
to celebrate the arrival of such individuals represent
an important celebration of their roles and a legitimization
of their future authority and responsibility in family
life and governance. A ritual for their welcoming announces
and establishes their proper position in family
life, making it much more likely that they will successfully
perform their roles and functions.
Unique expressions
In concluding, what I hope is clear is that the range of
creativeness of human beings in expressing their desire
to recognize and celebrate the developmental stages of
their lives, and of the families and communities of which
they are a part, is both astonishingly broad and integral
to successful individual and family development. Apparently,
all human beings sense the need for such celebrations
as a way of affirming the critical steps in the
development of each individual and promoting the survival
of their families and tribes. We seem to sense those
moments when we must break away from one stage of
life, learn new things, and then reintegrate into the community
as more developed beings. Ritual within families
and tribes evolved to recognize and celebrate these moments
of our development and in doing so to strengthen
the bonds of relationship to our community, all toward
the greater likelihood of our and their long-term survival
and success.
I would encourage everyone to celebrate through rituals
these individual moments of development, as the
critical steps in their own and their family’s progress and
growth. As you do so, you will discover your “differentness”;
you will add to the family stories; and most importantly
you will honor and grow your family’s human
and intellectual capital. In all of these ways you will add
to your family’s wealth.
What are some of the forms of ritual a family could
study in developing its own unique rituals to express its
differentness
Most religious communities have rituals such as baptism,
naming, confirmation, Bar or Bat Mitzvah, marriage,
ordination, last rights and funerals to recognize
the developmental stages of their members. Many of
these rituals can be modified by a family to celebrate the
milestones in the life of its members. Secular communities,
whether monarchies, dictatorships or republics, use
music, speeches, special dress, dance, food and beverage,
elections, graduations, marriages, and funerals to
celebrate the developmental stages of their members and
of their communities. In my experience, many of these
forms of ritual can be and are modified by families to
celebrate the birthdays, marriages, anniversaries, and
deaths of their members. Cultural anthropology also offers
families seeking forms of ritual many examples of
the unique ways in which human communities have
evolved rites to celebrate the stages of development of
the individual members or tribes.
ReSUMÉ
James E. Hughes, Jr.
James E. Hughes, Jr. was the founder of the
law partnership of Hughes and Whitaker in
New York City. A legal representative of and
counselor to families in matters of asset and
succession planning, he is also the author of
numerous books dealing with family governance
and wealth preservation, including
Family Wealth: Keeping It in the Family – How
Family Members and Their Advisers Preserve
Human, Intellectual, and Financial Assets for
Generations. He is a regular speaker at international
and domestic symposia.
69
The Focus Vol. XV/1

Expertise
Interview
“You don’t choose a
successor. You have to
create the environment
for a successor to appear
naturally.”
Over the past decade the family-controlled Brazilian
conglomerate Odebrecht S.A. has grown its revenues
tenfold and gone from a little over 20,000 employees
in 2000 to almost 150,000 today, with operations
on four continents. Marcelo Odebrecht, CEO
of the company, tells The Focus how the value
system that was first developed and codified by
his grandfather more than 65 years ago continues
to guide the family and its rapidly growing, widely
diversified company today.
Photos: Paulo Fridman
70
The Focus Vol. XV/1

71
The Focus Vol. XV/1

Expertise Interview
ReSUMÉ Marcelo Odebrecht
Marcelo Odebrecht became CEO of Odebrecht S.A.
in 2009. After an engineering degree and an international
MBA at IMD business school in Lausanne,
Switzerland, he worked in the Odebrecht petrochemical
and construction businesses before assuming
the CEO role at age 42. His accession to
the leadership role also marked the completion of
an extensive restructuring process aimed at aligning
the organizational structure of the company
with its new business activities, projected growth,
and future objectives. Under his leadership, the
company continues to aspire to become a model of
sustainable development and socio-environmental
responsibility both through its businesses and the
Odebrecht Foundation, a philanthropic organization
created in 1965 by Norberto Odebrecht, Marcelo’s
grandfather.
The Focus: Your company was awarded the 2010 IMD-
Lombard Odier Global Family Business Award, the
most prestigious distinction for family companies in the
world. What role do you think the values and the principles
established by your grandfather Norberto, the company’s
founder, played in this award and the extraordinary
success of Odebrecht S.A.
Marcelo Odebrecht: Without a doubt, the values that
my grandfather instilled in the family and in the business
have played a critical role in the success of our company.
In fact, I believe that values are primarily what differentiate
one family-controlled company from another. Everything
that we have been able to achieve up to now stems
from a determination to put those values into practice and
to maintain them. I think we were very fortunate in having
those values established almost at the inception of the
company. Usually, an entrepreneur starts with a handson
innovation or a new business model and has little time
to think philosophically or reflect systematically about
the company’s values. But my grandfather, who was under
forty years old when he started, was able to establish
the value system at the very beginning. That is rare for
companies just getting off the ground, and I believe it
gave us a valuable advantage right from the start.
The Focus: Your grandfather translated strong family
values into a powerful management system and corporate
culture called the “Odebrecht Entrepreneurial Technology”
(TEO) that has been built up over a 65-year
period. Could you describe how it helps unify the company
across businesses, countries and cultures
Odebrecht: It emphasizes the willingness to serve, the
capacity and desire to evolve, and the will to surpass
expected results. It also involves a planned delegation
process, one based on trust and partnership between the
leaders and the people they lead. Other fundamental
principles include satisfaction of the client, self-development
of people, and re-investment of results in order
to create new opportunities for work and for community
development. And it stresses that the human being is the
measure of all of the organization’s values. When a
company is very small it is reasonably easy to implicitly
communicate values by setting an example. However,
when the company grows, as we have, you need to
carefully codify and formalize your values so that you
can communicate them across cultures and countries
and across an employee population that for us is now
150,000. Thanks to the commitment of my grandfather
and to the continuing evolution and strengthening of
72
The Focus Vol. XV/1

Expertise Interview
the TEO, we have been able to do that systematically
and effectively.
The Focus: What, in your view, is the dominant theme of
that system of values – the core principle that unifies it
Odebrecht: Trust in people. If we were unwilling to put
our trust in people we would not be able to decentralize
the way we do, and decentralization is one of the keys to
our success. We are in businesses that range from construction
to submarines, real estate, ethanol, petrochemicals,
and more – eleven lines of business and 300 companies
– and we operate in 22 countries. In all of those
disparate and widely dispersed businesses we entrust all
of the daily operating decisions, personnel decisions,
and strategic decisions to the entrepreneur who heads
“The people in the
company have only one
reference point –
a single representative
of the family.”
each company. It is impossible to imagine how we could
operate in that fashion without the TEO to help guide the
actions of everyone involved and cement the mutual
trust that is required. I have had discussions with people
who argue that if we centralized decision-making we
would get better decisions than we do by putting our
trust in our entrepreneur partners. I strongly disagree.
First, centralizing decision-making assumes that I am
smarter than the leader who is there, and I don’t think
that’s the case. Second, the leader who is there on the
ground is close to the client, intimately familiar with the
opportunity, and nearer to what I call ‘the warmth of the
moment’ where decision-making is concerned. Because
of those advantages of proximity, he is still probably the
best person to make the decision even in cases where he
may be less capable than his leader.
The Focus: Does family ownership make it easier to
sustain that core value of trust and, if so, how
Odebrecht: The employees of a company solidly controlled
by a family know that they will always have a
fixed point of reference throughout their tenure with the
company – a member of the family that they can rely on
to keep their best interests at heart. That enduring relationship
makes it possible to develop bonds of trust between
the employees and the company, which might not
be the case with a public company. Of course, the values
must endure and be passed from one generation to the
next within the family and then within the business.
From the day they are born, members of the family
should learn how to live up to those values. I remember
the first time I read my grandfather’s book about the
Odebrecht Entrepreneurial Technology. I was at university
at the time and had just begun to get involved with
the company. As I read the book, absorbing his philosophy
and values, I recognized all of the education and
guidance that I had received from my father and my
grandfather as I was growing up. Those values arose
naturally within the family, and passing them down
through a business decade after decade is difficult to do
unless it is family controlled.
The Focus: The family has stated a commitment to
“family control but professional management.” Does
that require a difficult balancing act
Odebrecht: I don’t think so – as long as you understand
that a business cannot be run by a family. It can coincidentally
be run by someone from the family, but that
person must be a professional manager. So before you
can professionalize the company, you have to professionalize
your family.
The Focus: What do you mean by ‘professionalize the
family’ Is that something your grandfather did through
the governance structure he created
Odebrecht: Professionalizing the family means making
sure that the family’s relationship to the business is organized
correctly. And I believe it’s advisable to do that
in the first generation, as he did. Though our arrangement
might not work for all family owned businesses, it
has worked well for us. My grandfather structured it so
that there would always be only two family members
representing the family in the company – a first representative
and a second representative. When one representative
dies, the surviving representative chooses a
family member to become the second representative.
Some people call that a meritocratic monarchy. In any
case, the people in the company have only one reference
point – today it is my father, the chairman of the board.
When they look to the family they turn to him. I am the
CEO of the holding company but my predecessor was
a non-family member professional and my successor
could be from outside the family. The only person who
73
The Focus Vol. XV/1

Expertise Interview
has to come from the family is the representative of the
family on the board.
The Focus: As the family grows and succeeding generations
arise, there will likely be a greater number of family
members who could potentially fulfill that role.
Won’t it therefore become more difficult to choose only
one person
Odebrecht: In my view, it will become easier. My
grandfather had only five sons, and he had to choose
from that fairly limited number. In my case there are
fifteen of us, so the next representative of my generation
will come from one of fifteen. The next generation already
numbers thirty. So, with the bigger number, there
is a greater probability that you will be able to select
precisely the right person. It must be someone who can
ably represent the family at the company, who will be
seen by the employees as a leader, and will maintain the
family bond. We once had a partner who was in the
midst of a family succession. She asked my grandfather
how he chose successors. He said, “You don’t choose a
successor. He or she has to come up and what you have
to do is to create the environment for the successor to
appear naturally. And then when you choose him in fact,
he will be the natural choice of everyone else.”
The Focus: There have been cases in which conflict
among family members about how best to run the business
have resulted in bitter disputes and sometimes the
break-up or sale of the business. To avoid such conflicts,
some families involved in multi-generational family
owned businesses have adopted written constitutions, a
legal agreement, or some other framework that governs
the family members’ participation in the business. What
mechanisms or practices does your family use as guides
to such issues
Odebrecht: The family doesn’t discuss the business decisions,
because the family has delegated the responsibility
to the representative. We do not have a family
board. The only board sits within the company, where
the chairman of the board is the family representative.
That is where all the decisions are made and where the
only person from the family nowadays is my father, now
that my grandfather has retired. The shares are set aside
in holdings to pass to the next generation so that there is
no access to them. The only thing that the entire family
has access to is the dividends. The family benefits from
the dividends but the leadership of the company is the
responsibility of one person only – always one.
The Focus: Do you think it is an important signal to the
family that the CEO comes from the family, so that more
family members might be motivated to pursue careers in
the business
Odebrecht: No, I don’t think it is important for motivating
the family. You should neither try to avoid having a
family member in such a role nor try to push a family
member to work in the company. Their involvement has
to come about naturally. In fact, we have no mechanisms
or rules in place for bringing family members into the
business. It just happens. Currently, there are thirty of us
in my generation, and out of that thirty, seven work in
the business: four spouses of my cousins, my sister, one
of my cousins and me. Said that, I do believe that in the
long term, if there aren’t family members working within
the company, the link between the family and the
business is likely to be weakened. And it would be very
difficult to find a family representative who had not
worked in the company and yet would still be viewed as
a leader by the employees.
The Focus: In talking with members of families that
own businesses, we sometimes find that there is a central
member of the family who acts as what might be
termed a ‘chief bonding officer’ who is responsible for
holding together all of the generations of the family.
Now that your grandfather is retired, does he fill that
role in your family
Odebrecht: We of course don’t know how long my
grandfather will be with us, so we try to make the most
of him, of his values, his ideas, and what he can still
teach all of us. We make sure that all of the grandchildren
and great-grandchildren spend a considerable
amount of time with him so that they will have the opportunity,
as my generation did, to learn as much as possible
from him. But it is not only my grandfather who
helps maintain strong family bonds. My father and his
sisters and brothers are also responsible.
For example, we have a family place in Bahia on an island
that my grandfather discovered sixty years ago, and
everyone in the family tries to spend most of the summer
vacation there in a healthy environment mainly for the
kids. And between Christmas and New Year probably
ninety percent of the family goes there. It is just one
of the initiatives to keep the family members as close
as possible.
The Focus: So even as the family grows it continues to
be tightly bound to its values, but what about the growth
74
The Focus Vol. XV/1

“If we can identify and
integrate the right people,
then I think we can achieve
any goals that we set.”
of the company Even with a codified system like the
TEO, how in practice do you communicate those values
to nearly 150,000 employees dispersed globally
Odebrecht: All of the business leaders are responsible
for communicating the values and thereby assisting in
the growth and development of their people. So when
we are considering candidates for the role of leader, we
look carefully at their ability to develop the people
around them. They must be able to focus not only on
the professional and technical competence but also on
the human being who is inside the employee, because
that is ultimately who we are developing. If we have a
leader who is unable to communicate well or unable to
educate employees through work, then we have a problem.
To be honest, we are growing at a rate now that is
outstripping our ability to form and develop leaders fast
enough within the company and therefore, we are
“being tested”.
For the past fifteen months, we have been hiring roughly
two thousand people per month – a pace that is very difficult
to maintain. If we can identify and integrate the
right people, then I think we can achieve any goals that
we set. But by “integrate” I mean not only bringing them
into the company but also having them work in accordance
with our values. This is the first time in our history
we have faced this challenge, so we are working hard to
speed up the process of inculcating our values in people
and making sure that our leaders continue to do it,
despite our rapid growth.
The Focus: With 300 highly entrepreneurial companies,
Odebrecht has staked its business success on what you
call ‘responsible empowerment.’ Has the extraordinary
degree of independence that you grant to the ‘entrepreneur-partners’
who run your companies sometimes
resulted in people disappointing you
75
The Focus Vol. XV/1

Expertise Interview
ODEBRECHT S.A
The global builder
Odebrecht S.A, with more than $30 billion in revenues
and nearly 150,000 employees worldwide, is
one of the largest non-financial conglomerates in
Brazil, with a presence in South America, Central
America, North America, the Caribbean, Africa,
Europe, and the Middle East. It is the holding
company for Construtora Norberto Odebrecht, the
biggest engineering and contracting company in
Latin America, and for Braskem S.A, the largest
petrochemicals producer in Latin America, and for
one of the five largest private-sector manufacturing
companies in Brazil, the sixth major producer
of thermoplastics, and for one of the five largest
private-sector manufacturing companies in Brazil.
In 2010, ETH was the largest producer of ethanol
in the world. Over the years, the organization has
diversified its operations through significant investments
in the oil & gas, energy, real estate,
environmental engineering, and infrastructure
sectors. From 2002 to 2009, the company grew
at an average annual rate of over 21 percent.
Odebrecht: Unfortunately, it has happened sometimes,
but we are not going to stop putting our trust in people
just because we sometimes experience a disappointment.
In choosing our partners and empowering them,
we are right far more often than wrong. If a problem
arises because I have chosen the wrong person, then that
is my mistake.
The Focus: Given so many different businesses and the
independence you grant their leaders, how do you keep
them aligned around an overarching vision and strategy
Odebrecht: Again, we do it through the effective communication
of our values. Ultimately, a company consists
of its people and the communication between
them, and that is how we regard our company. In terms
of strategy, we require the entrepreneur partner of
each company to agree with what we call “Odebrecht’s
Action Plan.” They are then free to make all of their
own decisions in trying to achieve the objectives of that
plan, but they know that their job performance will
be evaluated on how well they meet those objectives
and that their remuneration will be determined accordingly.
Because the environment often changes much
faster in emerging markets than in more mature ones, it
is certainly true that decentralization can provide the
agility necessary to adapt quickly there. However, we
also believe that decentralization is a strength in all of
our markets.
The Focus: The degree of decentralization you maintain
could be seen as an obstacle to taking full advantage of
the economies of global scale. How do you maximize
synergies within the very different business units
Odebrecht: We discuss that a great deal and I think we
have concluded that we may not be able to maximize
those synergies and achieve economies of scale to the
degree that we would like. However, we try to improve
those synergies as much as possible through our many
interdependent businesses and through projects that may
involve three or four of our companies. For example,
much of our growth is coming from greenfields projects,
and we are able to do that only because we have an
engineering company. Because we are so decentralized
some people argue that we may not be as cost-efficient
as we could be. But I think there are some strong counter-arguments.
For example, all of our construction
projects are responsible for procuring their own supply
of steel, so we don’t have any economy of scale in respect
to those purchases. But if the leader of a company
needs to buy steel or something else that is important for
the development of a project – and needs it as fast as
possible – then the cost is less critical than speed. If he
had to procure the item through a central purchasing department,
he might be ordered to buy it cheaper somewhere
else, which could delay the project. In the long
run, that delay could be more costly than spending a
little bit more on every ton of steel we buy.
76
The Focus Vol. XV/1

Expertise Interview
The Focus: How do you develop and groom leaders in
that context
Odebrecht: Decentralization and delegation are themselves
powerful mechanisms for grooming leaders.
When you help make someone an entrepreneur who is
responsible for running the business then you are creating
conditions in which they can learn and grow and
which demand the best from them. When things go
wrong they can’t blame someone else; they can’t avoid
responsibility. However, in addition to giving them the
authority to make decisions you have to give them the
tools to succeed; otherwise you are setting them up for
failure. We are not simply delegating freely; we’re doing
it in the context of the action plan to which they have
agreed and which provides direction. So we call it
“planned delegation,” which is part of a system that includes
assessment against the action plan and a candid
sharing of the results of that evaluation with the leaders.
The Focus: Often, value systems reflect elements of the
specific culture in which they arise. When your company
first went to Latin America, then Africa and the
northern hemisphere, was it more difficult to translate to
other countries what you had done in Brazil
Odebrecht: No, honestly I don’t think so. The difficulty
that we have when we go abroad is no different from the
difficulty we have when we go to another state in Brazil.
In both cases when we enter a new geography we initially
do it with our own people. We just cannot hire
people in the new market, because they don’t have our
values and we cannot give them the decentralization that
is usually given to people that we trust. So every time we
move to another country the only challenge is that it
takes us at least five to ten years to develop the level of
trust with the local people that we have here at home.
But then everything is absolutely the same.
For example, most of the current expatriates that we
have in, say, a Latin American country often don’t come
from Brazil. They come from Peru, Ecuador, or other
places where we’ve operated for twenty or twenty-five
years. Our branch in Peru has the same values as our
branch in Brazil, so it is not a question of particular
countries, but a question of the time it takes time for us
to develop the people within our company culture.
health, and job and income generation. Are these activities
driven by the family’s values and how does that
commitment affect the business
Odebrecht: First, it is very important to us that we
think we are here to serve rather than to be served. That
is something we have been taught since the day we
were born. In Brazil where you have employees work
in your home for everything, children from the beginning
learn a lot about how to be served, but what they
really need to learn is how to serve others. As a leader,
your responsibility for serving grows with you, rather
than you simply having more people serve you. That
means serving the clients, the shareholders, the members
of the company, and especially the communities
where you work. Serving communities is also a highly
pragmatic policy. Construction projects, for example,
are disruptive while they are being executed. So you
have to be able to have a bond with the community not
only through the future benefit the project will bring,
but during the construction itself. Every project, every
factory has some kind of social responsibility associated
with it that enables you to develop a bond with a
community. By taking that responsibility seriously we
were able to work in Peru when the Shining Path terrorist
group was active, in Colombia despite the FARC
guerillas, and in Angola during the entire civil war.
Why were we able to do that Because we had developed
such a strong bond with the communities, they
were willing and eager to protect us. What I think this
demonstrates is that when you really embrace social
responsibility toward a community you get back even
more than you give; but you give because it is the right
thing to do.
The Focus: Your company is known for its commitment
to social responsibility, economic development, and
sustainability in its businesses; and you invest resources
in social and cultural initiatives focused on education,
The interview with Marcelo Odebrecht in São Paulo
was conducted by Edilson Camara (left), Egon
Zehnder International, Rio de Janeiro and Christian
Spremberg, Egon Zehnder International, São Paulo.
77
The Focus Vol. XV/1

Crossroads
Balancing objectivity and emotion
How family businesses manage succession
Justus O’Brien
Egon Zehnder International, New York
justus.obrien@ezi.net
Jörg Ritter
Egon Zehnder International, Berlin
joerg.ritter@ezi.net
Many family businesses will be facing the issue of
succession over the next few years, but very few
of them are prepared for the challenge. Yet, particularly
for family businesses, the handover from one
generation to the next is crucial to the company’s
very survival. In this article, the authors describe
how the generation shift can be managed with
long-term planning, objectivity, and the use of
professional processes.
Once upon a time, the ageing owner and chief
executive of a large enterprise, growing weary of running
his business, decided without consulting his advisors
to retire and divide his duties and his estate between
his three daughters. In a formal ceremony, he commanded
each daughter to say why she loved him the most,
promising to award the greatest share of his enterprise to
the winning daughter.
His eldest daughters flattered him with fulsome
declarations of their love. His youngest and favorite
daughter, however, said nothing to ingratiate herself.
The old CEO, infuriated by what he took to be his
youngest daughter’s ingratitude, disinherited her and
divided the enterprise between the older sisters. A oncetrusted
advisor, who had fought many must-win battles
side by side with his CEO, strongly criticized this
decision and was fired on the spot.
As we all know, this succession story ends in tragedy
– the tragedy of King Lear. Over 400 years later, family
businesses (if not kingdoms) are still a major growth driver
in most national economies and account for the vast
majority of companies worldwide. Evidence suggests,
though, that succession planning is no more common now
than it was in Shakespeare’s day, let alone in the time of
the legendary ancient king of the Britons, Lear – or Leir
– on whom Shakespeare based his drama.
A recent worldwide survey of 836 top managers across
all sectors, conducted by Egon Zehnder International,
found that only 33 percent of businesses have a well-
78
The Focus Vol. XV/1

Expertise Crossroads
documented succession planning process in place. An
orderly succession is often not recognized as an
issue until it is too late and is frequently not handled
professionally. The particular mix of clashing emotions,
expectations, ambitions, and commercial demands that
is typical of many family businesses also often makes it
difficult to tackle the issues calmly and objectively. Yet
a successful – or unsuccessful – handover of leadership
in a family business is often the key to its very survival.
The generation gap
Dominant and highly successful entrepreneurs from the
founding generation are particularly likely to think themselves
irreplaceable and to doubt their successors’ abilities.
Others, by contrast, ‘resolve’ the succession issue
simply by expecting at least one of their children to take
over running the family business. But in families with
several children, this official if unspoken anointing of a
crown prince or princess may mean openly favoring one
child over his or her siblings, splitting the family in a way
that parents are otherwise at pains to avoid.
The successor generation may also have mixed feelings
about the situation. Potential successors from within
the family may feel weighed down by expectations that
they cannot, or do not want to, meet. Or they may lay
claim to positions for which they are unqualified in terms
of managerial ability and expertise. And the personal hurt
that comes from being passed over, even though they
would have liked to have a career in the family business,
can often erupt suddenly, years later, when the shareholders
face difficult business decisions.
Yet even when the succession is clear, many questions
remain. How will the successor find his or her place in the
parent’s business and carve out his or her own niche How
can the transition be managed smoothly How can the new
man or woman at the top gather their management team
and fellow family members around their banner
In other words, what needs to be done in family businesses
to achieve a balance in succession between the
emotions that inevitably surround the process and the
commercial interests of the business and its prospects of
success Our long experience in advising family firms
shows that three factors are particularly important:
• prior planning to tackle the issues that arise and a longterm
perspective;
• professional management of the necessary processes;
• objectivity to counterbalance the emotional components.
No two family businesses are alike; each has its own
individual opportunities and challenges that need to be
painstakingly teased out in discussions around succession.
A business with a large shareholder body will
raise different issues and interests from those that arise
in a business being handed on by a single owner. Some
companies are highly specialized, produce just a single
product, and are often leaders in their market segment,
while others are more broad-based. The challenges facing
the heir to a family business are equally diverse.
A further complication is that even if some families
do start thinking about succession in good time, they
tend to assume that the situation on handover will be
as it is now. It is, though, much more important to
have a long-term perspective that takes account of the
future development of the company, its medium- and
long-term strategic goals, and the evolving challenges
that the company management will face in meeting
those goals. In our view, a ten-year timeframe is appropriate
here.
Developing the successors is also time-consuming.
Even if the next generation has been introduced to the
business at an early stage, has undergone the necessary
business training and, in some cases, has gained experience
outside the family business, it takes years to
make a realistic assessment of those individuals’ talents
and to develop them. Moreover, if it turns out that,
despite this, the eventual successor does not have the
right skills to run the family business, a better qualified
replacement from outside the family circle cannot
simply be conjured out of thin air. A successful handover
relies on long-tem monitoring and continuous
development of all the talents in the business – those
displayed by non-family managers as well as by family
members.
In our experience, clients appreciate our early involvement
in this process to help provide an objective
basis for assessing the potential of the next generation.
This way, our consultants can work with the up-andcoming
generation, the family and the management team
to draw up development plans for possible future roles
in the company. How should the younger generation be
planning their careers over the next five to ten years, for
example What aspects of the company’s activities are
they best suited to Is the family business even the right
place for them We have found that the whole family is
more than ready to accept objective advice and support
of this kind, as indicated by the growing number of
client enquiries in this direction.
79
The Focus Vol. XV/1

Expertise Crossroads
Talent management that takes account of the strategic
goals of the business should be an integral part of succession
planning in family businesses. For the decision-makers,
it provides a sound basis for selection but also offers
potential candidates transparency and accountability in
decision-making. And transparency and accountability
are crucial to avoiding the vague feeling of unfair treatment
and discrimination that can arise when processes are
less carefully planned and that can be a rich breeding
ground for conflict further down the line.
Professional processes
Having clear rules for the successor profile and accountable,
objective processes can be extremely valuable in
planning and carrying through succession professionally.
An important first step may be to appoint a facilitator to
support the planning process over a period of years. This
individual may be a widely accepted family member, a
member of the company’s advisory board, or some other
external adviser in whom the owners have confidence.
Identifying the commercial and family challenges the
successor must face means analyzing the situation the
business is in and how it is to develop. If external advisers
are involved, it is important that they base their assessment
on whether this is the first generational shift the
business has faced or whether there have been previous –
and, perhaps, unsuccessful – attempts at succession. If the
latter, it is likely that there are points of conflict that need
particularly careful handling to defuse tensions. This is
particularly important for businesses with a complex
shareholder structure in which multiple individual interests
need to be met. When analyzing the current position
of the family business and its projected situation in ten
years’ time, it is, in our experience, vital to take account
of three dimensions:
• The current and future ownership structure: Is ownership
in the hands of one individual, a manageable
group of close relatives, such as siblings or cousins,
or a sprawling family dynasty What impact will a
generational shift have on this structure
• The investment structure: Is the company a focused
or a diversified family business, or is it seen as a
family investment office And what are the family’s
intentions for the future
• The governance structure: Is the business ownermanaged,
family-managed, overseen by the family,
or externally managed And is it likely to continue to
be managed in this way in the foreseeable future
These three dimensions produce a profile of the family
business that can be benchmarked against the profile of
other similar and commercially successful family businesses.
This profile can then be used as the basis for a
tailored strategy developed with the entrepreneur and the
shareholders, which in turn will allow the successor to be
profiled accurately.
One further vital step in this context is the clear articulation
of the rules relating to family and business
governance. What rules and policies exist within the
family and among the shareholders What principles
and structures of governance does the family business
have During succession discussions, it often becomes
clear that the entrepreneur’s family has never had any
binding rules for governance or, at best, only imprecise
and vaguely worded rules. Thinking about succession,
therefore, offers an opportunity to create clarity and
binding guidance in this area. This is an opportunity that
the family should take, because not having rules or having
only very vague ones can, in many cases, sow the
seeds for later conflict.
Once the successor profile has been drawn up, internal
and external candidates can be assessed objectively and
their development can be monitored and encouraged. It
goes without saying that the family or the former owner of
the business must be clear from the outset about whether
they wish to limit their search for potential successors
to family members or whether they will also consider
managers from outside the family.
In the case of non-family management, it is important
to establish whether the management team is to be
put together internally or brought in from outside the
business. As already noted, it takes considerable time to
develop internal talent, but where time is short because
the succession issue has been allowed to become pressing,
a comparison of the successor’s requirement profile
drawn up together with company management and
the competence profiles of potential candidates that
we compile in the course of every Executive Search
assignment can help in making ad hoc assessments and
reaching decisions about successors.
In this context, what is particularly important in family
businesses is not just technical and entrepreneurial ability
but also the personal chemistry between the successors –
whether they are family members, home-grown talent, or
external hires – and the family. The selection process
should therefore involve all the key stakeholders with
whom the successor will have dealings over the next few
years. A kind of hiring committee that represents the
80
The Focus Vol. XV/1

Thomas Struth, The Richter Family 1, Cologne 2002
81
The Focus Vol. XV/1

Expertise Crossroads
interests of shareholders, the family, and the business in
an absolutely even-handed way can be very useful here.
Achieving a new balance
Appointing the CEO, managing director or managing
partner is absolutely vital, since these functions are the
key to the future of the business. And, as with any election,
a decision ultimately means that only one person (or
a very small group) can be chosen and many others are
passed over. For this reason alone, and because this can
cause significant levels of friction, some single owners or
entire families choose from the outset to fill these posts
from outside the family. Some entrepreneurial families
with a number of successful generational handovers
under their belt already consistently exclude family members
from managerial positions in their company.
Every generational shift also means that the previous
owner and the family need to find a new balance between
holding on to the reins and letting them go, between family
commitment and personal ties on the one hand and
successfully distancing themselves from the business on
the other. For the retiring senior executive it is not only a
matter of withdrawing from active involvement in the
business but also of defining a new and meaningful role
for the future, be it in the immediate vicinity of the company
– on the advisory or supervisory board, for instance
– or outside the business arena in the form of social,
societal or political commitments. However difficult it
may be at times to deal with the abstract and irrational
emotions of all involved, personal identification with and
internalized ownership of this decision are vital both to
the survival and to the prosperity of the family business.
Studies have shown that emotional ownership (EO) is
a vital source of the particular and marked business culture
that is unique to family businesses. More than that, it
is the decisive link between the company and the next
generations. Research also shows that this kind of internal
responsibility and commitment is produced above all
when young family members are involved in the company
at an early stage and see what career prospects it can
offer them. It also, however, depends on having a flexible
and adaptable family with a positive outlook and structures
that support the next generation as they develop.
This includes the regular and, particularly, informal
exchange of information about the company and the fair
and impartial involvement of young family members.
As indicated above, one important role of external advisors
is also to work with the outgoing CEO to define his or
her new role, especially where that individual initially set
up the company. Sometimes a succession appears to have
been well managed but then fails because the former CEO
cannot stop meddling, thinking he always knows best and
constantly seeking to influence events from behind the
scenes. In such situations, many successors become exasperated
and give up or, in the worst cases, are even stripped
of their powers by their own father. Particularly with regard
to emotional ownership, the retiring CEO can play a key
part. Through a commitment to philanthropic causes he can
become a living example of the company’s approach to its
social responsibility or, in a similar vein, he can set himself
up as a guardian of the corporate values, responsible for
communicating these to the younger generation.
To sum up, succession is not just the handover of
leadership of a business. It can also include things such
as taking over a function on the advisory board of a
family business, becoming the manager of the family’s
affairs or its assets, or taking on the role of a non-executive
shareholder.
The majority of the shares in family businesses across
the world belong to shareholders who do not actually work
in the business but who are nonetheless expected to assess
strategies, scrutinize balance sheets, and be familiar with
the specific roles people play in the business, as well as
with their rights and obligations. Ultimately, only those
businesses in which each family member reorients their
role when there is a generation shift have a good chance
of achieving successful succession.
The Authors
Justus O’Brien is a partner in the New York
office of Egon Zehnder International and
co-leads the U.S. Board Practice. He consults
with companies of all sizes and industries
specializing in executive search and management
appraisals for Board Members, non-
Executive Directors, Chief Executive Officers
as well as a variety of C-Level assignments.
Jörg Ritter is a partner in the Berlin office of
Egon Zehnder International and co-leads the
firm’s global Family Business Advisory Practice.
His clients comprise German and international
family enterprises from various environments,
mostly sectors of industry.
82
The Focus Vol. XV/1

Best Practice
“Each succeeding generation sees the
family business not as a matter of ownership,
but of trusteeship.”
A Vellayan on maintaining the fine balance
between family interests and business success
through many generations
Photos: Aditya Kapoor
It is often said about family businesses that
‘the first generation grows it; the second
generation enjoys it; the third generation
destroys it.’ Not so with the Murugappa
Group. Since the founder set it up, subsequent
generations have always found ways
to renew it. With the fifth generation in the
business and roots that stretch back to the
19th century, it is today one of India’s most
respected conglomerates. A Vellayan, the
current Executive Chairman, talked to The
Focus about the balancing act required to
build a vibrant family-owned business that
has been thriving for more than a century
and shows every sign of continuing to do so
for generations to come.
A Murugappa family photo from 1989 forcefully
brings home the challenges of family and business in a
way that words cannot. Taken at the 60th birthday party
for MV Arunachalam, who was the third-generation
leader of the business, the picture shows more than 80
members of the extended family, from white-haired
elders to babies in arms. One of those pictured is A Vellayan,
the son of MV Arunachalam and now the Executive
Chairman of the Murugappa Group who must guide
the business while taking into account the interests of
generations present and to come. How does Vellayan
balance the interests of so many diverse family members
and renew the business from generation to generation
What about the other stakeholders – the non-family professionals,
the employees, and the communities in which
the Group’s companies operate
“First of all, each succeeding generation sees the
family business not as a matter of ownership, but of trusteeship,”
he tells us in the Group’s headquarters in
Chennai, where he sits, casually dressed, beneath a portrait
of his great-grandfather, Dewan Bahadur A M Murugappa
Chettiar, born in 1884.
Deeply rooted in Indian culture, trusteeship has
meant using resources for the common good of family
members, shareholders, and communities. In fact, ‘Dewan
Bahadur,’ an official title later bestowed on the
founder by the Viceroy of British India, means ‘a great
man who is a steward in charge of a house of business.’
“Neither I nor any members of my generation can lay
claim to establishing the idea of trusteeship,” Vellayan
says. “My great-grandfather not only saw himself as a
steward of the company but also supported community
institutions in his home village and inculcated that ethic
in succeeding generations.”
In 1898, when Dewan Bahadur was aged 14, he
was sent to Burma to work as a bank clerk in a family
83
The Focus Vol. XV/1

Expertise Best Practice
”We knew that unless we put in
place an appropriate governance
framework we would have
problems as our business grew.”
THE COMPANY
THE MURUGAPPA GROUP
Headquartered in Chennai (Madras), The Murugappa
Group is one of India’s leading business conglomerates,
with 29 businesses and manufacturing facilities
spread across 13 states in India. Its origins
as a family business lie in an enterprise founded in
the 1900s by Dewan Bahadur, the great-grandfather
of current Executive Chairman A Vellayan.
Now a market leader in such diverse areas as
engineering, abrasives, finance, general insurance,
cycles, sugar, farm inputs, fertilizers, and nutraceuticals,
the company has more than 32,000 employees.
The Group has forged strong joint venture
alliances with leading international companies like
Mitsui Sumitomo, Foskor, Cargill and Groupe
Chimique Tunisien and become one of the fastestgrowing
diversified business houses in India.
business. Within 20 years he had built the largest private
bank in lower Burma. In 1929, when his three sons were
old enough to work in the business, he took the unusual
step of equally dividing the family business estate while
he was still alive and active in the business. It was the
first in a long line of such steps that his sons and subsequent
generations would take to adjust the fine balance
of family members’ interests with the evolving demands
of the business.
Drawing strength from outside the family
Trusteeship of the family’s interests has, over the years,
increasingly meant going outside the family – for impartial
governance structures, non-family professionals,
and external advisors. The company began to look outside
for advice and non-family professionals during a
time of rapid growth in the 1970s, but it was in the early
1990s, says Vellayan, that the business began moving
84
The Focus Vol. XV/1

Expertise Best Practice
decisively toward a new governance structure. “The
family was growing; several of our companies were being
listed on the stock exchange, and we saw a number
of families that owned businesses fall apart. So we said,
‘Okay, how do we keep this together’ We knew that
unless we put in place an appropriate governance framework
we would have problems as our business grew –
problems attracting the right kind of partners, problems
operating in an economy that was increasingly opening
up, and problems making sure that family members in
the business did not simply do whatever they might feel
like doing.”
At the time, a family member headed each of the seven
major companies, with no overarching structure and little
interaction among them. So in 1990 the family brought
their disparate companies together in a more formal way,
establishing a Murugappa Corporate Board, initially composed
only of family members. Family members also
continued as CEOs of the seven major companies, with
non-family members serving as presidents.
More rebalancing was to come
promoted from within to become CEOs of the seven
individual companies. The former family CEOs joined
the newly reorganized Corporate Board, which now included
three independent members from outside the
family and the Group’s non-family CFO. Things then
moved swiftly.
“We decided that we would consider divesting any
critical business that was not number one regionally or
number one or number two nationally. We concentrated
on the phosphatic fertilizer business, where we are now
number two nationally and number one regionally; on
abrasives, where we are now number one nationally; on
sugar, where we are number one regionally; on bicycles,
where we are number two nationally; and abrasives,
tubes, and chains, in all of which we are number
one nationally. All of this was entirely by design,
achieved by redirecting resources to these businesses,
emotion aside.”
The new structure not only created the appropriate
emotional distance between family members and individual
companies, but also, says Vellayan, put new emphasis
on the importance of non-family professionals.
Dewan Bahadur and his sons had made a far-sighted decision
in the 1930s to move from looming difficulties in
Burma to India, well ahead of their contemporaries. India,
they believed, was on the verge of industrialization
and offered greater opportunities. Since then, the business
has grown and flourished through a variety of
means: start-ups, acquisitions, joint ventures, diversification,
public offerings, and divestitures. Greater trade liberalization,
and the policy reforms that were initiated in
1991, brought with them new opportunities as well as
threats, requiring the Group to be more nimble than ever
before. But with individual family members committed to
their separate business units and focused on day-to-day
operations, it was difficult for the Group to downsize, restructure,
or sell a business. It was another question of
balance: personal emotions versus value creation.
“What we needed at that point was not more emotional
attachment or passion for a particular business,
but less emotion,” says Vellayan. “You cannot be emotionally
attached to the businesses. For example, Parry
Confectionery was an excellent brand, but realistically
we knew that it would never be as large as Cadbury’s or
Perfetti because we simply did not have the technology,
so we sold it.”
In 1999 the Group separated ownership and operational
management. Non-family professionals were
ReSUMÉ
A Vellayan
In 2009 A Vellayan became Executive Chairman
of The Murugappa Group, representing a passing
of the torch to the fourth generation in
the family business. With more than 25 years
of industrial experience managing diverse
businesses, he has said that the turning point
in his career came when he moved from the
engineering side of the business to the Group’s
fertilizer business, a sector considered unattractive
at the time. Pursuing an aggressive
M&A strategy, he grew the fertilizer business
to become number one in the region. He is
the Chairman of EID Parry (India) Limited and
Coromandel International Ltd. He is also on the
board of Indian Overseas Bank and Kanoria
Chemicals Ltd. And he has served as a Director
of the Export-Import Bank of India. Before
being named Executive Chairman, he served as
Vice Chairman of the Board of The Murugappa
Group.
85
The Focus Vol. XV/1

Expertise Best Practice
“We don’t want to make family members managers;
we want to make them entrepreneurs who can recognize
and seize business opportunities.”
“The core belief of the entire family is that we are
here to build value, and that if we have a more independently-focused
governance model and employ professionals,
we stand a far better chance of creating value
rather than destroying it, especially in an economic and
competitive environment that grows more demanding
every year,” says Vellayan.
That core belief is embodied in today’s Murugappa
Corporate Board, which consists of three independent
directors, three non-family executive directors, and only
two family members – Vellayan and his cousin M M
Murugappan. The independent directors of the Corporate
Board are involved in the career planning and performance
evaluation of the family members. This is
done to have an objective and unbiased view.
Just as these outsiders help preserve and grow family
interests, they also help safeguard the family’s values of
trust, integrity, and transparency. Vellayan calls them
“external conscience-keepers.” Those values are transmitted
through a Family Board, headed by the karta – an
elder who guides the family and who communicates the
family’s views through the family member who heads the
business. Traditionally, the family elder served both as
karta and leader of the business, but in recent years, in
another careful act of balancing, the roles have been split.
The family is also developing a Family Constitution
to define the family’s roles, responsibilities, and relationships.
Because written family constitutions are rare
among family-controlled businesses in India, the family
has looked far afield for useful examples, at one point
even spending a week in Lausanne, Switzerland, exchanging
ideas with other families who own businesses.
Says Vellayan, “Twenty-five families came from different
parts of the world; we spoke different languages,
grew up in different cultures, traditions, and beliefs; but
when it came to owning a family business we all faced
the same problems and challenges.”
While the family has found outside models of family
constitutions helpful, they are painstakingly developing
a framework that they can be sure is right for them. “Our
approach is to develop guiding principles, not highly restrictive
rules, because as the family and the business
grow you have to have the flexibility to adapt to changing
circumstances,” says Vellayan. “We also want to
involve all of the generations in the process, to seek their
input, since it is a document that will materially affect
their futures. We want them to feel a genuine sense of
commitment and to derive inspiration from it, because
86
The Focus Vol. XV/1

Expertise Best Practice
ultimately no framework will succeed, no matter how
carefully designed in the abstract, unless everyone is
willing to live its spirit.”
Grooming entrepreneurs, not managers
The twice-yearly meetings of the independent directors
with the family include searching conversations with the
younger members in the business. In private sessions
with the directors, they discuss their passions, their ambitions,
and their career paths – exploring and expressing
the depth of their connection to the business, not
simply assuming it.
Careful grooming of young family members for the
business began during the tenure of one of Dewan Bahadur’s
three sons, A M M Murugappa, who held the dual
role of karta and head of the business from 1949 to
1965. He prepared the males of the third generation for
their future in the business by guiding their educations
and having them spend time in England learning from
joint-venture partners. The third generation provided
similar guidance for Vellayan’s generation, making sure
they had a broader education in the best national and
international institutions and became fluent in all the
languages – Tamil (their mother tongue), Hindi, English
– necessary for operating a genuinely national business
in India. Like Vellayan’s generation, male family members
today are encouraged to work outside the Group
during the first several years of their business careers so
that they can learn and grow as ordinary employees.
Induction of a family member into the business includes
careful mentoring by a trusted professional –
“somebody who can make a difference,” says Vellayan.
Along with a development and career plan, new entrants
must also have reasonable expectations about how rapidly
they can advance. Typically, if a family member
enters the business at the age of 25, based on competence
and capability he should aim to achieve the level
of being an MD or CEO in his early 40s.
Asked if these family members are thrust into roles
carefully chosen to make them better managers, Vellayan
offers a surprising answer: “We don’t want to make
them managers; we want to make them entrepreneurs
who can recognize and seize business opportunities, find
new ways to create value, and grow the Group.”
Just as new blood entering the business helps renew
it, so does mandatory retirement at age 65, which prevents,
in Vellayan’s words, “an unduly long perpetuation
of a single style of running the business.” If the retiree is
chairman and no successor from the family is ready, then
the Group is willing to appoint a non-family professional
to serve as chairman, as happened in 2001.
Following the traditions of the clan from which the
family comes and Hindu custom, the opportunities to
work in the family business are passed only to the males.
Daughters and wives provide leadership and guidance
for the family’s AMM Foundation and its charitable institutions.
Over the past 80 years, the Foundation has
built and maintains four high schools comprising 8000
students, a polytechnic institute of 1000 students, four
no-fee hospitals, and a rural research center that focuses
on the development of protein-efficient algae, natural
dyes, organic farming, and technologies for the rural and
urban poor. These efforts often get an additional boost in
leadership from the men who join in the family’s philanthropic
work when they retire.
Family bonds among all members and generations
are regularly renewed at family gatherings – joint
vacations, retreats at one of family’s plantations, and
weddings and other celebrations that take place in the
family’s ancestral village.
“We recently had two weddings in our village within
a month of each other,” says Vellayan, beaming – one
of the grooms was his son. “Everyone in the family,
even distant relatives living outside the country, come
from everywhere and it’s an extraordinary bonding
experience.”
Like that 1989 birthday party for Vellayan’s father,
they are the kinds of celebrations that produce more
family photographs, depicting more family members,
more generations and – in a way that is worth a thousand
words – the spirit that holds them all together.
The interview with A Vellayan in Chennai was
conducted by Neeraj Sagar, Egon Zehnder
International, Bangalore, and Rajeev Vasudeva
(right), Egon Zehnder International, New Delhi.
87
The Focus Vol. XV/1

Case Studies
On the verge of globalization
Family businesses in emerging and fringe
economies face special challenges in finding
the right successor.
Marcelo Grimoldi
Egon Zehnder International, Buenos
Aires, marcelo.grimoldi@ezi.net
Paulo Simoes
Egon Zehnder International, Lisbon
paulo.simoes@ezi.net
Johannes B. WardHana
Egon Zehnder International, Jakarta
johannes.wardhana@ezi.net
Away from the meta-national decision centers,
family businesses in emerging and fringe economies
need to continuously adapt their business models
to the growing presence of globalization. Sometimes,
this can mean they have less time or lack the necessary
focus to optimize vital internal processes, such
as top-level succession planning. In what follows,
Egon Zehnder International consultants working on
three different continents – in Argentina, Indonesia and
Portugal – argue that in these special circumstances
there are several aspects that must be observed if
succession planning is to match up to best practices
and meet with success.
We search in vain for a strictly scientific and unequivocal
definition of “emerging economies”. S&P, for
instance, assigned a total of 19 countries to this category
at the end of last year, while Dow Jones counted no less
than 35, including Argentina and Indonesia. But even in
the absence of precise definitions, experts are agreed
that these economies all display strong growth and rapid
industrialization. In these parts of the world the business
environment often changes much faster than in mature
economies.
Partly as a result, emerging markets are assumed to
provide greater potential for profit, but they also harbor
substantial risk factors. And in another crucial distinction,
the corporate landscape is far more clearly dominated
by family firms – the archetypal form of private
enterprise – than in developed economies with their
established industrial traditions.
Adding to the catalog of differences between emerging
or fringe and developed nations, the distinction
between urban centers and rural areas is far more pronounced
in most emerging countries. Their rapid
economic progress is often focused on a single center or
a small number of cities. This, of course, has knock-on
effects in terms of infrastructure, educational opportunities
and general standards of living, as reflected in the
availability of goods and services and leisure facilities.
As we will show, all of these factors exert a direct or
indirect influence on succession processes at familyowned
companies in the different countries.
88
The Focus Vol. XV/1

Expertise Case Studies
A company without a well-designed succession process
is invariably a brittle system. Just how brittle is
shown by the high proportion of family firms that fail to
master the shift from one generation to the next and go
under, no matter where in the world they may be.
What holds true for succession planning – or the lack
of it – in the world’s richer, more industrialized countries
is even more in evidence in emerging or fringe markets
where family businesses have traditionally been a
key driving force in economic growth. Thus, the general
reluctance of many family-controlled businesses to face
the succession issue early enough can cause acute problems
in countries on the verge of globalization. Family
businesses in emerging or fringe markets need to adapt
their business models continuously to the challenges of
rapid change. As a result, they often completely forget
about succession planning – a topic that leads a neglected
existence at the best of times – until it is too late.
No one-size-fits-all solution
From our experience and the collaborative model we
have developed, Egon Zehnder International has been
able to capture and present a set of best practices that
work across continents and cultures. Best practices,
however, do not translate into a formulaic one-size-fitsall
approach. In many respects, the challenges facing
family firms derive from the unique dynamics of the
families and organizations themselves. As a result, best
practices translate, rather, into a series of codified and
documented processes that can guide family businesses
through succession planning. At the same time, however,
these processes need adapting to the specific requirements
and conditions that apply in smaller but often
high-growth economies.
To illustrate how this works, we want to look at two
family businesses from different countries – Argentina,
an emerging economy, and Portugal, an EU fringe economy.
While Portugal is set apart through its membership
of the EU, it nevertheless displays structural similarities
to the Argentine market. In their respective countries
these two family firms (jeans manufacturer IVN in Portugal
and milk producer Williner in Argentina – see insets)
are either market leaders or rank among the top
players. As globalization progresses, however, they are
also finding themselves exposed to increasingly international
competition – a development that will also have a
major impact on their succession planning and that must
be taken into account in the relevant processes. In fact,
succession is a process that should begin years before
the actual event.
Effective succession planning requires balancing the
need to deliver short-term results with the need to invest
in the longer-term development of talent. When succession
planning fails, it is often because it ends up being
merely a mechanical process of updating a list of high
potentials matched with slots they might fill. Best practice
dictates that, in order to obtain a significant talent
pool to serve present and future needs of the organization,
succession planning and leadership development
must be treated as interrelated issues. Moreover, the
CEO needs to be involved personally and hold senior
managers accountable for developing talent and constantly
strengthening succession alternatives.
Effective implementation of succession planning depends
on the organization adopting a talent mindset in
which there is time for and investment in in-depth talent
assessment, including external benchmarking. Highpotential
candidates can figure in several succession
plans, even in different departments or business units.
Refining and adjusting the solution to cope with the
organization’s business context and culture – that is, a
commitment to continuous improvement – produces
better results all around.
In family businesses, succession is a two-stage process
involving the transfer of both management and ownership,
which might occur at different times. At the
highest level several options in terms of succession exist:
appoint a family member, appoint a professional
non-family manager, or exit the business.
Planning early, implementing over time
For many entrepreneurs and family business founders,
giving up direct operational control at first appears unthinkable.
In fact, though, the only unthinkable and unacceptable
option is “do nothing.” The two companies
we advised already had experiences with non-family top
managers (IVN) or were looking for one (Williner).
Planning early and implementing over time can help
overcome the natural reluctance to connect with the succession
issue at all and with the idea of a non-family
CEO in particular. It helps ensure a smooth transition, be
it to a family member or a professional manager. The
focus should be on “who,” not “how.” A written succession
plan enjoys a better chance of success if it incorporates
both practical and psychological aspects into the
search process. These would include timing, how the
89
The Focus Vol. XV/1

Expertise Case Studies
Case Study
Sucesores de Alfredo Williner S.A., Argentina
Williner is one of the largest milk producers in Argentina,
with USD 250 million in revenues [2010], 1,500
employees, and five manufacturing plants. Its main
multinational competitors include Danone (France)
and Saputo (Canada). The Williner board is composed
of the third and fourth generation
family owners. When the shareholders
of the Williner Company
agreed to look for a non-family CEO for the first time
in their history, they faced the problem of attracting a
top-talent candidate to a small city (96,000 inhabitants)
some 500 kilometers from the economic, political,
and cultural center of the country, Buenos Aires.
The company had limited experience in external
recruiting; the most recent outside hire was the HR
manager from a competing dairy firm in the region.
Case study
Irmãos Vila Nova, Portugal
One of the largest clothing companies in Portugal,
Irmãos Vila Nova (IVN) is the producer and retailer of
the Salsa Jeans brand. The company has a presence
in 35 markets through mono-brand stores, department
stores, and carefully selected multi-brand stores.
IVN reported sales of approximately
EUR 130 million in 2010 and employs
over 1,000 people. It competes
against multinationals such as Levis. The company is
still owned and controlled by one of its founders,
Filipe Vila Nova. IVN is based in Famalicão/Trofa, an
area 300 kilometers from Lisbon, making it harder to
attract top-notch candidates. In 2009, the owner
agreed to look for a non-family CEO – the first in the
company’s history – when his brothers decided to
sell him their shares and leave the company. A CEO
was chosen – a direct pick which proved to be a
mistake. Though he brought international expertise to
the role, his cultural sensitivity was too limited to integrate
well into the family business.
decision is taken and confirmed, the communication
process, and the skills, experience, and leadership competencies
required by the next leader. If the transition is
to occur within the family, the successor should submit
him/herself to a transparent career development plan, as
well as, over time, developing his/her own vision for the
future of the family business.
Different stakeholders should be involved – selected
family members, non-executive directors, and trusted
employees – as well as outside help to bring added expertise
and objectivity to the table. Benchmarking
against business processes and performance metrics,
against industry bests and/or best practices from other
industries can also add a measure of objectivity to the
search process.
Three special challenges that family businesses in
emerging and fringe economies face in succession planning
should be handled with extra care:
Limited talent pool
First among these is that the pool of qualified candidates
available to the succession planning process will likely
be limited. The job market may not be fully “liquid.”
Also, companies that are not based directly in the commercial
hot spots in emerging or fringe markets, normally
in the region of the capital city, will often have
difficulties recruiting the best outside talents. This was a
problem encountered by IVN in Portugal and Williner in
Argentina. In response, the succession planning strategy
must be more flexible, more open to the necessity of
trade-offs, and also more aware of the need to tie the
process to effective internal talent development.
At Williner in Argentina, for example, our initial
proposition was to evaluate the possibilities of promoting
from within, while simultaneously strengthening the
company’s talent development process and thereby minimizing
the need to search for talent externally. If mining
internal talent did not produce a suitable candidate,
at the very least the effort would reveal unique cultural
and personal traits in the talent pool that would help
maximize the chance of recruiting the right external
candidate.
In this particular case, following an appraisal, Egon
Zehnder International recommended that the Commercial
Manager be promoted to General Manager, despite
the fact that he did not speak fluent English, and needed
some support in the financial area.
Systems under construction
Until recently, most HR systems were purely operational.
The transition of HR to a business partner role in
family businesses is generally taking longer. In our two
90
The Focus Vol. XV/1

Expertise Case Studies
business case studies, the area of talent management
is still under construction and not very robust, which
hampered the succession process – especially when the
search turned to the internal talent pool.
But with the business environment also changing rapidly
as we said at the outset, the essential thing is to keep
the new succession planning methodology simple and
realistic – based on the company’s strategy and a robust
competency model. There is also a need for coaching the
business leaders – not only in identifying successors, but
more generally to get involved in people development.
Cultural issues
The impact of cultural issues in family businesses is invariably
strong and nowhere more so than when it comes
to succession planning. However, in younger or more
peripheral economies, until recently less exposed to international
best practices, the cultural angle becomes
more acute. Family firms in countries with a traditional
patriarchal culture in particular will often be highly
geared to the man at the top, in many cases the company
founder. In place of established processes and systems
to support talent management, here it is often a case of
gut feeling and personal preferences on the part of the
boss – something we at Egon Zehnder International have
encountered in several emerging economies including
Indonesia. Also, many of the senior managers often have
spent most of their careers in one company and are accustomed
to a particular environment and way of doing
things. This form of specialization can be efficient, but
makes it difficult to build scale and scope. This brings an
extra degree of complexity to succession planning.
Another aspect here is that when external successors
are appointed there is an urgent need to ensure their cultural
fit. The owners of jeans manufacturer IVN in Portugal
encountered this problem when they engaged in
their own search for a non-family CEO.
Following this unsatisfactory experience, Egon Zehnder
International performed a CEO search for IVN. We
started the process with a series of meetings to discuss
the optimal profile for the new CEO, agreed on the inevitable
trade-offs, and established the need to optimize
the organizational structure to help integrate the new executive
– who would initially sign on as COO.
We were involved initially in organizing workshops
on people development, establishing a competency
model, and optimizing the succession planning architecture.
The CEO search was thorough, and along with
competencies and critical experiences also focused on
personal characteristics of the candidates.
Thus, when developing succession planning activities
in family businesses, special care should be taken
regarding cultural or political issues. Getting to know
the owner and his or her passions, values, and concerns is
critical in mobilizing the organization. Being assertive,
when required, is part of the advisory role.
Integrating external candidates into family businesses
with a strong culture – which is typical of younger
economies – is not an easy job. Finding the right candidate
is only the start. Both the family and the company
then need to devote time and energy to achieving successful
integration.
For family businesses in emerging and fringe economies,
succession planning follows its own rules. It can be more
difficult and complex than for their counterparts in mature
and major economies. But learning from proven best
practices and adapting them to the specific conditions of
each family and the economic environment of the company
will greatly increase the chances of success.
The authors
Marcelo grimoldi is based in Buenos
Aires and leads the Leadership Strategy Services
Practice for Latin America, having conducted
several hundred Management Appraisals throughout
the region. He is a member of the Technology
and Industrial Practices and has a strong track
record in searching for and developing key talent
for family-owned companies.
Paulo Simoes is based in Lisbon, Portugal
and is a member of the Leadership Strategy
Services Practice. He has been serving local and
multinational clients in Portugal in a variety of
assignments and sectors.
johannes B. Wardhana is Office Leader at
Egon Zehnder International, Jakarta. He joined the
firm in 1995 and besides his focus on Executive
Search assignments he has conducted several
hundred Management Appraisals.
91
The Focus Vol. XV/1

Forum Zehnder
Egon
International
“Holland, wake up!”: Author Yesim Candan
with the Dutch coach of the Turkish national
soccer team Guus Hiddink.
Inspirational speech: The Turkish writer Elif
Safak was keynote speaker at Egon Zehnder
International’s Firm Conference in Istanbul.
EVENTS
Sustainability dinner New York
The Sustainability Dinner hosted by Egon Zehnder
International in New York in the spring of this year
brought together sustainability leaders, chief executives,
investors, and policy experts. One interesting
aspect to emerge was that quick wins are essential to
imbue sustainability initiatives with momentum, but
the corresponding focus on low-hanging fruit must
be augmented by a credible long-term strategy
matched by employee engagement.
Women leaders in Asia
Four distinguished panelists and over 50 CEOs, HR
directors and other senior executives from across the
Asia Pacific region attended a debate staged by Egon
Zehnder International in Hong Kong. The topic was
the development of women leaders in Asia, and how
women’s presence in leadership positions in Asian
companies can be strengthened. Those present agreed
that the business case for diversity is today virtually a
given. China fares better than some Asian countries in
this respect, and China’s rapid growth is good for
women leaders. But the challenge remains, and flexibility
is key to getting the most from women leaders.
Book presentation
Egon Zehnder International’s Amsterdam office hosted
a presentation of Yesim Candan’s book “Nederland,
word wakker!” (“Holland, wake up!”). Mrs.
Candan, born and raised in Rotterdam, comes from a
background of Turkish immigrants and graduated
from the renowned Nyenrode Business University.
Her book offers a critical and humorous look at integration
in the Netherlands. Guus Hiddink, the Dutch
coach of the Turkish national soccer team, was guest
of honor at a reception for a small, select group of
guests from a range of cultural backgrounds.
Ladies’ Night in Amsterdam
This year, the four female consultants at Egon Zehnder
International Amsterdam joined with the female principals
of McKinsey & Company’s Amsterdam office
to host the third annual “Ladies’ Night” at the historical
Concertgebouw. The evening aims to bring together
female executives from different industries and
with different levels of experience, to connect with
role models, and to discuss topics of general interest.
Peter ter Kulve, CEO of Unilever Benelux, gave a
presentation on “Sustainability”. Dinner in the choir
room at the Concertgebouw was followed by a classical
concert.
Firm Conference in Istanbul
Elif Safak, the most widely-read female writer in
Turkey, was the keynote speaker at Egon Zehnder
International’s Firm Conference 2011 in Istanbul. In
her inspirational speech, she talked about how her
personal experience had shaped her way of thinking
and what mattered for her in life. She left the
audience with a lot of valuable thoughts.
92
The Focus Vol. XV/1

Addresses
Amsterdam
Egon Zehnder International B.V.
‘Atrium’ 5th Floor
Strawinskylaan 3091, P.O.Box 75534
1070 AM Amsterdam
The Netherlands
Tel. +31 20 301 11 11
Fax +31 20 661 01 41
eziamsterdam@ezi.net
Athens
Egon Zehnder International S.A.
2 Paradissou Str.
151 25 Maroussi
Athens
Greece
Tel. +302 10 683 33 33
Fax +302 10 683 40 14
eziathens@ezi.net
Atlanta
Egon Zehnder International Inc.
3475 Piedmont Road NE, Suite 430
Atlanta GA 30305
USA
Tel. +1 404 836 28 00
Fax +1 404 876 45 78
eziatlanta@ezi.net
BANGALORE
Egon Zehnder International
RMZ Millenia, Tower B, Level 10
No. 1 & 2 Murphy Road, Ulsoor
560 008 Bangalore
India
Tel. +91 80 4334 9000
Fax +91 80 4091 6986
ezibangalore@ezi.net
BArcelona
Egon Zehnder International S.L.
Via Augusta 200 1°
08021 Barcelona
Spain
Tel. +34 93 240 51 35
Fax +34 93 201 93 16
ezibarcelona@ezi.net
Beijing
Egon Zehnder International
Oriental Plaza, Tower C2
7/F, Units 704-706, No. 1 East Chang
An Avenue, Dong Cheng District
Beijing 100738
China
Tel. +86 10 58127300
Fax +86 10 58116015
ezibeijing@ezi.net
Berlin
Egon Zehnder International GmbH
Beisheim Center, Berliner Freiheit 2
10785 Berlin
Germany
Tel. +49 30 32 79 55 0
Fax +49 30 32 79 55 60
eziberlin@ezi.net
Bogotá
Egon Zehnder International
Oficina 803-Torre A
Carrera 7 No. 71–52
Bogotá
Colombia
Tel. +57 1 312 04 16
Fax +57 1 312 04 24
ezibogota@ezi.net
Boston
Egon Zehnder International Inc.
45 Milk Street
4th Floor
Boston MA 02109
USA
Tel. +1617 535 35 00
Fax +1617 457 49 49
eziboston@ezi.net
Brussels
S.A. Egon Zehnder Associates
(International) N.V.
Avenue Franklin Roosevelt 14
1050 Brussels
Belgium
Tel. +32 2 648 00 83
Fax +32 2 640 61 10
ezibrussels@ezi.net
Budapest
Egon Zehnder International Kft.
Honvéd utca 20/A.
1055 Budapest
Hungary
Tel. +36 1 474 97 40
Fax +36 1 474 97 34
ezibudapest@ezi.net
Buenos Aires
Egon Zehnder International S.A.
Av. del Libertador 602 piso 9
C1001ABT Buenos Aires
Argentina
Tel. +54 11 4814 50 90
Fax +54 11 4814 50 92
ezibuenosaires@ezi.net
CALGARY
Egon Zehnder International Inc.
Suncor Energy Centre
Suite 3320, West Tower
150 - 6th Avenue S.W.
T2P 3Y7, Calgary, Alberta
Canada
Tel. +1 403 718 37 00
Fax +1 403 718 37 37
ezicalgary@ezi.net
Chicago
Egon Zehnder International Inc.
One North Wacker Drive,
Suite 2300
Chicago IL 60606-2824
USA
Tel. +1 312 260 88 00
Fax +1 312 782 28 46
ezichicago@ezi.net
Copenhagen
Egon Zehnder International S.A.
Frederiksgade 21
1265 Copenhagen K
Denmark
Tel. +45 33 11 13 53
Fax +45 33 32 23 10
ezicopenhagen@ezi.net
Dallas
Egon Zehnder International Inc.
2018 One Galleria Tower
13355 Noel Road
Dallas, Texas 75240
USA
Tel. +1 972 728 59 10
Fax +1 972 728 59 15
ezidallas@ezi.net
Dubai
Egon Zehnder International
1601, Al Moosa Tower 1
Sheikh Zayed Road
P.O. Box 71902
Dubai
United Arab Emirates
Tel. +971 4 381 0200
Fax +971 4 329 14 60
ezidubai@ezi.net
Düsseldorf
Egon Zehnder International GmbH
Königsallee 55
40212 Düsseldorf
Germany
Tel. +49 211 13 999 0
Fax +49 211 13 999 31
ezidusseldorf@ezi.net
Frankfurt
Egon Zehnder International GmbH
Arndtstrasse 15
60325 Frankfurt
Germany
Tel. +49 69 633 96 0
Fax +49 69 633 96 100
ezifrankfurt@ezi.net
Geneva
Egon Zehnder International (Suisse)
SA
10 Cours de Rive
1204 Geneva
Switzerland
Tel. +41 22 849 68 68
Fax +41 22 849 68 78
ezigeneva@ezi.net
Hamburg
Egon Zehnder International GmbH
Warburgstrasse 5
20354 Hamburg
Germany
Tel. +49 40 32 32 40 0
Fax +49 40 32 32 40 70
ezihamburg@ezi.net
Helsinki
Egon Zehnder International Oy
Erottajankatu 19B, 5th Floor
00130 Helsinki
Finland
Tel. +358 9 684 00 30
Fax +358 9 684 00 333
ezihelsinki@ezi.net
Hong Kong
Egon Zehnder International Ltd
Level 8 One Pacific Place
88 Queensway
Hong Kong
Tel. +852 2525 63 40
Fax +852 2845 34 92
ezihongkong@ezi.net
Houston
Egon Zehnder International
700 Louisiana Street
Suite 2750
Houston, Texas 77002
USA
Tel. +1 713 331 6700
Fax +1 713 222 0960
ezihouston@ezi.net
Istanbul
Egon Zehnder International
Suleyman Seba Cad. No: 92
BJK Plaza A Blok Kat: 12 D: 127
Besiktas
34357 Istanbul
Turkey
Tel. +90 212 236 7393
Fax +90 212 236 7399
eziistanbul@ezi.net
Jakarta
PT Egon Zehnder International
One Pacific Place, 10th Floor,
Suite 1001-1002
Sudirman Central Business District
(SCBD)
Jl. Jenderal Sudirman Kav 52-53,
Lot 3&5
Jakarta 12190
Indonesia
Tel. +62 21 2935 5600
Fax +62 21 57 97 34 67
ezijakarta@ezi.net
Jeddah
Egon Zehnder International
P.O. Box 126226
Jeddah 21372
Saudi Arabia
Tel. +971 4 381 0200
Fax +971 4 329 1460
ezijeddah@ezi.net
Kuala Lumpur
Egon Zehnder International (M)
Sdn Bhd (338139-P)
Lot E, Level 7, Tower 2
Etiqa Twins
11 Jalan Pinang
Kuala Lumpur 50450
Malaysia
Tel. +60 3 2168 3333
Fax +60 3 2164 8295
ezikualalumpur@ezi.net
Lisbon
Egon Zehnder International
Consultores Lda.
Av. Sidónio Pais, 8-5°
1050-214 Lisbon
Portugal
Tel. +351 21 351 06 60
Fax +351 21 351 06 79
ezilisbon@ezi.net
London
Egon Zehnder International
Devonshire House
Mayfair Place
London W1J 8AJ
United Kingdom
Tel. +44 20 7493 3882
Fax +44 20 7629 9552
ezilondon@ezi.net
Los Angeles
Egon Zehnder International Inc.
350 South Grand Avenue
Suite 3580
California Plaza II
Los Angeles CA 90071
USA
Tel. +1 213 337 15 00
Fax +1 213 621 89 01
ezilosangeles@ezi.net
93
The Focus Vol. XV/1

Addresses
Luxembourg
Egon Zehnder Luxembourg S.A.
13 Rue Beaumont
1219 Luxembourg
Luxembourg
Tel. +3226480083
Fax +3226406110
Lyon
Egon Zehnder International S.A.S.
32 Rue de la République
69002 Lyon
France
Tel. +33 4 72 41 18 50
Fax +33 4 72 41 18 59
ezilyon@ezi.net
Madrid
Egon Zehnder International S.L.
Antonio Maura 8–2°
28014 Madrid
Spain
Tel. +34 91 521 41 15
Fax +34 91 521 21 63
ezimadrid@ezi.net
Melbourne
Egon Zehnder International Pty Ltd.
Level 27, 333 Collins Street
Melbourne Victoria 3000
Australia
Tel. +61 3 9678 96 00
Fax +61 3 9629 60 40
ezimelbourne@ezi.net
Mexico
Egon Zehnder Internacional
de Mexico S.A. de C.V.
Edificio Torre Optima I
Paseo de las Palmas #405
Despacho 703
Col. Lomas de Chapultepec 11000
Mexico
Tel. +52 55 40 76 35
Fax +52 55 20 91 08
ezimexico@ezi.net
Miami
Egon Zehnder International Inc.
Suite 1130
121 Alhambra Plaza
Coral Gables
Miami, FL 33134
USA
Tel. +1 305 569 10 00
Fax +1 305 446 11 36
ezimiami@ezi.net
Milan
Egon Zehnder International S.p.A.
Via Santa Margherita, 7
20121 Milan
Italy
Tel. +39 02 86 96 21
Fax +39 02 86 96 24 01
ezimilan@ezi.net
Montreal
Egon Zehnder International Inc.
1 Place Ville Marie
Suite 3310
33rd Floor
Montreal Quebec H3B 3N2
Canada
Tel. +1 514 876 42 49
Fax +1 514 866 08 53
ezimontreal@ezi.net
Moscow
Egon Zehnder International
Khlebny per 19A
Floor 10
121019 Moscow
Russia
Tel. +7 495 916 54 38
Fax +7 495 916 54 37
ezimoscow@ezi.net
Mumbai
Egon Zehnder International Pvt. Ltd
908 Dalamal House
Nariman Point
Mumbai 400 021
India
Tel. +91 22 40767000
Fax +91 22 40767031
ezimumbai@ezi.net
Munich
Egon Zehnder International GmbH
Promenadeplatz 12
80333 Munich
Germany
Tel. +49 89 29 00 69 0
Fax +49 89 29 00 69 92
ezimunich@ezi.net
New Delhi
Egon Zehnder International Pvt. Ltd
Tower A, 11th Floor
DLF Building No. 9
DLF Cyber City
Gurgaon 122 022
India
Tel. +91 124 46 38 000
Fax +91 124 46 38 029
ezinewdelhi@ezi.net
New York
Egon Zehnder International Inc.
350 Park Avenue
8th Floor
New York NY 10022
USA
Tel. +1 212 519 60 00
Fax +1 212 519 60 60
ezinewyork@ezi.net
Palo Alto
Egon Zehnder International Inc.
1290 Page Mill Road
Palo Alto CA 94304-1122
USA
Tel. +1 650 847 30 00
Fax +1 650 847 30 50
ezipaloalto@ezi.net
Paris
Egon Zehnder International S.A.S.
54 Avenue Marceau
75008 Paris
France
Tel. +33 1 44 31 81 00
Fax +33 1 47 20 39 82
eziparis@ezi.net
Prague
Egon Zehnder International s.r.o.
Palladium
Na Porici 3a
110 00 Prague 1
Czech Republic
Tel. +420 2 21 11 17 34
Fax +420 2 24 23 40 30
eziprague@ezi.net
Rio de janeiro
Egon Zehnder International Ltda.
Avenida Rio Branco
89–4° andar,
20040 – 004 Rio de Janeiro · RJ
Brazil
Tel. +5521 22 11 22 50
Fax +5521 22 11 22 55
eziriodejaneiro@ezi.net
Rome
Egon Zehnder International S.p.A.
Via Clitunno 40
00198 Rome
Italy
Tel. +39 06 853 737 1
Fax +39 06 853 737 02
ezirome@ezi.net
San Francisco
Egon Zehnder International Inc.
Suite 2400
50 Fremont Street
San Francisco CA 94105
USA
Tel. +1 415 963 85 00
Fax +1 415 284 93 70
ezisanfrancisco@ezi.net
Santiago
Egon Zehnder International Chile S.A.
Apoquindo 3600 piso 13
Región Metropolitana
Santiago
Chile
Tel. +56 2 924 77 00
Fax +56 2 335 99 77
ezisantiago@ezi.net
São Paulo
Egon Zehnder International Ltda.
Rua Hungria,
1240-8th Floor-Jardim Europa
01455-000 São Paulo SP
Brazil
Tel. +55 11 3039 07 00
Fax +55 11 3039 07 25
ezisaopaulo@ezi.net
SEOUL
Egon Zehnder International
20F Seoul Finance Center
84 Tae-Pyungro 1-ga, Jung-gu
Seoul 100-101
Korea
Tel. +82 2 3706 8100
Fax +82 2 775 4850
eziseoul@ezi.net
Shanghai
Egon Zehnder International (Shanghai)
Company Limited
No. 8, Gao An Road
Shanghai 200030
China
Tel. +86 21 2401 8200
Fax +86 21 6445 3330
ezishanghai@ezi.net
Singapore
Egon Zehnder International Pte Ltd
6 Battery Road #27-01
Singapore 049909
Singapore
Tel. +65 6225 0355
Fax +65 6225 0352
ezisingapore@ezi.net
stuttgart
Egon Zehnder International GmbH
Mörikestrasse 3
70178 Stuttgart
Germany
Tel. +49 711 273 006 0
Fax +49 711 273 006 99
ezistuttgart@ezi.net
Sydney
Egon Zehnder International Pty Ltd.
Level 49 Governor Phillip Tower
1 Farrer Place
Sydney N.S.W. 2000
Australia
Tel. +61 2 9240 45 00
Fax +61 2 9251 28 06
ezisydney@ezi.net
Tel Aviv
Egon Zehnder International Ltd
9 Nehardea St.
Tel Aviv 64235
Israel
Tel. +972 52 601 8201
Fax +972 35 227 789
ezitelaviv@ezi.net
Tokyo
Egon Zehnder International Co., Ltd
Marunouchi Mitsui Building 3F
2-2-2 Marunouchi Chiyoda-ku
Tokyo 100-0005
Japan
Tel. +81 3 5219 04 50
Fax +81 3 5219 04 51
ezitokyo@ezi.net
Toronto
Egon Zehnder International Inc.
Brookfield Place, 181 Bay Street
Suite 3920
P.O. Box 810
Toronto, Ontario M5J 2T3
Canada
Tel. +1 416 364 02 22
Fax +1 416 364 09 55
ezitoronto@ezi.net
Vienna
Egon Zehnder International Ges.m.b.H.
Bauernmarkt 2
1010 Vienna
Austria
Tel. +43 1 531 72 0
Fax +43 1 531 72 40
ezivienna@ezi.net
Warsaw
Egon Zehnder International Sp.z o.o.
ul. Ksiazeca 4
00-498 Warsaw
Poland
Tel. +48 22 537 74 10
Fax +48 22 537 77 87
eziwarsaw@ezi.net
Zurich
Egon Zehnder International
(Switzerland) Ltd
Toblerstrasse 80
8044 Zurich
Switzerland
Tel. +41 44 267 69 69
Fax +41 44 267 69 67
ezizurich@ezi.net
94
The Focus Vol. XV/1

THE FOCUS Volume XV/1