How Being A Family Business Contributes To Success
Giacomo Chiesi, Head of Global Rare Diseases at the Chiesi Group, explains how being a family business contributes towards greater success.
There is an increased emphasis on the need for pharmaceutical and biotechnology companies to be adaptable and flexible during the COVID-19 pandemic. Family businesses – often small or mid-sized privately held companies where decision-making is influenced by multiple generations of a family – are generally seen as risk-averse, traditional, or stagnant. But research shows that many of these companies are among the most innovative, productive and efficient in their industries.
As in my case, family members are often involved in a family business starting from an early age, positioning them to develop a comprehensive understanding of the company culture and values, decision-making processes, industry dynamics and positioning versus competitors. I grew up listening attentively to my father’s experiences at work over many years, and that taught me a lot. I also have distinct memories of my grandfather and founder of the company, Giacomo Chiesi, in his apron, which was a symbol of his etiquette and rigour as a person. By collecting this important information early in a person’s career, the next family generation can be a valuable resource and have the confidence to make fast and tough management decisions in the future.
The COVID-19 pandemic is a great example of a situation where flexibility and the ability to make quick decisions is essential. Even during these uncertain times, we have continued to make progress in our clinical and pre-clinical development programs in rare diseases, support patients in the U.S. and globally, and maintain our manufacturing activities and a regular supply of medicines to patients in need. We were also able to quickly establish an Emergency Management Committee, which develops business continuity plans and contingencies designed to protect the supply of medicines in all of the countries where our products are distributed.
Flexibility and adaptability are also important in terms of innovation. To be able to effectively drive innovation, owners of family businesses need to be informed about what is going on in their organisations. They need to gather as much information as possible on issues including technology developments and customer demands and adapt accordingly. At Chiesi, our overall goal is to develop and commercialise innovative pharmaceutical solutions to improve the quality of human life. To drive these solutions, we need to be able to listen to, learn from and respond to the needs of our stakeholders, which is why we work in close partnership with patients, caregivers and their healthcare providers and incorporate their voices in everything we do.
We have also made a long-term commitment to investing in innovation, which is a key strength of many successful family businesses. Chiesi has historically invested 20% of its sales in research and development (R&D). This level of investment, which may not be possible among other companies (both public and private), is an essential part of Chiesi’s efforts to build on our long history of innovation and stay ahead of our competitors. In turn, our investments may lead to more new products and higher revenue from those products compared to our peers. One study shows that family businesses have a smaller R&D budget on average than other organisations of similar size, but that does not mean they are less innovative. On the contrary, family businesses are more efficient in their innovation processes.
We are very persistent as a family, and thus also as a company.
We believe that persistence pays off and that you reap the benefits of your investments and your efforts. We have the opportunity to continue to invest in R&D and to do so for the sake of science and patients. The secret sauce of Chiesi has been that we put the interests of patients ahead of our bottom line.
We also put the interests of society ahead of our own, which is why we also significantly invest in sustainability practices. After months of work, in May 2019, Chiesi became a Certified Benefit Corporation (B Corp) – companies that meet the highest standards of social and environmental performance, public transparency and legal accountability. B Corps represent one of the most advanced models in terms of positive social and environmental business impact, and this status can, among other benefits, positively impact a company’s reputation among stakeholders and maintain a competitive edge. But more importantly, as a family business, we felt achieving this status had a lot of implications for everyone and we pride ourselves on being the change that we see.
Family businesses (and B Corps) are also better positioned to focus on the well-being of their employees and thus attract new talent. Research shows that focusing on the well-being of employees makes them more engaged and eager to improve their work – engaged workforces are 22% more profitable and twice as likely to succeed as those with less-engaged workforces.
Family businesses also often facilitate engagement between members of the executive management team and employees. This offers opportunities for employees to suggest new ideas for improving processes, products and internal culture and opens the door for creative thinking and innovation within an organisation while making employees feel valued. At internal meetings at Chiesi Global Rare Diseases, the company unit that develops and commercialises treatments for rare diseases, we always ask the team how the goal of each meeting ultimately leads back to the needs of patients.
Another important advantage of family businesses is the opportunity to focus on the long term. We are focused on the next generation of people and not necessarily the next month or the next quarterly report. We try to have a very long-term orientation because we believe that aligns our objectives very well with the objectives of society and the patients we serve, and it makes us a stable business. Patients can count on the long-term commitment and financial stability of a family-owned business like Chiesi and should benefit from the flexibility family businesses have to invest in R&D, supporting disease awareness, diagnostics, and education, among other areas. And our long-term business philosophy has paid off, as the company now has nearly 7,000 employees and sales of about $2.7 billion in 2020.
Generally, family businesses profit from their culture and their close relationships with stakeholders, from suppliers to customers to patients, who can help these companies develop innovative ideas, products and processes. Family businesses also benefit from their members’ deep knowledge of the company and industry landscape given they have likely spent years getting to know the company, employees, clients and key stakeholders. And these are lessons that other types of companies can potentially try to put into practice to ensure long-term success.
Giacomo Chiesi belongs to the third generation of his family to hold a leadership role at the international healthcare firm Chiesi Group, where he serves as the head of the Chiesi Global Rare Diseases business unit. Watching his father and grandfather over the years has taught him valuable lessons about what it means to run a successful family business and its advantages, and he combines those lessons with his experience as a former management consultant.