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The magic ingredient that makes family firms successful? Patience

Family-run companies can think in decades, not quarters. Here’s what every business can learn from their far-sighted example

George Weston Ltd. founder Garfield Weston, left, and then-Chairman Galen Weston at the company’s annual general meeting in 1977

George Weston Ltd. founder Garfield Weston, left, and then-Chairman W. Galen Weston at the company’s annual general meeting in 1977. (Ron Bull/Toronto Star/Getty)

Like virtually anything in life, business principles shift over time. With few exceptions, wise strategy one year can be poor the next. When you are on the clock—as most short-tenured CEOs are—conventional thinking is a sound approach. Move the business forward. Achieve short-term goals. Match prior performance. Deliver immediate gains. In contrast, family firms can make transformative decisions with a more balanced concern for their short-term impact, focusing instead on their long-term relevance. The diverging paths of our family’s businesses in the U.K. and Canada provide a good illustration. In the 1970s, the two businesses were near-identical conglomerates, with operations touching the full life cycle of confectionery and baked goods, from ingredients and packaging to grocery store shelves. My uncle took over the U.K. business, Associated British Foods, following a strategy that ultimately divested the retail business and increased investment in ingredients—oils, flours, sugars and the like. My father, Galen Weston, took over the Canadian business, Loblaw Companies, following a strategy that ultimately focused on baked goods and the retail channels through which they are sold.

Half a century later, the U.K. and Canadian businesses still reflect those decisions. In a different sense, they reflect the personalities of my uncle and father. Both made bold decisions based on personal belief and preference, understanding they were in it for the long run, and supported by our family structure.

This ability—and willingness—to make such transformative, sometimes tough decisions matters even more when the competitive and market context is difficult. Take the start of my father’s tenure, which marked a challenging period for the Canadian business. His ability to weather those challenges and bring the company back to profitability hinged on making unconventional decisions, the first of which was a dramatic rationalization of the Loblaw store network. My father told a journalist at the time, “As a 200-store chain, we didn’t look very good. As a 100-store chain, we looked very good indeed.” He would go on to remake the company many times over many decades.

Family control always afforded him the time for creative destruction and renaissance. It also allowed him to hand control to me during a period of turmoil and inevitable change. Similarly, in my tenure, we repositioned Loblaw once, early on, and then a second time more recently. I have been able to make sweeping changes to our organization, invest in our customers while taking a considerable writedown, execute a $12-billion acquisition and much more—all in slightly longer than the average tenure of most CEOs. Few public company leaders could have done this, in part because few public company boards would have supported it.

We can consider our acquisition of Shoppers Drug Mart for an illustration of the different options available to the family firm and the public company. Shoppers Drug Mart is a leading pharmacy retailer with a track record of growth. When that trajectory ran its course, the company had years of debate over whether to acquire or be acquired. With few tried-and-true options at its disposal, momentum took over and the status quo prevailed. At the same time, our family firm was actively seeking an acquisition that would establish a growth platform for the next decade. Several regional grocers fit the traditional profile of an attractive target, but Shoppers Drug Mart stood out as a uniquely strategic asset in a less familiar but complementary space. We did the requisite due diligence to satisfy our board and subsequently pursued the unprecedented path of a national grocer buying a national pharmacy.

Beyond the numbers, much of our conviction about Shoppers Drug Mart was and remains its fit with our company purpose—“live life well”—and our family’s belief that our combined companies can make Canadian lives better through nutrition and wellness. In short, the numbers and business rationale were sound, but patient capital allowed a $12-billion acquisition that was largely based on the family’s values and vision for the future.

Galen G. Weston is executive chairman and president of Loblaw Cos. Ltd. This column is an excerpt from Re-Imagining Capitalism, edited by McKinsey global managing partner Dominic Barton; Schulich School of Business dean Dezsö Horváth; and Matthias Kipping, business history chair at Schulich; and published by Oxford University Press.