The generation game
Philip Aminoff discusses family businesses and how some entrepreneurs are sustaining growth at a time of global economic volatility.
Philip Aminoff is Chairman of two family businesses based in his home country of Finland. Electrosonic Group provides audio-visual solutions around the world, while Paulig, which is a coffee, spices and ethnic foods group, focuses its attention on the Nordics, Central Europe and Russia.
Previously, Aminoff was a member of the Enterprise Policy Group of the European Commission and President of European Family Businesses.
How did you first get involved in business?
My great-grandfather was an entrepreneur who built up a group of companies that included automotive groupVeho, which has represented Mercedes-Benz in Finland since 1939.
During the summers of my youth, I worked at Veho. When I left school, I was made a non-voting board member of Helectron, which represented Sony in Finland. That was my first practical experience of senior management. You could say that I have seen everything a business offers from the bottom upwards and also from the top down.
What do you see as the inherent strengths of family businesses?
A good family business seeks to drive long-term earnings at all times without the end goal of that strategy being a sale. They build a platform of growth, developing new businesses and ensuring that all the ecosystems of the group, such as the staff, customers, suppliers and its values, work together. This enhances your capabilities, gives the business strong credentials and builds trust with your employees, suppliers and customers.
That becomes even more important during a downturn, because you can withstand financial uncertainty if you have long-term relationships with your customers and suppliers based on trust. They will give you priority.
What challenges do family businesses typically face?
The main challenge is how the business is managed. The management, board and owners have to agree on how strategy and decisions are going to be made and how conflicts are going to be resolved. Some family businesses prefer to have a “king” at the top, while others prefer to govern through a council. Some families give great weight to board representation for each branch of the family, whereas others focus on identifying the individuals within the family who show the greatest aptitude for the business.
There will always be issues arising within a family, so having an agreed structure will ensure that problems are dealt with before trouble starts.
“I am fascinated by the idea of creating new products.”
What drives you as an entrepreneur?
I am fascinated by the idea of creating new products and business concepts that have never existed before. By setting up a business with really good people around you, it is possible to create your own market. That is very exciting.
Is innovation even more crucial when economic conditions are tough?
The worry during a downturn is whether you have enough time to be creative as a business. It is harder to grow as money becomes tighter and you spend a lot of time taking the fat out by streamlining positions.
But, if you are a market leader, you have to continue innovating. For example, you have to keep trying new packages and servicedelivery concepts. There is nothing inherently great in being a market leader in the past and today if you are not going to be a market leader in the future.
How important have new markets been to Paulig and Electrosonic?
By expanding into new markets, you keep your employees motivated. They see that the company is growing and their work is being appreciated in more countries.
Paulig’s coffee business had been geographically constrained to Finland and the Baltics, so some years ago, we made the decision to invest in Russia. We have grown very quickly there.
But Paulig has also grown through investments into new markets, such as ethnic food concepts. The company has been very successful in building Mexican food in Northern Europe.
Expansion beyond Europe is not a current priority at Paulig. We focus on the strong growth opportunities that we see in several of our current markets.
Electrosonic, as a company that has installed complex audio-visual systems for demanding customers across the world, has a different growth strategy. The purpose is to build an organization that can support global accounts locally. This must partly happen through acquisitions, which is why we have bought companies in Los Angeles, London and New York. We have also extended our reach into adjacent markets through acquisitions. An example of this is our recent acquisition of Global Immersiona, specialists in projection solutions and services to digital immersive theaters, such as planetariums and giant screen cinemas.
In contrast to Paulig, Electrosonic is not likely to seek growth in Europe. In the market for large and complex audio-visual systems, there are more interesting opportunities in Asia and the Middle East.
Regarding new acquisitions, how do you manage the organization across multiple countries?
When you buy something, you do your due diligence and get to understand the financials,but you don’t always see the ecosystems of a business. That takes a lot of understanding.
Sometimes, you find businesses that have managements and boards similar to your own and are a good fit. Then you can easily agree a strategy and how it is going to be implemented, and there is no rigid thinking. The trick is to align your culture and customers with theirs, in order to ensure smooth relationships.
Other times, you look at a business that has a totally different culture and doesn’t entirely fit your strategy, but that does so many interesting things that it makes sense to buy.
What is your vision for both businesses?
We must be relevant for future generations by growing and developing. The more I work with these companies, the more fascinated I am by how businesses can be rejuvenated. Electrosonic dates back to 1964 and Paulig to 1876. You have to create the mindset of constantly moving forward and perhaps, over my career, that is where I have contributed the most.