MANAGING FOR THE LONG RUN
Lessons in Competitive Advantage
from Great Family Businesses
By Danny Miller and Isabelle Le Breton-Miller
Harvard Business School Press; $29.95LUCKY OR SMART?
Secrets to an Entrepreneurial Life
By Bo Peabody
Random House; $13.95
In the endless quest for the secrets of business success, two new books offer some aid, both by toppling conventional wisdom. The first makes its argument with case studies, charts, and tables. The second reads like an extended e-mail from a college buddy you haven't heard from in a while.
The first bit of conventional wisdom that comes under attack is that while family businesses may thrive for a time, they ultimately implode because of internecine feuding and conspiracies worthy of Shakespeare. In Managing for the Long Run, authors Danny Miller and Isabelle Le Breton-Miller, a business professor and senior research associate, respectively, at the University of Alberta, concede that there is some truth to this popular belief. But they stake out unexplored territory by declaring that family-controlled businesses that win in the long haul share a set of values that other companies, both public and private, would do well to emulate.
The authors group family businesses by their central growth strategies: dealmaking (Bechtel), brand building (Est?e Lauder (EL) and Hallmark), craftsmanship (Timken (TKR) and Coors (TAP)), innovation (Corning (GLW)), and operations (Tyson). Each of their 40 successes relies on one or more of four characteristics: continuity, community, connection, and command. Hallmark, for example, based in Kansas City, Mo., indoctrinates employees in the "Hallmark Way," with superior human resources management and a culture that feels more like an "energized volunteer association" than a business.
Of course, most family-controlled businesses are privately held. So their leaders have more leeway to follow their instincts and can sidestep many of the shareholder-pleasing moves public companies must make. Public companies with majority family ownership don't seem much different. At one such company, Tyson Foods (TSN) in Springdale, Ark., the authors write that "Don Tyson's freedom also allowed him to expand by buying companies his rivals were too afraid or too slow to go after, giving him the highest rate of growth in the industry." Readers may wonder whether the critical factor is family or simply control.
The authors explain their theory in 272 pages of lecture-hall detail that can be numbing. And it must be noted that most of their anecdotes are borrowed from secondary sources, chiefly the business press. The writers state that while they interviewed about 10 of the companies they describe, they can't say which ones because of the companies' penchant for privacy.
But if you hope to start your own benevolent dynasty, you can find plenty of inspiration in the best family-controlled businesses: in their devotion to mission, responsibility for stewarding both that mission and the employees who execute it, and an intergenerational emphasis on integrity.
Clocking in at 58 pages, Lucky or Smart? Secrets to an Entrepreneurial Life, is the opposite of academic prose. Author Bo Peabody wasn't long out of college when he sold Tripod, the Internet company he had started just three years before, to Lycos for $58 million. Now in his mid-30s, Peabody has since co-founded five more companies, although none has become as well-known as Tripod. Success, he explains, boils down to being smart enough to know when you're getting lucky, then grabbing the opportunity.
Peabody is irreverent, imparting some obvious-but-worth-repeating advice such as: "Don't believe your own press" and "Great is the enemy of good." He asserts that while you can't control "everyday luck" (such as finding a $20 bill on the sidewalk), you can make your own luck in business. How? By starting a "fundamentally innovative, morally compelling, and philosophically positive" company. Smart people will gravitate to you, become inspired, and work hard. If you continue to communicate your mission well, "serendipity ensues."
Polar opposites in style, these books have similar substance: Be committed, communicate your passion, treat people well, and don't get too big for your britches. Serendipity just may ensue -- and for the long run.
By Marilyn Harris