Family businesses have much in common, yet each one must find its own unique path to a successful transition, says David LEE, Owners Council Chair and Director of the Lee Kum Kee Group.

If a family business is still going strong after close to 135 years, it is tempting to think there is a formula for success which others could readily emulate.

But David Lee, Owners Council Chair and Director of the Lee Kum Kee Group which traces its origins back to Nanshui in Guangdong Province in 1888 and now sells its Chinese-style sauces around the world, is quick to dispel that notion. “Every case is different,” he says.

“No one has the Holy Grail when it comes to this subject,” Lee says. “There isn’t one recipe that will work for every family. They must look for the most suitable answers for themselves if they strive to maintain continuity and achieve their mission.”

“But there are two vital points that everyone should keep in mind,” he adds. “Firstly, recognizing change as a norm and responding with innovative solutions is the key. Secondly, fostering open and continuous communication across generations is crucial to ensure the longevity and success of a family business.”

Lee recently threw a big post-pandemic family reunion which brought the different generations together under one roof. Lee believes these multi-generational family occasions not only foster personal connections, but also serve as a valuable platform for collectively reviewing family goals, plans and progress, and learn from each other.

“The quality time we spend together is precious and priceless,” says Lee, who is now a grandfather of three. “It is also a reminder that every business goes through phases of transformation, demanding adaptability, and openness. It is crucial to embrace change and nurture intergenerational ties.”

Listen, understand, and respect diverse perspectives

Changes, he notes, will inevitably cause tension. The best approach to deal with such tension is to make sure concerns are aired and diverse perspectives are heard. By addressing family issues promptly, and adapting new technologies or policy shifts, if necessary, at governance or corporate level, enable the family to progress in unity after open and effective discussion guided by professional facilitation.

“We call that an ‘extreme balance’,” says Lee, one of the family’s fourth generation who has been involving in all significant strategic reviews of the family business. “It’s unwise to run a business like a family or run a family like a business. Our experience has taught us that both aspects are equally vital. To effectively lead and manage our family business, we have established a comprehensive family governance system and constitution with clear guidelines and principles. We have separated the roles of our Family Council and Owners Council. For family, we place great value on maintaining strong familial bonds and unity. For business, we prioritize setting transparent criteria, values, culture, and personal qualities required when choosing the right talents to the business roles. We aim to prevent an entitlement mentality. As the family business continues to grow, we recognize our responsibilities to all stakeholders involved.”

With members of the fifth and even sixth generations now poised to take on greater duties as a family steward, learning and development, along with succession planning, are of utmost importance and demand immediate attention. The effective model is to expect those who pursue a role in the business to get outside experience first, usually for at least three years.

Commonly, this has been achieved through internal secondments, which develop requisite competencies and know-how, give broader perspectives, that instill the drive to further enhance Lee Kum Kee’s already-established accomplishments. Beyond that, other resources and opportunities such as innovation trips, annual owners assembly meetings, being an observer in family business board meetings, etc., are offered.

“We also engage consultants and professionals to review the selection criteria, formulate competency ratings, and evaluate any development needs,” Lee says. “The external advisers we select are experts in their fields, who are willing to challenge us. They critique our practices and provide new angles, rather than simply endorse what we do. Each of us has ‘hot buttons’ but we are open to fresh perspectives, investigating and adjusting our approach accordingly.”

Find the shared purposes and embrace “We are bigger than I”

For this, Lee emphasizes the commitment of open communication, not just within the family, but also with business managers and internal teams. “In the context of leading and managing a family business, disagreements and varying viewpoints are not uncommon, both within the same generation and across different generations. These situations can lead to challenging conversations. To effectively address these challenges, it is crucial for us to consider the bigger picture, align on shared objectives and core values, and approach these discussions with open-mindedness and mutual respect. Remembering our responsibility as stewards, our aim should be to smoothly transition the business to the next generation. It is essential to learn how to find common ground and reach compromises, even when we may not fully agree with each other.”

The family constitution was first written in 2003, after many off-site meetings and extended debates amongst the third and the fourth generations. Also, courses were taken at some of the world’s top management schools to tap into their collective wisdom and identify the issues that every family business must face.

There were two key objectives of the newly established family council at that time. The first was to get parents and siblings to identify the family values, and the long-term purposes of our family business, the second to establish consensus around the framework for decision-making. The background to this, of course, was the well-documented risk of differences or uncertainty opening the door to intransigence, conflict, and the possible breakup of the business.

“At times, discussions grew heated, but we’d take a break and play golf before reconvening,” Lee recalls. “We’d each share our viewpoint, practice patience, and emphasize the importance of “we” over individual interests. We call it “We are bigger than I” mindset. With all these, we usually resolve the matter.”

This approach has facilitated swift decision making in the face of subsequent financial events, as well as adapting our governance structure and strategic planning to suit the evolving business landscape. It has also allowed for appropriate expansion or consolidation actions when necessary.

Today, that translates into the idea of keeping the business around for the next 1,000 years, with each generation serving as a steward for the next.

Foster a culture of giving from an early age

“Guided by the principles of “Si Li Ji Ren” (思利及人), constant entrepreneurship and autopilot leadership, we strive to be the most trusted enterprise for a healthier and happier world beyond 1,000 years. This is Lee Kum Kee’s business vision statement. We will ensure all our business units align with and uphold it,” Lee says.

“We also have our own Family Foundation with its mission to promote multi-generational family relationship. Aligning with our family’s core value of “Si Li Ji Ren”, we promote and inspire all family members to make meaningful contribution to society in their unique ways, as the giving culture must be instilled from an early age,” Lee shares.