{"id":1939,"date":"2020-05-19T19:07:01","date_gmt":"2020-05-20T02:07:01","guid":{"rendered":"https:\/\/familyenterpriseusa.com\/?p=1939"},"modified":"2020-05-19T19:07:01","modified_gmt":"2020-05-20T02:07:01","slug":"new-strategies-from-a-new-generation","status":"publish","type":"post","link":"https:\/\/familyenterpriseusa.com\/feusa\/new-strategies-from-a-new-generation\/","title":{"rendered":"New strategies from a new generation"},"content":{"rendered":"

By Hedda Schuapak, Family Business Magazine.<\/a>
\n<\/em><\/p>\n

NextGens’ innovative ideas can revitalizes their family companies. Here are three examples.<\/h5>\n

When twin sisters Jenny Dinnen and Katie Rucker took over MacKenzie Corp., an analytics firm in Lake Forest, Calif., in 2013, they immediately realized that the business needed some new focus in order to remain competitive. Their father, Don Vivrette, had founded the company in 1985 and named it after his mother, Kathryn MacKenzie Vivrette.<\/p>\n

Vivrette, now 69, got MacKenzie to the point where it could support his family. His daughters, now 40, are preparing to take it to the next level. They\u2019ve shifted the business model from tactical market research to strategic consulting. They\u2019ve also expanded the company\u2019s client base beyond motorsports to new industries, including professional sports, charities and non-profits, and residential communities.<\/p>\n

In a family business, change can be a source of friction between generations. Senior family members may be leery of tampering with a successful formula, while younger generations see new opportunities or shifting market realities their elders might be missing or ignoring.<\/p>\n

Innovation is no longer a luxury \u2014 it\u2019s a necessity, says Jenny Dinnen, president of sales and marketing at Mac\u00adKenzie Corp. \u201cBecause this company has been wildly successful for 30 years, there are people who say, \u2018It\u2019s worked, why change?\u2019 The answer is the entire world is changing at a pace that\u2019s mind-boggling.\u201d<\/p>\n

\u201cFor us, honoring the past is making sure this company is still here at least the next 30 years,\u201d says Rucker, MacKenzie\u2019s president of operations. \u201cThere\u2019s so much happening in the customer and data analytics space. The industry is not what it was 30 years ago, and we had to adapt to a changing industry.\u201d<\/p>\n

Forging ahead<\/strong>
\nThe first step to successful innovation is losing the fear of failure, says Rucker. \u201cOur dad was very calculated and risk-averse, and we were brought up and trained in that mentality,\u201d she recalls.<\/p>\n

As the sisters grew into leadership roles, they realized cautiousness was holding the company back. The two women, in their early to mid-30s at the time, stepped back and considered what would be the worst possible consequence of trying something new.<\/p>\n

\u201cThe answer was, we completely bomb, go bankrupt and move on,\u201d says Rucker. \u201cThat was a big revelation for us. We figured that if that happened, we just take the great skills we\u2019ve learned and go get a new job. It was being OK with failure that allowed us to move forward.\u201d<\/p>\n

Failure didn\u2019t even register in Marisa Sergi\u2019s mind when she created the RedHead Wine brand as a college capstone project at age 19. Her goal back then was to present the project to the class and earn her degree.<\/p>\n

Sergi\u2019s parents launched L\u2019Uva Bella Winery in Youngstown, Ohio, in 2005. Today, in addition to the wholesale wine division, the business includes an Italian bistro that also sells supplies for home winemakers. Sergi started feeding grapes into a hand crank press in her parents\u2019 garage as a fifth-grader, so she naturally gravitated toward Cornell University\u2019s viniculture program. The capstone project is a defining feature of the program and is required to graduate.<\/p>\n

\u201cYou choose the topic, do research and present conclusions in what you\u2019ve learned. Instead of doing research with yeast or microbes, I proposed something a little more creative, and was glad my professors let me lead with my passion for winemaking and creativity rather than something super-scientific,\u201d Sergi says.<\/p>\n

After Sergi graduated from college in 2015, her parents wanted her to work elsewhere before joining the family business. She landed a plum job at Ernest & Julio Gallo in Modesto, Calif., helping to create new products. So good was the position that her father, Frank Sergi, wanted her to stay there instead of working at L\u2019Uva Bella.<\/p>\n

Her mother was more receptive. \u201cWhen she came up with the idea to launch RedHead, I said, \u2018OK, Marisa, you\u2019re single, you don\u2019t have a family, you don\u2019t have to worry about children, husband, or house; this is your time to do something like this,\u201d says Ruth Sergi, 59. \u201cMy husband felt she should have stayed [at Gallo] a couple of years; one year was not enough.\u201d<\/p>\n

Marisa Sergi knew the risks were high \u2014 \u201cmy reputation, my entire career! I resigned from a job that was very secure and something I really enjoyed, and, especially as a young female winemaker, I felt like I had the whole industry watching me.<\/p>\n

\u201cPeople knew I was working for Gallo. They knew I was starting a label in a very crowded market, and I knew people would watch me burn or thrive. But I didn\u2019t want to be 80 years old and one day look back on my life and have regrets that included not launching the brand.\u201d<\/p>\n

Now 25, Sergi is president of RedHead Wine. The brand can be found on the shelves at Walmart and Kroger stores in Ohio. In West Virginia, it\u2019s available in Riesbeck\u2019s Food Markets and some mom-and-pop stores. In Pennsylvania, consumers can find RedHead Wine in Sparkle markets and select mom-and-pop stores; it will also soon be available in Giant Eagle stores in the state.<\/p>\n

Sergi knows she was fortunate to have an existing family business willing to provide seed money for the new brand\u2019s grapes, bottles and caps. L\u2019Uva Bella offered her the use of its winemaking equipment and sales staff. She used money she won in business incubator competitions for sales, marketing and legal expenses.<\/p>\n

\u201cIt was definitely an adventure of a lifetime \u2014 small-town Ohio woman flies to Bentonville to pitch to the Fortune 1 company of the United States!\u201d she recalls. \u201cWe didn\u2019t have any experience with pitching to such a large company.\u201dShe landed her wine in Walmart by participating in the retail giant\u2019s U.S. Manufacturing Open Call, held every June at its Bentonville, Ark., headquarters.<\/p>\n

A business incubator organization in Youngstown, Ohio, helped Sergi plan her pitch. \u201cI got a lot of help in preparing the presentation and to shape my expectation for the meeting,\u201d she says. \u201cI walked in with a very solid pitch, samples and a story, and got a yes from them to go into some of their Ohio stores.\u201d<\/p>\n

But with 100,000 or so new wine labels registered every year and about 5,000 wine brands readily available in the U.S. wine market, Sergi acknowledges that without her family\u2019s network of sales reps and clients she might not have succeeded \u2014 and she\u2019s acutely aware how quickly fortunes can change. \u201cI don\u2019t want Walmart being 80% of my business and then stress about them going away,\u201d she says. \u201cI\u2019m making sure the business is very diverse, not overpowered by any retailer. Right now it\u2019s under control, but that could change, and I\u2019m very conscious of that.\u201d<\/p>\n

Breaking the mold<\/strong>
\nFor Danny Govberg, third-generation CEO of Govberg Jewelers, innovation and disruption are synonymous. If a decades-old business needs to be flipped on its head in order to stand out, so be it.<\/p>\n

Govberg Jewelers\u2019 roots date back to 1916, when Albert and Samuel Govberg first opened a small jewelry store in Philadelphia. Albert alone later opened Govberg Jewelers in 1922, and his descendants, including Danny, 58, run the business today. It was a traditional family jewelry store until Danny and his brother, Jeffrey, formally entered the business the early 1980s. Like most children in jewelry families, they\u2019d worked in the store informally all their lives. When, at age 27, Danny announced his intention to expand into luxury watches, his father, Irv, was horrified.<\/p>\n

\u201cThere\u2019s no money to be made in watches!\u201d insisted Irv, who is now retired. Most jewelers shared Irv\u2019s viewpoint; the advent of battery-powered quartz watches had put small watchmakers out of business, while global luxury brands like Rolex kept tight reins on distribution, pricing and margins.<\/p>\n

Whether motivated by his father\u2019s skepticism or the thrill of a challenge, Govberg embraced the category and made the store synonymous with luxury watches in Philadelphia. Today, Govberg Jewelers \u2014 which now has three brick-and-mortar locations \u2014 is so entrenched in watches that it\u2019s making a concerted effort to add back more jewelry.<\/p>\n

Overcoming objections<\/strong>
\nDinnen and Rucker, Sergi and Govberg all were lucky in multiple respects: Market timing was right for their ideas, and if their parents were skeptical, they at least were not hostile.<\/p>\n

\u201cMom always supported me,\u201d Sergi says. \u201cDad also supported me, but he had some doubt. I received a lot of pushback from him, but here we are.\u201d<\/p>\n

MacKenzie\u2019s Dinnen and Rucker faced more resistance from some longtime employees than from their father. Eventually, those employees \u2014 including a high-level manager \u2014 had to go. When the twins took over, the longest-tenured employee had been working there 30 years, and the newest had been with the company for 12 years.<\/p>\n

\u201cWe tiptoed for a long time trying to honor them and their commitment, but that was hurting the company,\u201d Dinnen says. \u201cThe changes we were making meant the company had evolved into something different. They were hired by Don for his company, and it\u2019s everyone\u2019s prerogative to say, \u2018This is not what I signed up for.\u2019 \u201d<\/p>\n

The sisters worked with a transition consultant and presented the situation as a self-selecting process. \u201cWe said, \u2018This is what we\u2019re doing now, and that\u2019s OK if it\u2019s not for you,\u2019 \u201d Dinnen says.<\/p>\n

For Govberg, \u201cno\u201d means \u201cdetour.\u201d After successfully challenging his father\u2019s objection to watches, he came up against another wall: an industry as reluctant to enter digital commerce as Irv Govberg was to sell timepieces. Many jewelers still believe nobody will spend thousands of dollars without touching the product, but not Govberg.<\/p>\n

\u201cToday\u2019s consumer is increasingly connected and empowered by social networks and digital devices, and they are no longer bound to a store\u2019s hours of operation,\u201d Govberg says. \u201cThey dictate how and when they want to interact with a brand.<\/p>\n

\u201cThis is the future for luxury retail: supporting the consumer on their time, through their preferred style of communication, and with the support of a highly trained and knowledgeable guide.\u201d<\/p>\n

But luxury watch brands were so resistant to digital commerce that they forbade even authorized retailers like Govberg to sell online. Selling pre-owned watches was the only way around the restrictions. Luckily, the market was ripe and Govberg pounced.<\/p>\n

Collectors often want to sell or trade in one watch to buy another. Govberg initially launched an online luxury watch resale site in 1999, but today the store\u2019s website offers a robust selection of pre-owned luxury watches. His two G4 sons, Marc and Brian, are now in the business, along with their G4 cousin Robyn, Jeffrey\u2019s daughter. Brian, 31, was instrumental in expanding the pre-owned watch business; Robyn, 32, is a client adviser and watch trader; and Marc, 30, is part of the company\u2019s operations team. (Jeffrey retired in 2005.)<\/p>\n

Meanwhile, Danny had bigger visions. He and a longtime friend who was a watch dealer in Asia both saw vast potential for a global online platform for pre-owned watches. Together with a private equity partner, they conceptualized and launched a separate global pre-owned watch site, called WatchBox, in 2017. With offices around the world, that site also offers loans against luxury watches in addition to buying and selling them.<\/p>\n

Changing the culture<\/strong>
\nInnovation must happen inside to be successful outside. At MacKenzie Corp., Dinnen and Rucker\u2019s ideas precipitated a shift in the company culture when they took over leadership.<\/p>\n

\u201cOur dad hired people very similar to himself,\u201d says Rucker. \u201cJenny and I are very different from him. He\u2019s more siloed, heads down, get the work done, but we\u2019re more collaborative.\u201d The twins permitted employees to work from home. They attended conferences in a variety of industries, partnered with other companies to penetrate areas that weren\u2019t MacKenzie\u2019s strength, expanded the client base, entered new industries and began to focus on consulting.<\/p>\n

\u201cSuccess to Dad was supporting his family and employees, and he was tremendously successful at both,\u201d says Dinnen. \u201cTo us, it\u2019s different. Of course, supporting family and employees is important, but how are we impactful on our client\u2019s business? How are we helping them to succeed?\u201d<\/p>\n

\u201cWe\u2019re passionate about really cool experiences,\u201d says Rucker. \u201cWe\u2019re thinking about how to collect information and insights to improve a customer\u2019s experience with the [client\u2019s] brand. That\u2019s how our services now are in line with how things are changing. For instance, millennials are focusing on companies that are doing good in the world, and that\u2019s something we\u2019re authentically passionate about, so how can our services help companies focus on that and help them align with what the consumer wants from business today?\u201d<\/p>\n

At Govberg, innovation required blending the traditional functions of a high-end jeweler with the modern vibe of an online retailer. By necessity, its brick-and-mortar stores resemble other luxury jewelry stores, with carefully curated assortments in locked showcases. But the online division headquarters looks more like a Silicon Valley workspace, with an indoor putting green, a full kitchen and event space, TVs, and toys scattered about.<\/p>\n

Danny Govberg may have proved that people will spend $20,000 online \u2014 but they still expect the same level of expertise and concierge treatment as they would get in a luxury jewelry store, and that had to be part of the online experience for both the Govberg and WatchBox sites.<\/p>\n

\u201cThe decision to invest heavily in growing the online business was about addressing the interests and needs of customers with as little friction as possible,\u201d Govberg says. \u201cLuxury commerce is the intersection of brick-and-mortar retail and e-commerce.\u201d<\/p>\n

\u201cThere\u2019s a real benefit of being a legacy company, but you don\u2019t want to be stuck doing things the old way. Now we have the benefit of both,\u201d says Dinnen. \u201cConsumers\u2019 expectations are changing, and we\u2019re either going to get crashed underneath or we need to get going with it.\u201d<\/p>\n

Article provide by Family Business\u00a0Magazine.<\/a><\/p>\n

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Family Enterprise USA<\/a> is the organization that represents all family businesses on a national level in DC; it is not unique to any industry. FEUSA is different from other organizations because it represents and advocates for the families of family businesses and the issues, they face running their businesses every day. Our sole mission and purpose is to promote family businesses and their job growth in America. We also support the work of Family Business Centers across the country. We hope your family will choose to be a member of FEUSA. Family Enterprise USA is a 501(c)(3) non-profit organization. Family foundations can donate.<\/a><\/p>\n