Family Business Blog
Sep 10, 2013
David Smorgon's Family Business Model for the Future
Founding Chairman of FBA, David Smorgon OAM, was a senior executive at Smorgon Consolidated Industries, the $1 billion family business that spanned meat, paper, glass, plastics and steel industries. When the business was sold off in 1995 in a staged divestment, it ended a 70-year family history and marked one of the lowest points of David's life.
At the recent Family Business Australia National Conference, David introduced a model which he has developed from his experience in the rise and fall of the Smorgon family business. He believes that enduring family business get 3 things right -
At the recent Family Business Australia National Conference, David introduced a model which he has developed from his experience in the rise and fall of the Smorgon family business. He believes that enduring family business get 3 things right -
- Family Values
- Family Time and
- Family Communication
Family Values
Identifying family values is not an easy thing to do (or something that you can do overnight). It's about investigating your roots and family traditions and then putting these thoughts into words and actions. In the Smorgon business these were encapsulated in the 'Smorgon Way' which included values such as -
Note the recent MGI Family Business Survey identified that only 40% of families have enunciated their values, and only 12 % have a Code of Conduct.
- two heads are better than one
- everyone has the the right to be heard in a non-threatening way
- the truth will be told
- our word is our bond
- there will be no surprises - everything is put on the table
- a commitment to put customer needs first
- promote teamwork and leadership
- being pro-active corporate citizens
Note the recent MGI Family Business Survey identified that only 40% of families have enunciated their values, and only 12 % have a Code of Conduct.
Family Time
The importance of scheduled face-to-face time cannot be over-emphasised. In David's view, the Smorgon family were very good at talking about business issues, but not so good at family issues. In his view this is the number one reason why, after 70 years, the Smorgon business faltered and then failed.
Setting aside the time for family meetings that address family needs, not business neccissities is difficult to do. If it's not structured and made part of the family business calendar, it can easily be overlooked.
Setting aside the time for family meetings that address family needs, not business neccissities is difficult to do. If it's not structured and made part of the family business calendar, it can easily be overlooked.
Family Communication
For communication to be effective it must be open and honest. The challenge is having these conversations with a family member who has let the team down. This requires face-to-face honest communication. David also made the comment than in his experience one of the failings of people who establish and grow businesses, is that they are good talkers but not good listeners.
'The power of listening cannot be underestimated, because when we truely listen to someone it means that we put our preconceptions about that person in the background'. Particularly where family is concerned, our preconceptions mean that we've often made up our mind before they start to speak.
In summary, despite having strong values and being good communicators, the Smorgon family business lost it's way. In David's view poor attention to 'Family Time' led to the eventual break up of an extremely successful business and to quote David's, 'two out of three is not enough, all three areas must be addressed.'
'The power of listening cannot be underestimated, because when we truely listen to someone it means that we put our preconceptions about that person in the background'. Particularly where family is concerned, our preconceptions mean that we've often made up our mind before they start to speak.
In summary, despite having strong values and being good communicators, the Smorgon family business lost it's way. In David's view poor attention to 'Family Time' led to the eventual break up of an extremely successful business and to quote David's, 'two out of three is not enough, all three areas must be addressed.'
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