Unconventional Continuity in Family Business
15th April 2015
Creating 3 successful businesses out of 1 is not the type of family business continuity story that is often told, which suggests it is a bit unconventional. However, this is exactly what the Seddon family decided to do after being in business for over a century. Their story of successful continuity was told by the branch of the family who went on to create JSSH Limited, the parent company of Novus Property Solutions at a Roundtable Discussion in London hosted by the Institute for Family Business and Withers Consulting Group.
"The importance of our family's shared vision and values cannot be emphasised enough" explained the family. "Every strategic decision in the business is measured against this standard."
Participants acknowledged that sticking to a vision and values is often challenging for a family business; in fact coming up with a compelling statement of shared purpose in the first place is no mean task in itself. However, as became apparent to the audience the Seddon's commitment is based on the fascinating story of how Novus came into being.
The predecessor of JSSH was the Seddon Group, which was founded by brothers John and George Seddon in Bolton, England in 1897. In 1930 the business expanded into Stoke-on-Trent, which back then was a separate market and a fair distance to travel.
Under the leadership of the 3rd generation of 2 brothers, also called John and George, and their cousin Christopher, the Seddon Group became a sizeable construction and property services company. John was in charge of Stoke, Christopher ran Bolton and George managed a separate engineering division that also sold equipment to the construction industry.
It is interesting how often the form of governance just described is used by family businesses and how little it is recognised given its record of success. Families at the sibling stage of ownership and later often organise their business into silos. Sometimes, as in the Seddon case, this involves running businesses in separate geographical locations under overall family ownership. Other families adopt a functional division of labour with each relative in charge of part of the same business, such as sales, finance, manufacturing and so on.
Each of these governance set-ups works based on relatives being able to trust each other to do a good job and act in the best interests of the overall family business. It also resolves the stresses of relatives working too closely together by preserving an owner-manager type of control in a more complex, multi-generational family business.
As the transition to the 4th generation of Seddons approached, it seemed that this model of governance could continue given that by then at least one member of each branch had joined "their" part of the business. John Seddon, however, was not so sure - "I felt we could be sailing into some headwinds" -and as chairman of the overall Group he initiated the first round of succession planning in 1995.
The reasons why this did not achieve an outcome will be familiar to many families. The business was doing well and for the moment an "if it ain't broke why fix it" mentality overwhelmed any desire to spend time imagining a future that could be different from the present.
Also, as mentioned during the Roundtable discussion, the family demographic was an obstacle to planning. In 1995 the youngest of G4 were still working their way up through the business and, looking back, it was a bit early to determine the future feasibility of the "silo" governance model.
Being persistent people, however, the Seddon family returned to the succession drawing board in 2000, and again in 2005. By then a significant change had occurred. It had been decided to consolidate operations in Stoke and Bolton since they were no longer the separate geographical businesses as in days of yore; in fact they often competed for the same business, a situation that customers found odd.
Having decided that Stoke would focus on property services and Bolton on construction, staff and customers needed to adjust to a new way of working. This transition was challenging, but perhaps no more than a taster for the major transition of ownership and leadership from G3 to G4. By now this was a lot nearer and everyone agreed that a plan was needed.
So in 2011 the succession drawing board was hauled out again, this time with some help from of an independent family business consultant. The consultant met with each of the 3 family branches and with the non-family directors who helped run the overall Group business. A Blueprint for Future Governance resulting from their work found favour with some, but not with others.
It was agreed to appoint a working party to review the Blueprint. This involved one representative from each family branch and the non-family company secretary. They produced another version, and then another, but each time the Blueprint received a mixed response and not enough support to move forward. Since each branch had a minority stake no one was able to impose an outcome on the others and consensus was the only way forward. What was happening and more importantly what could happen next?
An important private meeting of G4 representatives in 2012 agreed that the discussions had brought their generation in each branch to the conclusion that the best outcome would be to continue having control of their own business. In other words, the way forward was not to continue being in business together.
With some trepidation G4 reported their discussions to each of the seniors. This was not a future that anyone had imagined at the outset of the transition journey given that it involved separating or partitioning a much-loved and respected family business into a separate business for each branch. Nonetheless it was agreed that if this was the best possible outcome that could be achieved in all the circumstances - which was an easier decision to make after having spent time examining the alternatives - then the best thing was to implement it.
…Which was easier said than done. The family had to agree how to create 3 separate businesses out of one. In these negotiations the mutual trust and respect among G3, developed over 50 years of being in business together, was the vital factor. They decided how to divide the business and also agreed with relative ease to lend working capital as available to others that needed it in order to smooth the transition. A truly collaborative process.
And what about the Seddon name? More than being a highly regarded and well-known corporate brand, it was the surname of each branch but it was clearly not feasible for each of them to continue trading under the family name.
As the name suggests, what became the Novus branch of the Seddon family agreed to re-brand their business - and to do so in just over 6 weeks. The logistics of this were mind numbing; for example over 350 vehicles needed fresh livery and customers needed to be reassured that Novus was still the Seddon family. The success of this exercise was recognised in business marketing awards for what became Novus.
Amidst the many challenges of establishing and launching Novus, John Seddon and his family were convinced that the success of their new family business depended more than anything else on the family having a clear answer to this question, "why do we want to be a family in business together?"
The vision and values or shared purpose that was agreed has formed the foundation for the governance of JSSH limited. It is understood by the owners and the board and the next generation, G5, are learning fast and enthusiastically about a business that one day they will own.
The Roundtable participants described their 2 hours with the Seddon family as informative, moving and inspiring.
JSSH, Novus and the other businesses that were created through partitioning the Seddon Group represent the continuity of a family business in new guises. Happily, this was a fact that was celebrated by all branches and generations of the family when they met to toast the success of their respective new, Seddon family businesses.
Thanks to John Seddon and his family, Helen Oakey, Stuart Seddon and Susan Nutall and to Neville Richardson the non-executive director of JSSH Limited for speaking at this Roundtable event.
Photos: (top) John Seddon and family, (bottom) The extended family