The majority of businesses everywhere are family controlled and family managed.
The majority of businesses everywhere—including the United States and all other developed countries—are family controlled and family managed. And family management is by no means confined to small and medium-sized firms—families run some of the world’s largest companies. DuPont, controlled and managed by family members for 170 years (since its founding in 1802 until professional management took over in the mid-1970s), grew into the world’s largest chemical company. And two centuries after a still obscure coin dealer began to send out his sons to establish banks in Europe’s capitals, financial firms bearing the Rothschild name and run by Rothschilds are still among the world’s premier private bankers.
Yet management books and management courses deal almost entirely with the publicly owned and professionally managed company—they rarely as much as mention the family-managed business. Of course, there is no difference whatever between professionally managed and family-managed businesses in respect to all function work: research or marketing or accounting. But with respect to management, the family business requires its own and very different rules. These rules have to be stringently observed. Otherwise, the family-managed business will not survive, let alone prosper.
ACTION POINT: Less than 30 percent of family-owned companies survive into the second generation, while only 10 percent make it to the third generation, and just 4 percent to the fourth generation (Family Magazine, Web site, June 2004). Speculate as to why family businesses have such difficulty transitioning from generation to generation.
Managing in a Time of Great Change
* Source: The Daily Drucker by Peter F. Drucker