What’s unusual about this?

Alexandre Ricard, the heir to the Pernod Ricard empire talks about his unusual path to the top, how it has influenced his leadership and what’s next for the business .

Scion of the family runs family business. What’s odd about this?

12 thoughts on “What’s unusual about this?”

  1. “Ricard, who has retained his investment banker’s caution, will not comment on potential acquisition targets”

    Suspect he wasn’t quite so cautious about recommending acquisitions when he was working at Morgan Stanley.

    Different when you have to pick up the bill when buying over-priced assets.

  2. So Much for Subtlety

    No, no, no. That is how every other male born with a silver spoon in his mouth does it. This Richard wants you to know he rose to the top purely on the basis of his own talents and merits. He proved this by working for some of Daddy’s friends for a few years before coming back to the family firm.

  3. There’s a Freakonomics blog about family inheritance of companies which basically says that they perform worse than hiring someone from outside to do the job of CEO.

    JuliaM: is it just the aniseed? Have you tried Pastis?

  4. Always thought it was slightly odd that the Brits never developed an aniseed flavoured drink, seeing as we are pretty keen on liquorice.

    Might be a temperature thing, as aniseed flavoured drinks tend to be Mediterranean. Though no shortage of pastis drinking in northern Paris.

  5. Shinsei and SMFS,

    I can see some pretty good reasons for nepotism in choosing the next boss of a family firm. The obvious one is people like doing it. No one ultimately cares about “the good of the company”, while they do care about the good of their family.

    OK, so a rational owner accepts that the good of your family might be best served by running your family business well. But even then nepotism when selecting the next company boss is not necessarily an irrational idea. You are well placed to assess the candidate if he is a relative, better than if you must rely on interviews and CVs. Your young relative has (if you did it right) started getting his education in the business as a child, giving him a head start on others.

    No, I’m not demanding that all companies move to hereditary succession immediately, just saying that it isn’t crazy. The system used by the mafia or Anglo-Saxon kingdoms of selecting one individual as overlord from the next generation of the ruling clan seems to work fairly well.

    Incidentally, Tim, I still can’t read your front page. Going to https://www.timworstall.com on Google Chrome gives me

    “Site Temporarily Unavailable

    We apologize for the inconvenience. Please contact the webmaster/ tech support immediately to have them rectify this.
    error id: “bad_httpd_conf”

    I am sufficiently devoted to you do a search for “tim worstall” in the last twenty four hours and then cycling from post to post. It’s a real bore, and I bet it puts some less loyal people off.

  6. Took a while for me to find the version that I wanted, but “Why Do Management Practices Differ across Firms and Countries?” by Nicholas Bloom and John Van Reenen in 2010 is really worth reading. Among other things it compares the effect of various forms of firm ownership on management practices and effectiveness.

    As the authors blog here, it indicates family-owned firms should hire professional management. The theoretical argument is interesting:

    There are three problems with family succession:
    Narrowing the CEO selection rule to a family member reduces the pool from which managerial talent is drawn. Imagine if we selected our Olympic team members from the sons and daughters of those who had won medals two decades ago. Sure, there is some genetic component, but it is rather unlikely that the best person for the job inevitably is a family member.

    Next, there is what we call “the Carnegie Effect,” named after the famous industrialist Andrew Carnegie, who gave away most of his wealth to non-family members. Carnegie argued that if his eldest son knew he was going to inherit the firm, what incentive would he have had to work hard at school?

    Finally, primogeniture has a depressing effect on other talented managers in the firm. Why work hard when you know that the top seats will always be reserved for the owners’ offspring? Better to leave and seek your fortune in a more meritocratic environment.

    Many economic historians blamed Britain’s decline relative to America and Germany to “personal capitalism.”…

    But the empirical evidence in the paper is even more convincing. That study was part of a wider World Management Survey run by Stanford, LSE and Harvard Business School. That has produced a wealth of material but this working paper roams rather wider than the one I linked earlier. Suspect certain denizens of this blog will enjoy what it says about the effect of competition and public/private sector, on management effectiveness (all the pretty graphs are at the end btw).

  7. Meanwhile, some baby born recently is 3rd in line to the throne and that the best way to do it?

    At least, family businesses are wasting their own money or wealth.

  8. So Much for Subtlety

    monoi – “Meanwhile, some baby born recently is 3rd in line to the throne and that the best way to do it?”

    Actually it turns out it is. I am no particular fan of these Dutch fools, but they have worked out very well for us.

    “At least, family businesses are wasting their own money or wealth.”

    What applies in business may not apply in politics. If you took a list of the richest and most stable countries in the world, monarchies would be grossly over-represented at the top. After all, where would you rather live – Sweden or Guinea Bissau? Britain or North Korea? Japan or Vietnam? Even Thailand or Burma?

    It is hard to think of a monarchy that is a dump – Swaziland perhaps. Even the Gulf monarchies are much better than the Gulf non-monarchies. It is not hard to think of republics that are sh!tholes.

    That fat little sh!t factory is making all of us rich.

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