Good family enterprise leaders are committed to the success and sustainability of the family enterprise and of the family. They feel responsible to deliver these results.
Great family enterprise leaders shepherd their enterprises and families through great adversity or to notable achievement. They do so by:
- Setting direction
- Aligning people
- Motivating and inspiring action (often, change)
Great family enterprise leaders believe in forward movement and momentum. They guide family members and family owners over hurdles that require growth and adaptation. They see that the enterprise, the family owners, and the family are in constant evolution, and they serve the needs of all groups (what we call the family enterprise system). They understand that their most important contribution to the family enterprise system is guiding it through needed change.
Two notable next generation leaders exemplify this form of great leadership of their families and enterprises, and we are proud to share their stories. Simone Bagel-Trah and John Elkann are recognized on our List of 17 Next Generation Family Enterprise Leaders to Watch in 2017, which honors 17 of the world’s most promising under-50 leaders in family enterprise. Each heads a 5th generation enterprise, and each demonstrates the wisdom, courage, decisiveness, and persuasiveness to move their families and enterprises through meaningful change.
Chairwoman, Henkel AG
Chairwoman, Fritz Henkel Foundation
Only a few years after assuming leadership of the shareholder committee and the supervisory board of Henkel–her family’s $21 billion, publicly traded, consumer goods company–microbiologist Simone Bagel-Trah demonstrated deft leadership and long-term vision. In 2009, when she became the first Chairwoman of Henkel’s board at the age of 40, the family owners were five years away from the expiration of a critical ownership agreement. In 1994, many of the family owners had committed to a 20-year, share-pooling agreement that bound the voting shares of some 80 family owners together, and prohibited them from selling their shares in the company during that lock-in period.
Dr. Bagel-Trah had ambitious plans for Henkel: marked growth in emerging markets, brand realignment, bold sustainability goals, and continued innovation. The company needed ownership stability and unity from the family’s 61% stake. This was not the time for the fractured ownership or fractious debates. The advantages of committing to a new share-pooling agreement were many, though it would be more complicated than in 1994, given that the number of family owners had nearly doubled to 150. In a move that surprised no one who knew her, Dr. Bagel-Trah negotiated a new ownership agreement among her growing family, extending the family’s ownership solidarity to 2033. This expression of the family’s confidence in management and long-term support of the company continues to have a profound impact.
It is not only her leadership of the board and owners that is admirable; Dr. Bagel-Trah’s guidance of the family is too. Recalling how third generation CEO, Konrad Henkel, engaged and educated future generations, Dr. Bagel-Trah, too, knew the value of nurturing a commitment to the family and unity around the business. She has systematically strengthened these bonds among her own fifth generation and other generations by overseeing regular family meetings, a “Lions’ Club” of the family’s teenagers who hold retreats and conduct projects together, as well as a family magazine and private family website. The results of her leadership in the business, in ownership, and in the family, will be widely felt for generations to come.
Chairman, Fiat Chrysler Automobiles
Chairman and CEO, EXOR
In 2014, John Elkann, the 5th generation great-great-grandson of Fiat founder Giovanni Agnelli, did what many thought was unthinkable. In his fourth year as the Chairman of Fiat Chrysler, at the age of 38, he moved Fiat’s headquarters from Italy to the U.K. To put that bold move in perspective, it is important to know that the name Fiat itself is an acronym standing for Fabbrica Italiana Automobili Torino (F.I.A.T.), or, Italian Cars Factory, Turin.
As surprising as the headquarters move was, it was, in fact, just one of a number of changes Mr. Elkann has brought to the company in fairly short order. In 2004, as Vice Chairman, he persuaded the redoubtable Sergio Marchionne to become CEO of Fiat, the Agnelli Family’s largest asset. In 2009, he bought into, and later fully acquired the U.S. automaker Chrysler. He acquired a 43% stake in The Economist in 2015.
In 2016, with Fiat, Chrysler, and Ferrari all merged into a single operating company and run from London, Mr. Elkann then turned to the family shareholders, and led them to another historic decision. Exor, the Agnelli Family’s investment company–valued at $13 billion–was hampered by Italian regulations. In contrast, The Netherlands has shareholding structures that give more voting rights to long-term shareholders–precisely what Mr. Eklann needed to continue building value for the family. Over the course of just a one-hour meeting, reportedly, at Fiat’s old Turin headquarters, Mr. Elkann persuaded 85% of Agnelli Family shareholders to accept his recommendation to move Exor’s headquarters to Amsterdam.
Under Mr. Elkann’s direction, the Agnelli Family would no longer have its largest holdings based in their native Italy. It would be remarkable for any company to make such geographic moves; but for the Agnelli Family, which had been an Italian mainstay for 115 years and whose family of brands, also including Maserati and Alpha Romeo, are so quintessentially Italian, it was doubly so. As connected to Italy as the Agnelli Family and Mr. Elkann are, he prioritized the owners and their long-term ownership strategy above national sentiment. He would find other ways to remain connected to their heritage, such as the Agnelli’s Family ownership of Italy’s popular Juventus soccer team. Change requires letting go, and it is a bold, brave leader who moves beyond tradition in pursuit of forward-movement for his family.
Two Great Leaders
As these two next generation trailblazers demonstrate, true leadership of a multigenerational family enterprise is complex and high stakes. It is increasingly global and ever-changing. Setting direction, aligning people, and motivating them to change is more challenging today as families, companies, and industries shift in significant ways. More and more, great leaders are focused on ownership strategies that influence the family’s wealth, unity, and ability to have a global impact.
Simon Bagel-Trah and John Eklann are family enterprise leaders well worth watching as they continue their impressive leadership over the next generation.
The copyright on this article is held by Cambridge Family Enterprise Group®. All rights reserved. Articles may be available for reprint with approval. For permission to duplicate, distribute, or copy, in whole or in part, contact [email protected]