Is writing a family business history important? While some might think creating such a history is an exercise in vanity and a waste of time, it can in fact have very beneficial business consequences. Phyllis M. Cowan and Paul D. Milne, in their paper, “THE FAMILY BUSINESS HISTORY: a catalyst to a successful succession plan,” make the case that writing a family business history is extremely important, especially with respect to succession. What follows is a case study excerpted from this paper that makes this point quite eloquently.
The Foster-Creighton Story
This is the story of a four-generation family business from 1885 to 1973 which was “proudly” written by Wilbur F. Creighton, Jr. at the time “he was honoured to head” the company. The Foster-Creighton Company is a construction company located in Nashville, Tennessee, a company whose famous product is so ubiquitous, most of us are scarcely aware of it — the invention of Redi-Mix concrete.
Business practices are illustrated in the contractual dealings of the Company over the years which culminated in the last sentence in the book: “Foster and Creighton is proud of the fact that throughout its long history, every contract has been completed without a single loss to any surety.” Can you imagine the pressure on family members employed in the business to ensure that this proud string of completed contracts continued. This knowledge would be helpful not only to family but to non-family senior executives and consultants to the business as they would more easily recognize why, for example, family employed in the business might be reticent to back out of a bad business deal.
The inventive side of the company is illustrated in the section of the history devoted to the development of “ready-mixed concrete” and the building of the first Redi-Mix concrete plant in the south. This gave the company a competitive advantage over all of the contractors in Nashville with the result that the company “received most of the jobs awarded in Nashville during the 1930s.”
There are two other aspects of the history that are particularly intriguing. One is how the company used business techniques and relationships, learned in the course of construction work carried out for the United States government during the second World War, to obtain substantial government construction work during the Korean War. The value of maintenance of business relationships and future planning (to obtain private sector contracts after the war) is a constant theme throughout the history.
The second noteworthy aspect of the business history is the effort made to chronicle the relationship with the company’s banker and its consultants. It is interesting to note the president of the company’s bank was informed of the value of projects completed during the company’s fiscal year whereupon it was reported that the president of the bank: “had no interest in the amount of business done; all that mattered to him was the amount of company capital and surplus at the end of the year. His words made a profound impression on the officers of the company and since that date, the company has been able to improve its financial position each year:”
We believe that The Foster-Creighton Story illustrates that a business history is extremely useful in the succession planning process. As well as being a diagnostic tool, it is also an assessment tool for the identification of critical success factors for the family business. For example, as a business history unfolds it can help family members and consultants determine important core values, leadership and management styles, conflict resolution, decision-making processes and external relationships such as those with customers, professional advisors and business relationships. This can act as a template with which future generations can test current practice and decisions for the future in these domains.
If, in fact, writing a business history is worthwhile and is a useful tool in the succession planning process, the challenge rests with the consultant to convince the owners of the family business that writing a business history is an invaluable exercise regardless of the cost.