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A family business that’s 4 centuries old

How long do family businesses last? Most make it to the second generation, and then the problems start. Once the visionary founder has handed over the reins to his son/daughter/nephew/brother, an inflection point occurs. What happens in that second generation decides whether the business has a future. Either the company makes necessary changes and undertakes a meaningful evolution; or it implodes.

This Sunday I want to introduce a business to you that is now being run by the 14th (!) generation of the same family. The Zildjian Company is the oldest continuously family-run business in the United States. It was featured in a recent issue of the Harvard Business Review.

The Zildjians, like most Americans, were immigrants into that country. The business was founded in 1623 in Turkey by an Armenian alchemist. (I don’t even want to think about what we were doing in Kenya in those days.) What do the Zildjians make? Cymbals. That’s right, those metal things that accompany drums that you hit to make a (sometimes) pleasing sound.

Can you make money making cymbals? Certainly you can, if you control two-thirds of the world market as Zildjian does. But let us be clear: this company is successful because it is good at what it does. It is constantly improving its formulae for producing different alloys to produce specific sounds; and it collaborates closely with key customers (leading musicians) to develop new products and sounds. It invests in the future, and remains connected to customers.

Most importantly, this business has thought very deeply about the nature of family businesses, and how to make them work. It has had its share of problems: sibling rivalry has reared its head in this family as well, and acrimonious splits have occurred in the past. But this is one family business that learns from its mistakes: hence its 400-year life to date (it is older than most nations and even some religions!).

Three-quarters of the world’s businesses are estimated to be family-run concerns, and in Kenya that statistic may be even higher. Family businesses generate a large chunk of the world’s GDP (and Kenya’s). There is no doubting their importance. Equally, there is no doubting their special vulnerability.

When a family runs a business, there are often two levels of interaction. There is a professional level, where business processes are run efficiently, command-chains adhered to, and information and knowledge exchanged and shared. But underlying that level is a layer of deep-seated family emotions. Your Chief Financial Officer may not just be the key financial man, he may also be Cousin Karanja or Brother Bhupesh with whom you have a long competitive history, from when you were both in nappies.

It is that invisible emotional level, involving familial ties and tensions, loyalties and enmities, that causes difficulty. In a family business, things may be happening that make no professional sense. Only a family insider would know why certain people behave as they do. Family businesses are therefore often quite difficult places for outsiders to operate in.

So what can the Zildjians teach us? Craigie Zildjian, current CEO and first woman to run the business, says there is no secret formula: you just have to ensure that you follow good management practice at all times. The core values of the company must be maintained and its legacy protected; but it must equally not allow family matters to get in the way of doing the right thing for the business.

A family business must get succession right, above all things. Often, succeeding to the top seat is taken to be a matter of bloodline: the eldest son of the dominant patriarch gets it, regardless of ability. That is suicide for the family firm, and what undoes most of them. The Zildjians do things a little differently. There is no obligation for any generation to join the business; nor is there any sense of automatic entitlement.

In fact, the Zildjian Company has strict criteria about family members joining the organisation. For one thing, they must have worked for another company before they are allowed to join Zildjian – so that they learn how to manage away from the family roof and make their early mistakes elsewhere. They are also required to work in different parts of the business, and Zildjian tries to avoid having one family member reporting to another.

Family issues are discussed in a special quarterly meeting – to separate family from business issues, and to avoid “contaminating” the business with emotional matters, according to the current CEO.

This business has seen the danger of mixing the coldly commercial and the fiercely familial, and it has taken some very thoughtful measures to prevent such unhealthy mingling. A look at the top executive team will reveal a mixture of Zildjians and other names – mixing “old and new blood”. The only constant is that everyone must be qualified and able, and the correct person to do the job.

Bravo to the Zildjians. With such insightful practice, they may well go another 4 centuries.

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