“Younger family members inspire business-owning
families to strike out in new directions, explore new technologies and establish new partnerships with other family businesses.” Pepper, who acts as chief investment officer to
several single family offices, cites an example of a creative next generation family member repurposing a mature wood processing business. “The family had been in the timber business for
generations and this young man in his twenties realised that the future was not just in timber, but in the rapidly-developing carbon-credit trading market.” “Suddenly a tree was not only wood,” Pepper says. “It was valuable for its reduction of carbon
emissions. He guided the family into the carbon trading market and now the carbon credits are worth more than the land and the timber.” In his role as an executive development strategist,
Cranfield’s Zawwar tells a similar tale of a client he helped seize opportunities through new digital marketing practices. “In a one-year period the family business increased
their online sales by roughly 150% and 93% of these sales were in new territories,” he says. Success was attributed to the family’s decision to
establish a separate strategic business unit. “It was a way to break down the silos of the family
business and establish a new entity altogether.” Despite the impressive results, the family was
hesitant to make further investments in its new business unit. It felt more comfortable with traditional marketing channels, despite higher costs. “The lead time in implementing strategic change in a family business is more than twice the lead time
taken by an average corporation,” says Zawwar, who is often retained for entrepreneurial strategies. “In most cases, change is not fully implemented
as expected.” Yet strategic business units often pay off
handsomely as family members tend to behave more like opportunity entrepreneurs rather than necessity-driven entrepreneurs. They tend to reduce the influence of the whole
family in the strategic business unit and concentrate decision-making in one or two members of the family only. Some family businesses take to blue ocean
tactics like ducks to water. Driven to differentiate, they thrive on creating new demand rather than competing in old shark-infested waters. “There’s no doubt [we] consciously adopted a
blue ocean strategy,” says John Casella, managing director of third-generation Australian winemaker Casella Family Brands. “The strategic approach was simply intuitive
to us.” Casella says his company was already on a path
to differentiate itself from competitors and find untapped markets “before the term blue ocean strategy was defined.” That was in 2001. “The wine industry was hugely competitive. We
needed to escape the crowded market, make our own rules, and create a brand that had breathing space to grow,” Casella says. “We needed to be highly strategic as many of our
competitors were established market players and very well-resourced.” The strategy paid off. By 2015, the family-run
winery had rocketed from a small Australian regional player to capture a 51% share of the Australian category of the US wine market.
IN THE DEEP END: WHAT IS A BLUE OCEAN STRATEGY?
22
CAMPDENFB.COM
Blue ocean is jargon for uncontested market space in an unknown industry or innovation. Introduced in the 2005 book Blue Ocean Strategy, blue oceans are associated with rapid and high profits. There are two ways to create blue oceans: launch a new industry, as eBay did with
online auctions, or expand outside an existing sector. Montreal’s Cirque du Soleil (pictured above) is oft-cited as a blue ocean organisation because it reinvents the circus, competes outside the confines of an existing industry (the traditional circus), and does not poach customers from rivals.
Cirque du Soleil developed uncontested market space that made the competition irrelevant. In blue oceans, demand is created, not fought over as in competition-based ‘red’ oceans where companies vie for a greater share of a declining market.
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