Risto Varynen is the fourth generation of a Finnish bakery business, Primula, founded by his great-grandfather in 1908. Baking is a particularly competitive business in Finland so Risto, 33, and his cousin Juha Valkamo, 44, wanted to offer something different to their customers. They decided to sell off their most profitable branch of the business and restart the company as a carbon neutral operation.
This required the 101-year-old family company to change its business model, restructure corporate governance and address its succession plan, which had been in place since the business began.
The process started last year when they decided to professionalise the company board, a difficult move in a family business that has afforded its sons a directorial role since its inception. Before the reorganisation, the board was made up completely of third-generation family members and Juha, who has held the CEO role for nine years.
"The business was started over 100 years ago and it was decided then that the sons would always get a place on the board. Family members expected to inherit a position on the board. Is that board the most efficient and best in the world? Probably not," Risto (pictured) says.
Since then the entire third generation has been removed from the business and been replaced with outside professionals. "We met some resistance at first; it was especially painful for those family branches who did not get their representatives on the board. But everybody accepted it and understood why it had to happen," Risto explains.
"I know it was difficult but as soon as it was done the third generation board members were relieved. The big, huge decision about what to do was no longer on their shoulders and we were ready to take up the challenge with great enthusiasm," Risto says.
Now he and Juha are the only family representatives on the board. "I had to earn my place – I have a financial background. I'm a professional investor and I'm in charge of the family office and everyone accepts I have earned my place. And Juha earned his place as the CEO so he is on the board because he is the CEO," says Risto.
The next step was the sale of one of Primula's subsidiary businesses. Although it was the most profitable, the company was made an offer that was too good to miss and so decided to sell. "We had a hugely successful line making hamburger buns for McDonalds and other local chains. We had a monopoly position and this was the subsidiary we sold off," says Risto, who is also a member of the FBN-Next Generation International Committee.
The new board was left in a "very, very liquid position" but unclear how best to move the business forward. "We were stuck with this old-fashioned bakery business and one very out-of-date factory," Risto says. "We even considered stopping baking altogether."
Far from leaving the bakery business, Risto and the other board members decided to restart the company as carbon neutral. "We wanted to do something different that the big players couldn't copy and that is where the ideas for the green initiatives came from," says Risto.
So they demolished the one old factory the business still used and built the most modern, carbon neutral factory in Northern Europe. Becoming carbon neutral was then incorporated into the whole business philosophy. "It is central to every decision we make now as a business," Risto says. "We are calculating the carbon emissions of all our staff too. We look at how they get to work: do they use buses, bikes or cars? Then we compensate for all our emissions in a wind farm in Turkey."
But going green was not just about gaining an edge in a highly competitive industry, Risto and his family wanted to make a real impact on a problem affecting next generation members much more than their parents. "Our family is starting to 'green up' for sure, even before the business initiatives we were very aware of climate change. So this was a business decision but it was also a conscious effort to change the world into a better place," he says.
These initiatives are still in the early stages of development so their effectiveness and profitability have not yet been tested. "It is an ongoing process and we are not 100% green yet but we have committed to this huge investment and we have seen some of the changes happening already. We are LEED certified, Green Office certified and as of October we are allowed to call ourselves carbon neutral."
Risto and Juha are an example of the positive impact the next generation can have if they are afforded responsibility and control at a relatively young age. "I think it is important for members of the next generation to get involved as early as possible because we are living in an era where things change pretty quickly, so people in their middle age are not always in the best position to understand these changes," Risto says.
He also acknowledges the modernisations made in his family business were not only down to the entrepreneurial spirit of him and his cousin. "We owe a huge credit to the third generation as they were brave enough to leave the board and actually give us the power. Not too many family businesses that I know are ready to do that for the next generation," concludes Risto.