The Family Growth Advantage – Thriving Not Just Surviving
27th October 2020
In a recent Article in The Scotsman, Kirsty Ross who leads KPMG’s family business team in Scotland wrote a compelling piece about how family firms can help power post-Covid recovery. Kirsty wrote:
‘In a time of crisis, history matters. Generational experience has enabled some of the country’s best-known brands to survive conflict, economic collapse and civil strife. In one conversation with a respected Scottish business the current directors shared their own tale of speaking to grandparents about how they managed to keep the company afloat throughout World War Two'
History matters indeed.
Every year, as a judge in The Herald Scottish Family Business Awards, I see first-hand the impact of family businesses across the entire country and the contribution they make to the Scottish Economy. In addition to their substantial economic impact (the top 100 family firms alone employ more than 112,000 people, turn over some £20 billion and generate profits of over £1.3 billion annually), family businesses have strong loyalty to their local communities, a well-developed sense of social responsibility and create around them clusters of suppliers, customers and advisers. What I also see is innovation and ambition to grow – using the inherent advantages that family businesses have, perhaps without even realising it.
I have specialised in growth companies for 25 years and know what it takes to grow a business and to sustain that growth, yet time after time I have seen companies fail to capitalise on opportunities in front of them and that never fulfil their potential. Sometimes this is due to market forces but often it is because the management teams lack experience in key areas:
- Managing new product development
- Managing multi-site operations
- Managing international operations
- Managing acquisitions
- Managing the brand
These practical challenges of growth are real and can be difficult to address, particularly in Scotland where there is no critical mass of commercially experienced management coming out of large corporates who are willing and able to draw on that experience to help with the owner’s growth plans.
This is a particular issue facing the technology companies that the Scottish Government is so keen to back, but it is increasingly clear to me that this management talent is thriving in family businesses and this is where the family growth advantage really lies.
I know this from personal experience on family business boards such as The Beal Group and John White & Son; from getting to know the winners of the Strathclyde Business School Outstanding Contribution award at the Scottish Family Business Awards, most recently McAlpine Plumbing Products and James Donaldson & Sons; and from listening to guest lectures at Strathclyde from Mairi Mickel who described entrepreneurship in each generation of Mactaggart and Mickel and Keira Proctor explaining how growth in her family business Proctor Group is driven by constant innovation.
This family growth advantage is not confined to the largest of Scotland’s family businesses. In 2015, I had the honour of speaking at the 300th Anniversary Dinner of John White & Son - a rare moment in both the history of the company and the history of business in Scotland – and drew on the story of 300 years of innovation at John White & Son:
- From craft business to industrial concern
- Constant product innovation - industrial scales / retail scales / munitions scales / check weighers for the whisky industry / renewable energy
- Technology innovation – mechanical to electronic
- Manufacturing and process innovation – iron founding and early computerisation
- Business model innovation - branch operations close to customers / acquisitions / international expansion
All of this in one small family business and I confidently predicted to the gathering of some of Scotland’s best known family businesses (with collectively over 1,200 years of trading history) that John White & Son would continue to innovate and build on the legacy of 8 generations – producing innovative products, manufactured in Scotland and sold in international markets.
Our work at Strathclyde Business School – helped in part by the Gordon and Ena Baxter Foundation and William Grant & Sons – clearly demonstrates the importance of family businesses and, to me, there is an enormous opportunity to draw on the family growth advantage and the patient long term approach taken by families acting as stewards of their businesses to grow our economy – to thrive and not just survive.
It is a constant source of frustration that this part of the Scottish economy seems to be routinely ignored by the government and its agencies in favour of start-ups and the so-called unicorns. The multi generation family businesses of Scotland are the real wealth creators in our country - creating employment and prosperity in their communities that is unmatched and we are on a mission to make sure that this is recognised.