FAMILY BUSINESS INVITATIONAL CONFERENCE: SUCCESS AND CONTINUITY STRATEGIC RENOVATION Moderator Professor Lloyd Shefsky Founder & Co-Director Center for Family Enterprises Kellogg School of Management Northwestern University 2012 Northern Trust Corporation Panelist Andrew Berlin Chairman & CEO Berlin Packaging Wendy Carlson Nelson Member Carlson Board of Directors Steve Don President & CEO Edward Don & Company Stephen Goodenow Chairman & CEO Bank Midwest William Terlato CEO Terlato Wine Group & Terlato Wines International northerntrust.com
FAMILY BUSINESS INVITATIONAL CONFERENCE: SUCCESS AND CONTINUITY FAMILY BUSINESS: STRATEGIC RENOVATION Professor Lloyd E. Shefsky Founder & Co-Director Kellogg Center for Family Enterprises 2001 Sheridan Road, Evanston, IL. 60208 P: (847) 467-7855 F:(847) 491-5747 L-Shefsky@kellogg.northwestern.edu A-1
When it comes to change - - Established Companies tend to be resistant "Never, ever, think outside the box." Cartoon by Leo Cullum, The New Yorker, 1998 A-2
Note: Renovation, not Innovation Definition of RENOVATE To restore to a former better state (as by cleaning, repairing, or rebuilding) Definition of INNOVATION The introduction of something new, e.g., a new idea, method, or device: novelty A-3
Renovate what? Products and/or Services (new or updated) Management personnel and style Operational skills or procedures Customer service or focus Business model and lines Channels of distribution Owners A-4
Traditional Syllogism Our FB has successfully survived x generations If it ain t broke, don t fix it Significant change is dangerous Family Businesses Don t Bet the Farm A-5
When it comes to change - - Established Companies tend to be resistant "Never, ever, think outside the box." Family Businesses tend to be very cautious, but do make change when deemed appropriate. Cartoon by Leo Cullum, The New Yorker, 1998 A-6
Companies aren t built to last forever A-7
Dow Jones Industrial Average 1900 2000 American Cotton Oil American Steel & Wire American Sugar Continental Tobacco General Electric Company (late 1899) National Lead Pacific Mail Steamship People s Gas Tennessee Coal & Iron U.S. Leather Preferred U.S. Rubber Alcoa Incorporated Allied-Signal Incorporated American Express Company AT&T Corporation Boeing Company Caterpillar Incorporated CitiGroup Incorporated Coca-Cola Company Du Pont Eastman Kodak Company Exxon Mobil Corporation General Electric Company General Motors Corporation Hewlett-Packard Company Home Depot Incorporated Intel Corporation International Business Machines International Paper Company Johnson & Johnson J.P. Morgan & Company McDonald's Corporation Merck & Company, Inc. Microsoft Corporation Minnesota Mining & Manufacturing Philip Morris Companies Inc. Procter & Gamble Company SBC Communications Incorporated United Technologies Corporation Wal-Mart Stores Incorporated Walt Disney Company Source: http://www.quasimodos.com/info/dowhistory.html A-8
Companies aren t built to last forever A-9
Companies aren t built to last forever Reasons: Product, Service & Model Obsolescence Estate Taxes New Entrants to Market Owners and/or Managers Change in abilities, risk aversion, work ethic A-10
How all companies must Re-entrepreneur A-11
How Family Businesses Overlay Re-Entrepreneuring Requirement A-12
Updated Syllogism Our FB has successfully survived x generations Businesses are not built to last Strategic renovation is not only good, but necessary A-13
FAMILY BUSINESS INVITATIONAL CONFERENCE: SUCCESS AND CONTINUITY STRATEGIC RENOVATION Moderator Professor Lloyd Shefsky Founder & Co-Director Center for Family Enterprises Kellogg School of Management Northwestern University Panelist Andrew Berlin Chairman & CEO Berlin Packaging Wendy Carlson Nelson Member Carlson Board of Directors Steve Don President & CEO Edward Don & Company Stephen Goodenow Chairman & CEO Bank Midwest William Terlato CEO Terlato Wine Group & Terlato Wines International