Over the weekend, I watched Ferrari, the 2023 movie about the moment of truth for the company. With the company teetering on the edge of bankruptcy, Owner Enzo Ferrari gambles everything on winning the 1000-kilometer race across Italy. The week before, I met Annette Roeckl, whose family has run a leather goods company based in Munich, Germany since 1839. We corresponded after a Trust dinner. She wrote back to me, “thanks so much for your spontaneous enthusiasm. As you know, a family business is something special. Either you feel and understand this certain energy or not.” Here are some of my thoughts on the family business.
Motivation of the Team
Mr. Ferrari, on the eve of the big race, spends time with each driver. He knows exactly what to say to each one to achieve top performance. He urges them on with the law of the jungle, with the strongest surviving. He never allows the financial cloud into the conversation; it is always about beating Maserati, the arch competitor.
Striving for Excellence
The Roeckl brochure speaks about the brand creed, to create products of outstanding quality and elegance: “We are completely dedicated to quality and lasting value. Our accessories are manufactured in Europe by people who practice their craft with passion.”
Succession Planning
In the case of Ferrari, it was a complicated story. Enzo started the business in 1929, then he and his wife re-started the business in 1947. They had a child, Dino, before World War II who was sickly and died in his young 20s from Duchenne Muscular Dystrophy. Enzo had an affair during World War II and sired a son, Piero, with his lover. This son was not legally adopted as a Ferrari until after the death of his wife in 1978. Piero is now Vice Chairman of Ferrari. In my case, it is straightforward. I have three kids, all of them work in the company and they are the only members of Generation Three.
Juggling the Risks
Enzo Ferrari is more of a gambler than most family business owners. He has orders pending from royalty such as the King of Jordan. But he knows that he needs the big win in the Trans-Italy race to confirm the sales. And he also recognizes his need for working capital to expand the production facility. He puts out a story in Italian media saying that Ford Motor Company is considering an investment in Ferrari. This leads to a call from Giovanni Agnelli, owner of Fiat, who commits to buying 50 percent of Ferrari if the race is won. All of this would give me an ulcer; for Enzo Ferrari it was an adrenaline rush.
Power of Tradition
The Roeckl story is replete with royal patronage of the store. Among the famous customers were Empress Elisabeth of Austria, Prince Ludwig and Princess Maria Theresa of Bavaria. The essence of Ferrari is exclusivity, with 13,000 cars sold per year.
Carrying the Family Flag
Enzo Ferrari is known at the company as Comandante, the Commander. There is a natural overlap between the family and the company for Annette Roeckl, who wrote about “just how extraordinary and rare it is that a company founded in 1839 is still run by the same family, now in the sixth generation.”
I love working with family companies because I understand the dynamics, from sibling rivalry to reverence for tradition to fear of falling behind public market competitors. I have pictures of my parents and my kids (and my wife of course) all around my cubicle at the office to inspire me to do my best every day, to hand on to them the torch that my father gave me in 1996 when it is their turn to lead.
Richard Edelman is CEO.
