When a business is passed through a family, each generation inherits not just what the business is at the time, but also an endless number of possibilities.
It takes a lot of guts to change what the business does -- what your parents did -- but these people took their business in a totally new direction and found their way to success.
Wrigley’s Chewing Gum
Believe it or not the most famous name in chewing gum, by a country mile, sort of fell into it.
William Wrigley Jr. was born and raised as a soap salesman. His father, William Snr., made the soap and as soon as his son could walk he hit the streets of Philadelphia, selling it out of a basket.
The basket became a horse and cart and young William discovered he was a talented salesman.
In 1891, when he was 29 years old, he moved to Chicago to start his own business with $32 in his pocket and started with what he knew -- soap.
But here’s where it gets interesting. He offered a free can of baking powder as an incentive for his stockists to choose his brand. The baking powder became more popular than the soap and so he responded -- Wrigley’s switched from soap to baking powder.
He kept offering little rewards to people who did business with him, now it was a pack of his own brand of gum with every box of backing powder.
As before, the little prize became the best part and Wrigley once again pulled the trigger -- making his business all about the gum.
After he died in 1932 his son Philip took over and expanded the gum empire. Due to rationing during World War II Wrigley’s struggled to keep up production. Rather than drop the quality Philip decided to take his gum off the shelves and dedicate his production to the US Armed Forces. The move did wonders for public image, not to mention all the soldiers who continued to chew Wrigley’s when they returned.
The company was then passed down through two more generations of William Wrigleys before an outside CEO was brought in for the first time in 2006.
In 2008 Mars Incorporated bought The Wrigley Company for $23 billion.
Being light on its feet and easily adaptable made this family company the world’s most popular gum brand -- and it’s a long way from its soapy start.
This company started out making things kids want nothing to do with -- school supplies -- but one day decided to focus on recess rather than the classroom by switching to toys, and everything changed.
Hassenfeld Brothers was founded in 1923 by Henry, Hilal and Herman as a textile company in Rhode Island and over the next 20 years it homed in on making school supplies like pencil cases and pencils.
But in the early 1940s the company split, Henry Hassenfeld’s son Merrill became president of Hassenfeld Brothers and his older brother took over what would become Empire Pencils.
Merrill took the company into plastics moulding, and everything changed when a toy called Mr Potato Head hit the shelves, which the business bought off inventor George Lerner in 1952. The spud with interchangeable facial features made millions for the company in its first few months and is now in the US national toy hall of fame (which exists).
The company later shortened its name to Hasbro Inc. and went on to bring out toys and games including G.I Joe, Monopoly, Nerf, Play-Doh, Scrabble and Trivial Pursuit (just to name a few).
Hasbro is now listed on the NASDAQ, with a current market capitalisation of $US6.87bn.
Maybe this one isn’t so much a case of a change in direction as it is an example of innovation.
In 1889 the must-have game in Japan involved a special deck of cards. It was called Hanafuda and Fusajiro Yamauchi’s business, Nintendo Koppai, produced and marketed the game.
And that game remained the company’s bread and butter for the next 74 years.
But by the 1960s the family company was struggling. Nobody bought playing cards anymore and Nintendo started having a go at everything -- in its arsenal it had a taxi business, a hotel chain, an instant rice company, a vacuum brand, and toys.
In 1974 the company began to test the waters of electronic games, and by the mid-1980s Nintendo had created (or bought out) some of the world’s most popular characters (Mario & Luigi, Donkey Kong, Pokémon and hundreds more).
Nintendo basically invented the modern understanding of video games, and is valued at $US16bn.
Smorgon Consolidated Industries
Naum (Norman) Smorgon came to Australia with his family in 1927 on a converted cattle ship. They settled in the Melbourne suburb of Carlton and set up a kosher butcher shop (their father had been a butcher in Ukraine) but this was just the starting point for the biggest and most diverse family business in the country.
The entire family, including Norman’s brothers Moses and Abram, his second wife Vera, and four children, were involved in the business from the early stages.
Before long they outgrew simply selling meat and started looking toward the supply chain for growth. They found it by turning the business into Meat Works, a meat importer based in West Footscray.
Eventually, the family wound up a long way from where it started, running Australia’s second largest steel business, along with divisions including an international paper and cardboard recycling and manufacturing business -- as well pine forests, food canning and export businesses, property interests and glass and plastic companies.
This is how the Smorgons became a dynasty -- their ability to spot an opening in the marketplace that nobody else could see and swiftly move in.
Steadily putting their fingers in more and more pies, the Smorgons were able to split the focus and expand the various businesses by tracing back the supply chain, as they had with the meat business.
By 1995 the Smorgons led Australia’s largest private business, but that was the year the chickens came home to roost -- the year of the Smorgon empire’s downfall.
It’d be easy to view the breakup of the $1.5 billion business as a failure, but when you consider that the each of the seven family branches got $100 million, according to BRW, it starts to look more like the biggest success story in Australian family business history.
David Smorgon, a grandson of Moses, is now a family business advocate and runs an executive coaching firm that specialises in family businesses.
People often don’t realise how much their kids learn from them -- sometimes the parents aren’t even aware when the lessons are taking place.
Kerry Packer is the perfect example. The media tycoon was famous for a few things -- among them were his swift business tactics, huge temper and lavish gambling habits.
Arguably the most famous story on the latter, legend really, is the one that involves a wealthy Texas oilman stumbling up to Packer in a Las Vegas casino and bragging about his $US100 million fortune.
Upon hearing this Kerry pulled out a coin and said to the Texan “I’ll toss you for it”.
Apparently Packer had won 20 hands of Baccarat in a row that night, but as we all know, what goes up must come down and Kerry Packer lost plenty of money to his habit -- rumour has it he lost as much $34m in one session.
Kerry’s son James, who took over the family media empire that his grandfather Sir Frank Packer started, saw all this happen and understood the value to be had by taking a gambler’s money -- so he gradually moved into casinos.
In 2006 James sold Channel Nine and Australian Consolidated Press $5.5 billion so he could concentrate on Crown Resorts, which has worked out pretty well considering he’s now worth $6.2bn according to Forbes.
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