Doris Sommavilla: Breaking the cycle of bad governance
Having felt the aftershocks of her grandfather’s unprepared succession and experienced first-hand the effects of her father’s sudden passing, Doris Sommavilla knows all too well how poor governance can threaten the future of a family business.
A third-generation member of hotels and residential development businesses, Doris’ Italian family have invested their wealth in hospitality, entertainment, residential projects and beyond in Italy, Eastern Europe, and the United States.
After suddenly inheriting her own family business and helping diversify away from real estate, Doris is passionate about advising next gens to avoid similar pitfalls, both as a mentor (as part of the CFA Mentoring program) and as a director within Stonehage Fleming’s family office division.
Here, she talks exclusively to Campden FB about family legacy, increasing diversity and planning for the future…
How was your hotels group founded?
In the late-1950s, my grandfather opened the first guesthouse in Campitello di Fassa – my village in the Dolomites which is 1,445 meters above sea level. When he started, the population was very limited, people were struggling to live there because of the rigid weather conditions and food shortages due to the prolonged consequences of the Second World War. He hosted expert climbers and mountaineers mostly coming from abroad and especially the UK, Austria, and France.
Later in the 1960s, after the introduction of ski lift technology, tourism in the area became popular, paving the way for the Dolomites to become a worldwide-known destination and UNESCO World Heritage site.
My grandfather was a visionary entrepreneur. He supported and invested in the development of the first cable car in my village – just a few steps from our guest house. This was a great milestone that has changed not only the fate of my family, but also the fate of local inhabitants. This also represented an important step in what today is known as the Sella Ronda circuit.
In the late 1960s, my grandfather passed away. My father, who was in his early 20s, was the only son, the last born of five and the son of my father’s second marriage. As was the tradition back then, the eldest son would be the one to inherit the operational business and all the related assets. Nothing was planned, but the rule was clear. So, of course, that led to tension with his sisters.
Up until the early 2000s, my father grew the business from one hotel to eight, remained involved and supportive of the development of the cable car system that made Sella Ronda what is today and got involved in several other interests, including a limestone business, and residential development in Italy, Eastern Europe and the United States.
I had no leeway to learn by doing, I could not make any kind of mistake.
You abruptly inherited the family business and initially struggled with the role. How did this all come about?
In 2010, my father passed away unexpectedly, nothing was planned, no family governance was in place. He was 73 when he passed away and, consequently, we ended up with a non-structured succession. This triggered unexpected consequences, as uncertainty and lack of coordination put an incredible strain on our sibling relationships and with external stakeholders (existing advisors, employees, suppliers, clients, banks etc).
I had to resign my job at [American investment management firm] PIMCO to personally take care of my own interests, as my father’s advisors did not seem interested in our needs and future projects. I went back home for almost two years. The first year into our succession journey was very challenging: We quickly went from one decision maker to many uncoordinated voices not listening to one another; it was complete confusion. I was only 25 years old and I was struggling to speak up and to find my own role. From one day to another, I had to wear different hats because when I was speaking with my brothers. I wasn't the little sister anymore; I was a shareholder who aimed for an operational role in the family business. I had to grow very fast.
It took us a year to fully understand our situation. My father had more than one advisor for similar tasks and properties, he probably didn't want anyone to really know the bigger picture. The bigger picture was clear in his mind…
My brothers had more interest in the real estate development business and managing our entertainment division, which includes mountain chalets, clubs, gyms, spas, discos and restaurants. They had no interest in managing hotels whatsoever, probably because of our childhood memories. Hotels are operationally intensive and our parents were always very busy. We hardly celebrated holidays together.
I had to take on a lot of responsibilities, including running our Romanian companies at the age of 27 years old. I started running our Romanian business in 2014 – during the real estate crisis, so you can imagine everything was complex. During the first few years, I had to learn under time pressure and replace my family advisors who were not supportive. I had no leeway to learn by doing, I could not make any kind of mistake.”
Through diversification of assets, you helped turn the company’s fortunes around. Can you talk about the process?
I was lucky because I previously studied at Bocconi University [in Milan] and then worked for PIMCO in asset management. Here, I met my first mentor who shaped my way of thinking. He taught me a lot about the merits of diversification. I like to share my own experience as a way of discouraging others from keeping all their eggs in one basket. It is thanks to a proper diversification program that my family and I have navigated through the pandemic with relative peace of mind. Diversification has helped us become resilient in times of crises.
Not being diversified enough is the problem with many first- and second-generation families. While they are extremely skilled, they want to only focus on their own vertical and they completely forget about their inability to fully control events - crises happen repeatedly, we are not fully immune, and it might happen that our main market simply plays against us.
Starting a diversification path for my family was a big challenge for two main reasons. Firstly, my brothers didn’t want to miss out on potential opportunities in our core sector – my father’s motto was ‘Invest in what you understand’. Secondly, because of my father’s bad experiences with private bankers in the 1980’s running his diversification programme.
The real estate market crisis in 2008 was an eye opener for my family and this is when we started to embrace a gradual path towards diversification of our investments. During the pandemic, when our hotels were closed for more than one and a half years, we finally harvested the benefits of diversification. This has dramatically increased our resilience. Having some dry powder and emotional capacity gave us time to turn the current crises into an opportunity for growth on a personal, family and business level.
Unplanned succession is something that keeps repeating in my family - I want to break this cycle.
You inherited the same governance issue that your father did when you grandfather passed away. How did that affect your approach to taking over the business?
When my grandfather died, my father inherited almost everything in terms of wealth, but he lost his relationship with his family, especially his sisters as they felt they were treated unfairly. When my father passed, my brothers and I faced a very complex situation as well, because of age difference as I am almost 15 years younger than my youngest brother.
I often wonder why people don't learn from their ancestors’ mistakes. We're very united as a family thanks to our mother who is the social glue in the family and thanks to the education, we have received that focuses on the family wellbeing more than on the individual.
Unplanned succession and the related challenges are something that keeps on repeating in my family and I want to break this cycle for the benefit of my next generation.
I'm very close to my two nephews and two nieces and I enjoy mentoring them, especially one of my nieces who is very similar to me. I'm helping them speak up and unlock their own talents. I am an advocate to give them the opportunity to join family meetings and earn their own credibility early on in pet projects. I believe that it is key that our next generation has the possibility to start with baby steps, learn from their own mistakes and seek constructive feedback to be better prepared to the next project.
It's so important, because when you are in your 40s and you finally inherit the business, then you are ready for the challenge.
I want to do my part in supporting my next generation. They are a pool of talent, and I am grateful for their enthusiasm. This is one of the reasons why right in the middle of the pandemic, in August 2020, I decided to take back one of our hotels [Hotel Gran Chalet Soreghes] from the management of my cousin and manage it directly with my 24-year-old niece in an operational capacity. My mother was extremely supportive of this shift of governance.
On the business side, that was probably one of the most difficult times since my mother started managing hotels. She told me that she did not remember a time in which our hotels remained closed for such a long time. Also, she inspired us by recalling that in moments of crises, she always had the best ideas, her most creative moments.
On the family side, this was the right moment for me as proper diversification and family governance mechanisms were in place to allow us to have productive family meetings and invite the next generation to express their own ideas and be part of the family project. Getting them involved gave me the idea of strategically repositioning of one of our hotels transforming it in a sport hotel – with a focus on bikes, trail running, skiing and paragliding, with dieting plans, sports clinic etc...
This experience has paved the way for our personal growth and created a strong bond between us. In many ways I recognise myself in my niece, being a young woman in business she is today facing similar challenges I had to face with the only difference that I was alone, while she can count on me and other support networks that I have introduced to her.
It seems like we ladies need to go the extra mile and earn our own credibility more than men. Facing these challenges for my niece has been key as this paved for her an important journey of personal and professional growth.
How did you devise your family governance structure?
When it comes to the division of liquid assets, it's easy to be precise and equal. When it comes to uneasily divisible and illiquid assets, it's not always equal. Also, who can operationally join the family business is a difficult decision and talents and, in particular, their motivation and skillsets must be considered.
When we speak about governance opportunities, we need to clearly define what fairness means. We have put together un patto di famiglia [a family pact], which entails some criteria. For example, they must have a university degree, the need to have a significant experience working outside from the family business, and fluency in German, English and Italian, of course. Within our patto di famiglia, we ask our next gen to participate alongside key staff in education programmes that teach the basics of running a business in hospitality. It is also key that our next gen remember their roots, learn the importance of investing in relationships, be a team player and give to those who are less fortunate through philanthropy.
You have a passion for increasing gender diversity within family business roles, how do you hope the landscape will look in ten years?
Women have always been the pillar in my family, I had a very strong grandmother, and my mother is also a very tough woman. My mother plays such an important role in the family, she's really the social glue for us.
Now, we women need to understand that finding our own space and voice starts with us being proactive and less perfectionist. It is an important investment in our education, but it is also important that we learn by doing, investing with baby steps in small projects early on. I am a big believer that women should take on more risk, make more mistakes early on and learn from them to be better prepared for the next challenge. Also, research shows that we tend to spend too long planning before going into implementation because we are afraid of making mistakes. There is nothing to be afraid of if we reframe the meaning of mistakes at an early age – they are instead important lessons for us that help us be better prepared for the next challenge and then finally succeed – this activates a process that leads us to gradually grow our self-esteem.
In the next decade, I think there will be real change. The change has already started and is bringing significant results. I see already a big change between my generation Z niece and I. I always say to my nieces, they are lucky to be living in this time but they need to remember the efforts women before them made to pave the way, starting from their ancestors to many female role models we should be grateful to.
I decided to become a mentor for other women in business, I think it’s a nice way of giving back, plus I also learn from them. It’s very important to keep speaking about our opportunities today, especially when it comes to work-life balance, because if women forget the struggles that we had in the past, we might take a step back.
When I started in my family business, my family advisors were my father’s yes men.
Have the challenges and successes you’ve faced with your own family business influenced your approach to work for Stonehage Fleming?
Sometimes I see myself in their situation, which helps me to understand what they are going through. My role at Stonehage Fleming is to ask them questions, understand my client needs and develop typical family office services around them – depending on their size. When I started in my family business, my family advisors were my father’s yes men. They had no faith in us being the third generation, they had an even stronger prejudice in me being the youngest woman in the family. They also probably had a hidden agenda with us. They basically were not listening to our ambitions, did not consider our talents and expectations, they were just focusing on numbers, looking at their Excel spreadsheets, making market evaluations and not understanding the potential. They did not pay attention to the whole family – they simply ignored some family members.
I decided to join Stonehage Fleming because I like the company’s work ethic and how family officers deal with their clients. I have learned the importance of being a good listener. It is key to ask the proper questions to try to uncover our client’s needs and the ones that are less obvious - sometimes what is voiced by the client is only the tip of the iceberg.
Chemistry is also very important. In Stonehage Fleming, we have a very strong division focussed on family governance which is very much separated from the investment management business. This division is very important as family members need to feel they are in a safe space and that they work with an advisor who has their own needs at their best interest.