Italian family businesses are waking up to the need to engage more constructively with the next generation of owners. Today’s leaders realise if they don’t make these efforts more family businesses will lack the will to carry on and many will consider selling their companies. If this happens it will prove an existential threat to the country’s all-important family business sector. The stakes couldn’t be higher.
If families want to maintain ownership then they have to invest a lot in the next gen. Of course, this is the case anywhere, but the emphasis on this needs to be stressed in the Italian context more than most places. Traditionally, the next generation transition in Italy was followed mechanistically, without a lot of thought given to the process. Typically, the owner would say to their son or daughter that they are coming into the business and one day they will be the owner of the company. There was very little nurturing, and learning from others in how this transition could take place to maximize its success.
This worked in most cases, but these days this mechanized approach isn’t enough. Family businesses are increasingly selling out to both local and international competitors – and in many cases, these sales are promoted because the next gen lacks the will to carry on. If family businesses don’t invest in the younger generation, eventually the family will lack the skills and will to maintain ownership.
To a large extent, Italian family businesses realise this and are investing more in the next generation. The focus on the young generation is becoming much more popular. The efforts to better engage is being supported by the AldAF, the Italian Association of Family Businesses. Many of these initiatives have been led by Elena Zambon, the president of the Association and the president of the pharmaceutical group Zambon. She has made engagement with the next gen a priority.
Engagement with the next gen can happen in the following ways:
- They can get to know the company and understand how it performs
- They can get to know the non-business activities of the family
- They can get to know stories of other families and the business they own
- They can get to know about their siblings and cousins
- They can get to know how to work together
As part of this process, the next gen also needs to learn more from each other. They need to meet and find out more what the experiences are for their contemporaries in other businesses. Of course, this cross-fertilisation of ideas among the next generation isn’t something new. The next gen in many of the other major developed markets have been following a more engaged learning process for some time, but this process is relatively new in Italy. What is clear is that it needs to grow as a concept.
Although external groups like the AldAF are helping with getting the message across, family businesses also need to realise this themselves. Mostly they are, largely because family businesses are becoming more international and learning from trends happening outside of the country. Italian families are becoming more open to sharing experiences with other families.
For example, members of the Lavazza family, famous for their coffee brand, recently spent some time with the Scottish drinks company and family business William Grant & Son, which owns Glenfiddich and Balvenie whisky, Hendrick’s gin and other spirits. Another Italian company that is pursuing a more constructive engagement with the next gen is La Doria, the canned vegetable specialist. These types of getting together initiatives with other family business will help companies understand the challenges they face. They will learn from each other.
The efforts being made by Italian family businesses to engage better with the next gen should help to invigorate the sector and ensure that successions can be handled better. But there is no room for complacency. All family businesses need to realise the key to their continuing prosperity is to engage constructively with their next gen of leaders. And in Italy, that priority couldn’t be more important.
Guido Corbetta is Professor of Strategic Management and AIdAF – EY Professor of Strategic Management in Family Business at Bocconi University in Milan