At least in my mind, family run business bring the image of dirty money, inefficient staff and low level of satisfaction. I like investor run companies like GE and IBM where people rise to the top by the virtue of their merit. But then, I ask, some of the family run businesses are so succeful - TATA, Mittal, Reliance, some european one and Corning in USA. Is there some fundamental aspect of the family run business that is an advantage.
My thoughts were swayed by a book and an article I read recently. Book - bell curve - notes finding of the studies that later generations of rich families gradually acquire low IQ, leading to demise of family fortune. In case, rich families have a way to infuse high IQ meritocratic people in the gene pool, they survive and flourish. Example given in UK's royal family that has a tradition of marrying into meritorious (read high IQ) commoner.
Aricle - MIT Corning Incorporated: The Growth and Strategy Council - takes the case of Corning, a family run company that survived telecommunication bubble in year 2000. Corning is still innovating, maybe more rigorous, while other similar companies e. g. Kodak are gone into oblivion or changed business - IBM.
I agree with all the findings. In investor run organization, business is driven by only profit and self-interest . In the family run businesses, profit and self-interest are not the only driving forces. When the crisis hits, investor run businesses cam close their shop easily, since higher management is not so much emotionally invested in the business. Higher management or bosses of family run businesses are emotionally attached to their businesses, they or their forfathers help build. In Corning case, it was emotional for Houghton family to see their 150 year old business going down and thus, they made extra effort to save it. Kodak did not make same level of effort.
But in order to survive, a family run business must value merit and infuse merit in all levels. Corning's current CEO Wandell Weeks started out at Corning but left to pursue MBA at Harvard. When he was leaving, then company President James Houghton personally invited him to return to Corning to run the business. Wendall Weeks had central role in turning around fortunes of almost bankrupt Corning in 2000.
My thoughts were swayed by a book and an article I read recently. Book - bell curve - notes finding of the studies that later generations of rich families gradually acquire low IQ, leading to demise of family fortune. In case, rich families have a way to infuse high IQ meritocratic people in the gene pool, they survive and flourish. Example given in UK's royal family that has a tradition of marrying into meritorious (read high IQ) commoner.
Aricle - MIT Corning Incorporated: The Growth and Strategy Council - takes the case of Corning, a family run company that survived telecommunication bubble in year 2000. Corning is still innovating, maybe more rigorous, while other similar companies e. g. Kodak are gone into oblivion or changed business - IBM.
I agree with all the findings. In investor run organization, business is driven by only profit and self-interest . In the family run businesses, profit and self-interest are not the only driving forces. When the crisis hits, investor run businesses cam close their shop easily, since higher management is not so much emotionally invested in the business. Higher management or bosses of family run businesses are emotionally attached to their businesses, they or their forfathers help build. In Corning case, it was emotional for Houghton family to see their 150 year old business going down and thus, they made extra effort to save it. Kodak did not make same level of effort.
But in order to survive, a family run business must value merit and infuse merit in all levels. Corning's current CEO Wandell Weeks started out at Corning but left to pursue MBA at Harvard. When he was leaving, then company President James Houghton personally invited him to return to Corning to run the business. Wendall Weeks had central role in turning around fortunes of almost bankrupt Corning in 2000.
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