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Ferrero's folly?

We can only speculate as to the real reasons the Ferrero family abandoned its consortium bid for the UK's Cadbury for at least the second time in a decade, write Ben Harper and Shonali Sashikant. 

The proud third-generation Italian business, with a turnover of €6.2 billion and a string of industry awards to its name, recently shocked the business community with its sudden withdrawal in the high profile battle against, amongst others, the US goliath Kraft.

Revelations in the run up to their announcement suggests possible intergenerational disagreement within the secretive and close family, who ultimately opted to keep all of their Kinder eggs in one basket. As is often the case when there are different generations with different visions for the business, the patriarch and chairman, Michele Ferrero, had the final say. Despite the apparent strong desire of his sons, co-chief executives Pietro and Giovanni, to bring the Cadbury brand into the Ferrero dynasty, the decision was taken to drop out of the bidding race.

Like Michele Ferrero, many founders/entrepreneurs feel the need to hold their view of the business strong for as long as possible. In this case, it is not that difficult to see why. He has a great track record thus far (inheriting a flair for innovation from his opportunistic father, the late great creator of the iconic Ferrero Rocher chocolate), and is poised to continue his magic through a new treat he has been heard to describe as one day being "as big as Nutella". With this up his sleeve it is easy to see the comfort in continuing as is.

His sons might be hard pushed to ignore such a legacy of successful family innovation and a promising opportunity for "the next big thing", but at the same time, the current situation begs the question: "Does the family actually have a shared vision for the future of the business?" If not, can they find a way to avoid inevitable bitter intergenerational disharmony and blend their rich, distinctive values to create a powerhouse of sweet success?

Many cases of upheaval in family businesses are found to be a result of divergent visions and aspirations within the family. At Ferrero the apparent father-son divide, to be expected in almost any family, is now in the public arena and the traditionally highly-secretive family business seems to be experiencing a crisis of direction. Of course, this is partly explained by Michele Ferrero handing the baton down to his sons, who are from a different generation and have different personalities and perspectives. However, succession does not have to have a negative impact on the business if it is carefully planned in advance.

The key to avoiding continued disagreement and a possible place in the storybook of failed succession transitions is for Michele and his sons to work together to articulate their aspirations for the business and develop a shared vision and set of core family values that both generations buy into. A shared vision of the future for the business and the family would give the Italian chocolate makers clear strategic direction, family peace and a more robust strategy, allowing them to weather any storms or transitions in the future.

Succession is always an issue family businesses must address and many do very successfully. One such family, the Rockefellers, frequently re-examine the family's core ideals and values, redefining and renewing them as is felt appropriate to help reinvigorate the sense of connection between family members and the organisation.

With a shared vision, there are definitely ways of managing succession whilst maintaining the business model and ideals which made the company successful. 

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