5 Factors of Entrepreneurial Success
If they're missing at your company, perhaps it's time to get grounded in 'corporate entrepreneurship'
By Les Roka
For Dan and Dean England, family and business are as close as oxygen and fire. "Entrepreneurship has always been in our family genes," says Dan, chairman of the C. R. England trucking firm. "Our philosophy always has been to remove the obstacles, hire the right people and encourage the free creative flow of ideas."
The brothers--with Dean as CEO of the Salt Lake City company that employs more than 5,000 people and has revenues approaching $1 billion--are the third-generation stewards of a business their grandfather started 89 years ago in Plain City. Back then, their grandfather started the enterprise by hauling milk every day at 4 a.m. from farmers in Weber County and Cache Valley. Today, the family-controlled firm has business units with stakes around the globe, including a freight-load factoring business started nearly five years ago by one of Dan's sons.
And like Antoine Lavoisier--who disputed the existence of a magical phlogiston and proved that fire is fed by oxygen--four generations of the England family are providing solid evidence that entrepreneurship feeds on the elements of financial resources, human resources, education, economic conditions and, most importantly, positive relationships. Even today, Gene England, 89, and Bill England, 85--second-generation family members who are no longer involved in the company's daily operations--continue to test new ventures, Dean says. "They recently started a car leasing business that primarily serves company employees," Dean says, adding that they have more than 800 vehicles available.
Why the family perspective matters
The England family experience certainly dispels the stereotypes of family business, in part by showing their long-standing capacity to leverage relationship capital as one of their most important entrepreneurial assets, even if it isn't represented specifically on the company's balance sheets. Attuned to the challenge of long-term company growth, the third-generation England brothers work to fulfill the goals of responsible family control, economic growth and family harmony.
Indeed, family businesses are often perceived as awkward and amateurish, as underperformers in their respective industry markets. More than 80 percent of operating firms and 77 percent of all new ventures are family businesses, while fewer than 30 percent of family firms succeed to the second generation, according to a 2004 study led by a University of Calgary business researcher.
Today, the England company is one of the two largest carriers in the nation for refrigerated freight. The trucking industry also has another company with England family roots: Pride Transport, which is owned by Jeff England, son of Gene, and where Jay England is operations manager.
But what does an entrepreneurial startup have to do with your organization? Howard Aldrich, a sociologist at the University of North Carolina at Chapel Hill who has extensively studied entrepreneurship in family-controlled businesses, suggests a 'family embeddedness perspective' to track changes in the family. He believes that this will show how these shifts have transformed the ways in which entrepreneurial opportunities emerge and are realized with fresh talent and resources coming not just from the family, but also from those outside.
Within the perspective of a thriving family firm, multi-generational in form and operations, five characteristics emerge to create the essence of successful corporate entrepreneurship.
1. Comprehensive decision-making structure
Benchmarking on criteria such as customer service, driver safety and logistical performance is the pretext to effective strategic planning for the long term, Dan explains. "We have to continuously try to stay on top of our game, reaching out, looking at new ways that will keep us relevant in this industry," he adds.
Responding to a dramatic shift where the independent contractor proportion of the fleet had grown from less than 20 percent to more than 60 percent in four years, the company recently started its Drive Life initiative in part to reduce turnover among drivers. The program grew out of a semi-annual summit of the company's executive committee where they focused on creating a driver-friendly culture by empowering managers to give their drivers the best possible professional environment for success, free of frustrations and uncertainties about the company's expectations. For every manager at England, the Drive Life template encourages creativity and flexibility in decisions that focus on four objectives: financial security for the company and employees; career opportunities and potential for advancement at the company; a safe, high-quality work environment; and an effective training program dedicated to providing quality instruction for future drivers.
2. Long-term orientation
Most successful firms balance immediate needs with a long-term perspective. England champions a patient management philosophy, according to Dean, where short-term profits aren't excessively emphasized and where the strategic focus is more long-term. "We cannot act like a Wall Street publicly-owned firm that looks first at what the next quarter's bottom line will be," he says, pointing in his office to photos of his grandchildren, the potential fifth-generation stewards of the family business.
But the notion of including non-family is reflected in the company's organizational chart, which resembles that of any successful conventional large firm. This culture of inclusion is key to ensuring that non-family managers and executives play just as important a role as family members do in cultivating a long-term orientation, Dan explains. "There certainly is the occasional temptation to decide what's best for the family over what's best for the company," he says. "However, ultimately, what's the best decision for the company is what will be in the best interest for the family."
3. The right human capital mix
Unlike many family firms, the England brothers put a premium value on work experience and education outside the industry for family and non-family employees alike. Before joining the business in 1977, Dan worked as an attorney after spending more than two years on a church mission in Germany. "It was immensely important to see how others make decisions and take risks," he explains, adding that family members can join the company only after working elsewhere for at least two years.
Dean agrees, adding that the best possible way for the company to sustain and enhance its entrepreneurial capacity is to effectively integrate family and non-family talent and resources. "Our policies and rules make it clear that continuous employment is earned, not a birthright," he says. "We've ensured that our pay, benefits and performance standards are equal for every employee."
The company's recently adopted long-term plan for succession in executive leadership also reflects other important criteria, such as whether or not family members foster an environment for sustained business growth and whether the presence of specific family members enhances or constrains the performance of individual company units.
4. Organizational culture of professionalism
Dan and Dean are acutely aware of the problems of nepotism; entrenched, ineffective managers; and predatory managers who do not share the family's altruistic perspective. They believe in the same types of formal monitoring, governance, checks and balances, and controls found in the most successful Fortune 500 firms.
Six of the 20 executive committee members are family and all must hold at least a bachelor's degree and have outside work experience. "Our family is very large, so we want to ensure that our best non-family performers never feel threatened by the presence of family members," Dean explains. "And, we've started several satellite businesses that will be a good way to start some of our younger family members, especially those who have a good grasp on the latest technology trends."
5. Sustained family harmony
As evidence of how long family and business have been inextricably intertwined, Dean recalls the story of his grandfather building a shelf out of boxes that extended out from the seat in the truck cab. The purpose was to allow his father (Gene) and uncle (Bill) to take naps whenever they went along for the long runs to Wyoming during the summer. As the business grew, younger members of the family spent their summer vacations practicing what they learned from their older relatives.
Like their grandfather, father and uncle, Dean and Dan, who hold commercial driver's licenses, know what it is to be a trucker first and a corporate executive second. Always aware of their upbringing, they look for ways to extend those family values of integrity, an honest agreement and good service, from ensuring that company trucks are clean and freshly painted to maintaining their reputation for safety and quality of operating equipment and to launching the company's Drive Life initiative. "It is about taking control of your own destiny," Dan explains. "It's helping us develop our culture to be more driver-friendly, both on the part of drivers and non-drivers, and for all our employees to take control of their lives, get things done and be successful."