"An imperative competitiveness"
At the EDHEC Business School's Family Business Centre, created two years ago with the support of family businesses such as Michelin, Mulliez, Roquette, Bic, Sisley and Promod, the family business is the core focus, with activities such as pragmatic applied research for companies, conferences to share experiences and training aimed at reviving family-owned organisations. For centre director Sylvain Daudel, family businesses have a "competitiveness imperative" that drives them to innovate. Sylvain Daudel explains.
In your view, what characteristics are unique to family businesses?
Sylvain Daudel: Family businesses behave differently from the way other businesses do. They must deal with two opposing impulses. On the one hand, they have entrepreneurship in their DNA. On the other hand, they also show a lot of caution, which stems from their long-term focus on sustainability, on the need to pass on values to the next generation and on the drive to keep going over the long haul. This means they have a different relationship to time, as well as a certain obstinacy and determination. They also allocate their resources prudently, with some degree of risk aversion. Additionally, decision-making is often quick because the power structure is highly legitimised. Finally, family businesses retain a great amount of knowledge and expertise. Staff and clients are loyal, favouring the accumulation of experience.
How do these characteristics create fertile ground for innovation?
S.D.: It all leads to a culture that instils a desire to improve without taking too many risks that could spoil production. They are better able to make the necessary investments in favour of the company's competitiveness over the long-term with the next generation's inheritance in mind. Family businesses often spend more than the average on R&D. They do have some debt, but their spending is for the long term. They don't answer to the stock market, nor do they have to send quarterly reports to their shareholders, freeing them of the need to deliver short-term profits at any cost. In addition, their local or industry-specific focus is not a significant barrier to innovation.
Do their innovations differ from those of conventional companies?
S.D.: We've noticed that family businesses tend to develop new processes rather than new products. They file patents to upgrade their industrial tools, enhance their production methods and improve their margins. In this respect they are also driven by their competitiveness imperative and use their experience to help them along. They capitalise on their history and their skills. In other words, they are not trying to be glamorous or come up with a genius idea. The short term is not important. They engage in "relentless innovation".