When we first launched our Family Business Awards earlier this year, I was a bit nervous. Despite two decades of business reporting, I knew little about family businesses. I knew from patronizing my local Bartell Drugs that it tends to treat employees well and fosters a strong sense of community. But did it really deserve to be treated separately? I sought advice from local family business experts such as Rich Simmonds, a well-regarded consultant, and Steve Brilling, executive director of Seattle University’s Family Business Institute.
They explained to me that the volatile mix of ownership and family dynamics presents special management challenges to family businesses. As they discussed issues like succession and family commitment, it dawned on me that I knew a lot more about family business than I cared to admit. My father had presided over the messy unraveling of our family business in Yokohama, Japan—a firm that had survived more than a century across three generations and two world wars.
My Prussian great-grandfather, Julius, arrived in Japan in 1870, and worked 16-hour days to launch Helm Brothers, a stevedoring company that unloaded and forwarded cargo. He lived frugally, plowing all of his earnings back into his business. Most stevedores at the time used large “trucks” imported from the United States that had to be pulled by big American horses. Julius designed trucks that could be built cheaply in Japan and then pulled by two smaller Japanese horses.
Another innovation was when Julius’ sons became citizens in three different countries: Two became German, one Japanese and one, my grandfather, American. They took turns managing the company as Japan allied first with America against Germany in World War I, and later, with Germany against the United States in World War II.
My father, who served in America’s occupation of Japan, took over as president of Helm Brothers after World War II and transformed the company into a thriving real estate business. But three generations’ worth of effort soon went up in smoke. Family shareholders, now spread across four continents, had so little commitment to the company, they forced my father to sell the business to a Hong Kong firm for a tiny fraction of what it was worth.
Building a family business, I have come to understand, is as much about developing family support behind creating a legacy as it is about good management. Bartell Drugs, now celebrating 120 years in business, has been periodically approached with takeover offers, but the family rejected them, says Jean Bartell Barber, CFO and co-owner of the company, because of a desire to preserve the family legacy. That’s a tough decision to make. It’s why so few companies remain family businesses past the third generation of ownership. Family businesses deserve recognition because of their commitment to their communities. But they also deserve to be singled out because they have done the tough work required to align family values with business requirements.