Tag Archives: Beretta

Paradoxes found in the Jewish New Year parallel many Family Businesses Paradoxes

Amy Schuman
Amy Schuman

Starting at sundown last Wednesday night, Jews across the globe ushered in a New Year, specifically the year 5772. It struck me again this year, how many tensions and contradictions are found in the traditions surrounding the holiday. These paradoxes echo many of those familiar to family businesses and quite a few that are described in Family Business as Paradox which I co-authored last year with John Ward and Stacy Stutz.  

For example, as we contemplate the yet-undiscovered possibilities of a brand new year, we are brought up short by a major theme of the New Year’s service: Teshuvah  or ‘return’. How is it that a new year begins with a ‘return’?  Upon reflection we realize that meaningful new efforts are rooted in the legacy of the past. They are shaped by the treasured values and lessons learned by those that came before us.

This tension is a major theme for family businesses that must find ways to honor both tradition and change.  My co-authors and I have been inspired by many family enterprises that grapple with this paradox, notably Beretta and   Cargill.

There are other paradoxes with resonance for family enterprise – for example, the tension between structure/rules and spontaneity/intention*. As with all religious observance, there are plenty of rules related to the holiday, and proper observance is spelled out well in advance. However the tradition also makes clear that observing the law alone is not enough – one must observe with an intention that embodies trust and respect, and that resonates with caring, even passion.

Family enterprises also wrestle with a similar tension.  Policies and rules are essential– for family employment, for compensation, for ownership. However, they can’t stand alone. They have to be partnered with the right intention – the right relationship.  And they are best when infused with real commitment and passion. Although it may seem impossible, families must find a way to approach policies and practices in ways that are both fixed and flexible.

I’ll share some real world examples in an upcoming post. In the meantime, do you have stories to share about these familiar paradoxes?

*Known in Hebrew as keva (fixed structure in ritual, fixed texts) and kavana (intention, focus, concentration).

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“Creating Shared Value” – A Natural for Family Businesses

Perhaps you’ve already read of Michael Porter’s newest article and strategic insight. It’s likely to be one of the most profound ideas in business for the years ahead. (See Harvard Business Review, January-February 2011.)   

Porter, often with his colleague Mark Kramer, has led the thinking on ideas such as industrial structure and competitive analysis, value chain sources of competitive advantage, industry clusters for economic development, strategic philanthropy, and now “Creating Shared Value.” I want to describe the idea a bit, but, moreover, assert that this is how family firms around the world have long naturally thought.

“Creating Shared Value” attempts to bridge the contradiction of firms seeking increased share value from maximizing their economic efficiency and firms sharing their profits via corporate social responsibility in order to do good to their other stakeholders as well as their shareholders.

Porter and Kramer argue that this is a false contradiction – in fact, that it’s usually seen as a contradiction has cost firms and society.  They offer that more and more short run profit focus has driven this lose-lose contradiction. For example, in the pursuit of short-term profits firms have rushed to outsource as much as possible and to move production to cheap places all over the world. These moves, per Porter and Kramer, have been bad both for firms’ profits and for society.

“Creating Shared Value” proposes that shareholders and society find win-win solutions when firms imagine that their products and services can even better enhance the lives or effectiveness of customers. The same when firms enhance their profits and society’s benefit with wise and innovative use of resources (i.e., energy, packaging, water, etc.) – not charitably as a cost to the business, but creatively as a cost reduction to the business.  They also urge the win-win benefits of more focus on locals where they do business so that the firm’s business success is good for the community and the community’s other strengths improve the global competitiveness of the firms in the community.

My point in attempting to summarize the “Creating Shared Value” concept is to highlight that such thinking has long been common to successful family businesses for several reasons:

  • Family firms, for the most part, haven’t been swept up in the ideology of short-term thinking.
  • Family firms have readily seen the link between where they do business and how they do business as where they do business is home and where they want their families to contribute and to benefit.
  • Family firms often embrace vertical integration – not outsourcing – as a competitive advantage. They have long seen suppliers and customers as extensions of their family; they value the reliability and the collaboration of their value chain partners. And these partners are very often from the same locale – further strengthening the win-win insight of the home, community cluster. (For example, think of the long lived northern Italian fashion and industrial firms such as Ferragamo and Beretta and the education and technology centers surrounding many of Germany’s Middlestand companies.)
  • When family firms do move production or distribution elsewhere in the world they take their values with them. They see their dispersed locations more as extensions of their home culture rather than as impersonal cost or selling centers.
  • Most importantly, family firms don’t as likely fall into the win-lose thinking that fundamental contradictions bring. One of Porter and Kramer’s most powerful contributions of the “Creating Share Value” idea is that companies (and society) needed to see economic efficiency and social progress as a contradiction. Instead their concept synthesis the paradox of shareholder value and stakeholder value. Family firms, we believe, have an inherent capacity to think that way. They live with and cherish paradoxes (for example, Cargill and WL Gore & Associates).  After all, that’s natural for them: they have lived the family welfare and business welfare paradox all their lives.
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