25 February 2021
IFB (Institute for Family Business ) was founded in 2001 by a group of families coming together to help families, their businesses and communities to thrive and prosper for generations to come. Today, it’s the largest UK family business organisation and the UK Chapter or Family Business International (FBN).
How family entrepreneurs can position their businesses to respond to these enormous challenges?
The challenges we are facing don’t differentiate between businesses owned and run by families and corporate businesses with no family connections. We are all facing the same issues, we are all facing issues of a scale not seen in our lifetimes.
What is working, what will navigate us out of this storm, is innovation. But first we have to remember why we have our family businesses, why we choose to work together in this way.
Family businesses satisfy a need for generating shared success and secure futures for everyone. Through our businesses we support each other, we assess and evaluate challenges together.
The earliest businesses were family businesses: their mission was survival and, ultimately, prosperity for everyone. The word ‘company’ comes from the Latin com pani – which means ‘share bread’. The people we share bread with are our families. The word also describes a family group – a company of wolves for example. Family businesses are how we survived as individual families and as a race. Family businesses allowed people to exchange skills and further everyone’s chances of success. Above all, family businesses were, and still are, about resilience.
These special kinds of business have survival routes not generally open to other businesses. For example board directors can opt to forgo their own salaries to make sure their people are paid, offer the security people need, particularly now, and find other ways to reduce costs.
People are nervous about their futures and family businesses are able to offer support and reassurance. So family – in fact all – businesses have to clarify critical momentum. People have to understand the gravity and the urgency businesses are facing. Risks have to be taken during these times, but these times are when businesses are most risk-averse. Risks undertaken with full understanding and attention to detail are the only ones that can be considered because without that, any company stands a chance of collapse.
Tratos focused on cash-flow and clear parameters for the performance of the company. Clients have to have their continued trust rewarded and their expectations for reliable service met or, better still, exceeded.
It’s a unique place we’re in but communication and reassurance have never been more important for all stakeholders. That includes the smallest suppliers. We thought about them and revised their terms of payment to pay in advance, keeping our supply chain solid. We thought about our smaller clients and what part we could play in helping them.
In short we looked at
- why we were together as a family business
- the real urgency of the challenge and our response
- ensuring the whole team was on board
- together that is the only recipe to help others, survive and progress
- What impact are the challenges having and what have we learnt as businesses and families
What we do know is we haven’t seen the end of this. We can learn from the terrible pandemics in history. The Roman and Persian Empires fell not to conquering forces but to the ravages of The Black Death (the Plague). The disease left armies as well as civilian populations depleted and made space for invading forces to take advantage. It favored the early expansion phases of Islam, and, indirectly, the nomadic Arab tribes which hailed from desert or semi-desert territories.
The Spanish Flu hit in 1918, spreading rapidly worldwide. Today, in the 2020s we’re seeing the end of an era of globalization, of travel, of cultural norms and the arrival of new restrictions hitherto unseen.
History has never witnessed a reaction to a pandemic on this scale. Never in human history have people worldwide been locked down. And of course, that’s because it’s never been possible before. The technology simply hasn’t been there.
Not even during WWII has there been enforced reductions on freedom on this scale, a biological event that has had the capacity to trigger the shutdown of businesses worldwide.
In a world where we look to technology for ‘the cure’ there has been a corresponding loss of Christian and other religions’ values as well as traditional family values. People don’t accept death anymore as part of the cycle of life.
The Government has been clear about protecting the NHS – the truth is the NHS has to be there to protect the people – but its ability to do that has been reduced over different administrations as costs were cut as ‘bigger’ threats where perceived to have diminished. Once the biggest fear was radiation and plans for shielding NHS facilities were downgraded. Today the new, unforeseen and unprepared-for threat is Covid 19.
Our challenges aren’t finished. Society and business won’t be the same for a long time. We have spent a long time fighting for freedoms that Covid and Government efforts to curb it have reversed.
And of course there is ‘the business of Covid’ and by that I mean the vaccine war. China and Russia are the lead protagonists, battling for market share, influence and control.
Half of the UK population uses Chinese technology because it’s the cheapest. It’s big business in the hands of a foreign power. There are clear risks of collapse all around us, in domestic and international markets. As family businesses we have to lend our united support to safely regaining the freedoms that allow our businesses to trade profitably and contribute to the economy. We have to find a way forward that will allow us to get to where we need to go.
- And which innovative solutions there are?
Innovation exists only in capitalist societies. True innovation delivers something new in a new age –inside an environment that is already new.
Up to the 18th century and around the time of the opium war China was the number one for industry. Before the time of the first industrial revolution innovation was all coming from the East. The first cannon: gunpowder. It wasn’t long for gunpowder to move from fireworks to weapons.
After the opium war the first and second industrial revolutions in England changed the world, the axis swung to Europe and the West was back ‘at the centre’ of the world, controlling maritime routes and dominating international trade.
Then China opened its borders to trade and we exported our old manufacturing technologies to the East. More than a billion people operating unprofitable, dirty and polluting machines.
Innovation came from capitalist wealth. The West went from a 20% wealth 80% below the poverty line split to flipping people’s fortunes the opposite way. Capitalism shared created wealth, brought more jobs and offered support for those who needed it. Innovation was fired by free-thinkers, a pro-ideas culture and family businesses keen to take risks and explore new ideas.
Democracy and diversity are big innovation contributors, they always have been, but never more than in the last 100 years. There has been more of it in the last 100 years than in the previous 1,100 – and that’s thanks to democracy.
Innovation is what will save industry. But we can’t innovate unless we’re free to risk. Before, when you failed, you simply started again. Today a re-start is not a certainty.
Institute for Family Business website.
Other Maurizio Bragagni speeches