By Prof. Enrique Soriano
Is it really possible to create companies that will last more than a hundred years? I am always asked by clients and fellow researchers in many parts of the world and my usual response is this: If the Ayala (185 years) and the Aboitiz (132 years) families from the Philippines are able to last for more than a century and the Hoshi (1,300 years) and Kongo Gumi (1428 years) families from Japan can last more than a thousand years, I firmly believe there is hope for all family enterprises.
Longevity of a family firm is not dictated by a powerful business model nor a superior product. The sustaining power of the family business is something deep and it transcends blood relations, operating model or industry success. For century old firms, the quest to perpetuate the enterprise beyond the founder’s wildest dreams all boils down to the family’s DNA and its resilience and resolve to do whatever must be done to last for as long as it takes. Amidst the successful family firms that I have been sharing in my column for many years now, many family-owned and controlled businesses are on the brink of impending collapse not because of the current pandemic but because of the senseless conflict between and among family members that most often than not escalates to a simmering boil leading to power struggles and awkward succession battles. With the virulent nature of conflicted families happening everywhere, this question begs for an answer:
Why do some family businesses go on for centuries and why most fall on the wayside?
This coming Saturday, August 29, from 10 am to 1 pm, I will be sharing the stage online with a prominent Family Business expert and a 4th generation family business leader, Richard Eu, the great grandson of the founder of the global leader Eu Yan Sang (EYS) Group, a previously SGX (Singapore Stock Exchange) listed family enterprise involved in the manufacturing and retailing of Traditional Chinese Medicine (TCM).
The story of EYS dates back to 1873 when the founder Eu Kong left his hometown of Foshan in Guangdong, Southern China to seek his fortune in Malaya (present-day Malaysia). Determined to free tin mine coolies from the clutches of opium’s suffering by dispensing quality Chinese medicine and herbs, Eu Kong set up his first shop in 1879 in Gopeng, Northern Malaysia. This shop was named “ Yan Sang,” which literally means ‘caring for mankind’ in Chinese.
Throughout EYS’s existence, it had its own fair share of tumultuous family conflict and tragedy. One tragic event that almost imperiled the business was the murder of second generation successor Eu Tong Sen’s wife by his brothers, the sellout to an outside investor and the repurchase by the fourth generation members led by Richard, eventually giving back control of the business to the family. This storied rivalry involving money and power represents the complicated nature of family businesses and the even more complex and often unwieldy interplay of preserving family values, managing sibling rivalries, personality differences, and reviving a century-old business using modern management techniques.
Currently occupying the role of Chairman of the Board and mentor to next generation leaders, Richard will be personally sharing his struggles to reclaim the family business from outside investors, his triumph as the clan leader, his perseverance in uniting the 4th generation cousins as well as the family’s resiliency in overcoming obstacles throughout its more than 100 year old existence.
To quote Richard Eu when asked what his advice to leaders who want to grow their respective family businesses…
“Every generation, you’ve got to think what you want to do with the family business. Is your business the right business for the future? Is it more important to preserve the family or more important to preserve the business? That’s a discussion that you’ve got to have within the family, and there’s many different parts to this. The family must have ongoing conversations about its future. This isn’t just about the patriarch or the founder—it’s got to include everybody.”
This public webinar event entitled, “The Power of Succession Planning: Blueprinting a 100 year old Journey” will also highlight powerful ideas from other internationally renowned resource speakers where they will share their insights on the impact of governance on family businesses. I will end the event by providing advice to key family leaders in crafting a solid Succession Plan as a prelude to building 100-year old enterprises. Slots are limited and registration will close soon.
Please contact Jayson of W+B Advisory 09173247216/ inquiries@wbadvisoryasia.com
