Kinnarp – a town of barely 1,000 inhabitants, which lies in a remote part of Sweden approximately 120 kilometers north east of Gothenburg – is the home of one of the country’s hidden family business gems.
It’s easy for the residents of Kinnarp, or for that matter anyone who knows the town, to remember the company’s name – Kinnarps.
Kinnarps is one of Europe’s biggest office furniture companies. But it doesn’t make your bog standard office desks and chairs. Kinnarps furniture wouldn’t look out of place in cutting edge architecture offices, nor for that matter any office of a 21st century brand conscious of its image, and is a common sight at high-end design events.
And this not just some small, boutique maker of topnotch Scandinavia furniture. In its last reported financial year, Kinnarps had revenues of SEK3.8bn (€413m). It employs around 2,500 people and makes its furniture in six factories in Sweden – the biggest is in Kinnarp – and two in Germany.
Founded in 1942 by husband and wife Jarl and Evy Andersson, 72 years later Kinnarps is still 100% family owned. Currently the second generation – the five children of Jarl and Evy – are involved directly or indirectly in the business. Daughter Silbylla Jacobsson chairs the overall holding company.
Two of the eight grandchildren are also involved in the business and another two of the third generation are on an owners’ trainee program with the aim of eventually bringing them into the business. The family pay a lot of attention to how they fit into the business and how to best manage that with the demands of a multi-million euro company with global ambitions.
In 2011, long-term employee and non-family member Per Arne Andersson was appointed chief executive, replacing Henry Jarlsson, son of the founders, who’d been in the job for an impressive 37 years.
He came in during a tough time for the company, when revenues were hit hard by the euro-crisis and the slowing of economies in much of Europe. Revenues declined and expansion plans were put on hold.
Andersson reckons that in some ways being a family business has helped the company get through these difficult times – but in other ways it hasn’t.
“Yes, we have a longer view of our business that helps in tough times, but in another way maybe we should have more pressure on ourselves,” he said. “You can’t just rely on all the positive aspects of being a family business to get you through. You can’t substitute this for professionalism.”
Efforts to become more professional were helped by the hire of three outsiders to the supervisory board of Kinnarps, says Andersson. They included a new chairman, Lennart Pihl, who has served on the boards of many of Sweden’s top companies. He has brought a real depth of knowledge to the business, Andersson says.
The chief executive reckons the balance is right now at Kinnarps. “In my view we have made a good combination of the two sides – the long-term view of the family, but also outside pressure and professionalism from the non-family appointments on the board.”
That said, clearly it is crucial for an outsider managing a family business to get on with the owners regardless of any desires to bring in outside senior managers. Andersson appears to have done this well. He says that outside CEOs need considerable patience and even emotional intelligence to make the relationship work.
“It’s extremely important that you try to listen and learn what the owners of the business would like,” he says. “And it’s not always how they say they want to have it; sometimes you have to figure out by yourself.”
He adds: “The most important thing if you’re an outside CEO at a family business is that you have to understand that the company is part of the family. You are number two – you might be number one in the day-to-day running of the business, but you can never be out in the market saying you are Kinnarps. That is something you have to have in mind: that Mr and Mrs Kinnarps are always the owners.”
Andersson’s rapport with the family is helped by the fact that he’s been with the business for 20 years. As in many family businesses loyalty is appreciated, and for Kinnarps this also extends to where the business is located. “It would be extremely difficult to move the headquarters of Kinnarps,” says Andersson. “It is based in Kinnarp, it was founded in the town and you have all the history here.”
Small town connections are often what define some of Scandinavia’s best-known family businesses. IKEA was founded in the Swedish town of Älmhult and still has a big presence there, Lego is based in the small Danish town of Billund and Ecco, the Danish shoe business, is based in the even smaller town of Bredebro.
But loyalty sometimes has its limits, especially when you’re dealing with a very small town like Kinnarp. The office furniture maker has built an ice hockey arena called the Kinnarps Arena in Jönköping, a much bigger town to the south east. That, of course, is about building better relations with the extended community.
What’s clear is that Kinnarps isn’t going to make any radical departures from its current structure – the family will remain in control for years to come and it isn’t moving from its home town. But as Andersson says family businesses sometimes need to become more professional and can’t just rely on their long-term approach, family ownership and heritage to prosper.
Businesses that manage to strike that balance between the best aspects of family control, but at the same time professionalize their management structures, are the ones that will be best equipped to grow in the 21st century.
Kinnarps has gone some way to achieving that balance.