Warsaw disputes: how to accelerate growth, maintain control and manage to transfer the business properly to the next generation?

15.04.2017

The fifth international meeting of owners of family companies was held on March 23-25, 2017, in Warsaw, and gathered 45 participants. We worked in the beautiful suburban spa hotel NARVIL and came off for meetings with Polish family companies to the Polish capital.

Regarding family business, the Polish statistics are similar to ours: almost 90% of companies are family-owned ones, and 9 out of 10 business owners represent the first generation of entrepreneurs who are yet to pass over their businesses to children. In all other respects, Poland for Ukrainians is a tantalizing landmark and a model of how things could have been if in 1991 everything had gone in a way different from what really happened…

25 years ago, our countries had roughly equal economic indicators, and Ukraine’s potential was estimated even higher than the Polish one. Today Poland’s GDP is five times higher than ours, the country is a full member of the EU and NATO, and the Poles are actively increasing their influence in the European Union. To get acquainted with the experience of neighbors and to be inspired by successful cases of family companies, we organized that international meeting of FBN Ukraine.

The meeting began on March 23 in the evening on the day of arrival with frank communication in the common circle. Everybody told about the important events that had taken place in the family and business since the previous meeting, shared their current view on the mission of companies and the task on involving children in the common business. It worked out very warm and useful. We agreed that from now on every event would begin with such a friendly “defrosting”.

For the first meeting, we arrived on Friday morning to the factory of the pharmaceutical concern ADAMED. This business on creation and production of medicines, primarily in the field of oncology and psychiatry, was set up in 1986 by the father of the current chairman of the board, a Candidate of Medical Sciences Marjan Adamkiewicz. His son Maciej Adamkiewicz, a surgeon by education, also took part in his father’s affairs, but only in 2000 he left medical practice and began to manage the family business. Malgozhata Adamkiewicz, the wife of Maciej and also a phisician by education, became the third active member of the management team and the CEO of the concern. For 30 years, his father’s business has turned into an international group with a strong research base and the patents for many innovative medicines, and the Adamkiewicz family has firmly established itself in the TOP-100 of the richest Poles, according to Forbes.
It is interesting that the spa hotel NARVIL, in which we stayed, is also owned by the Adamkiewicz family, it is run by the second son of the company’s founder.

The next meeting was held at the only shopping mall of premium class in Warsaw – VITKAC. This is one of the most famous business objects owned by three Lycus brothers. Their family business comprises many commercial premium properties in Poland: hotels, restaurants, shopping and office centers. This family also regularly enters the TOP-100 of the richest Poles according to the Forbes version.
The brothers have 11 children, most of them are already involved in the operational management of the facilities. The daughter of one of the owners, Alysia Likus, met with us. “We love luxury,” – she said at the very beginning of the meeting, “and therefore we are engaged in managing this shopping mall.” Unlike many shopping and entertainment centers, where the owners of the building simply lease the area, the Likus family itself manages the trade, becoming a franchisee for famous premium brands. The family takes into account that in the style of expensive things consuming, the Poles are more like the Germans than the French people, that is they hold off on paying very much for recognizable global brands. Nevertheless, their premium centers in Warsaw and Krakow are doing well. The family members promptly solve their current business management issues every day, and do it in an informal style, “during lunch, and not at a meeting.”

The story of the largest ice-cream producer in Poland told by the gray confectioner Zbigniew Grycan and his daughter Malgozhata, was the most emotional thing of that day. “My grandfather and father were pastrymen,” -Zbigniew said. – They opened our family shop for the production and sale of ice cream in 1962 in Wroclaw. The authorities allowed small private business. ”
The second attempt was made by Zbigniew in the early 90s, when Poland rapidly became a part of the EU market. It was already an industrial business with a large-scale production; the company flourished, but when in the early 2000s the offer to sell the business was made by some major competitors, the family accepted it. We kept only one store in the center of Warsaw, where we dealt with the ice cream produced by someone else.
But the pause turned out to be short-lived. A few years later, at the insistence of the female part of the family, Zbigniew Grycan at the age of 64 launched a new company under his own name. “For ice cream of the choicest quality, there is always a place in the market,” he says. Today the company GRYCAN employs 1800 people, they have 150 retail branded cafes throughout Poland. The company offers 60 kinds of ice cream, export their products to 12 countries and are permanent ice cream suppliers for the last four presidents of Poland. Zbigniew Grycan appointed his daughter Malgozhata the owner of the business who is to make the main decisions from now on. But legally, he has not yet transferred his ownership to the daughter and was at a loss to answer – when and on what conditions this would take place, given that Malgozhata has a twin sister who does not participate in her father’s business.
During the tasting session of delicious cakes from ice cream, everyone could put dozens of questions to both father and daughter, as well as ask for the second helping. As we learned later, this wonderful family is included in the TOP-100 of the richest Poles as well.

The following speaker, a member of the board of the Polish footwear company CCC Group (and not a member of the founding family) Karol Poltorak helped us to look at quite different aspects of the family business development.
The number of CCC retail stores is growing, today there are more than 860 of them in 17 countries, including 5 in Ukraine. The company sells annually more than 40 million pairs of shoes. Working in the economy segment, the company is the fastest growing footwear firm in Europe, a major manufacturer of footwear; it is also rapidly increasing sales through the Internet. Founded as a family business by Dariusz Milek in 1999, the firm entered the market in 2004, and today almost 57% of the company is owned by the third-party shareholders. Nevertheless, the control over the company’s activities remained in the hands of the family. Four members of the CCC Board help Dariusz build a strategy that is based on a combination of the own production and supplies from China, and the optimal quality-to-price ratio of  footwear. As you can imagine, Dariusz Milek is also a member of TOP-100 of the Polish Forbes.

The evening of that day, we spent in an amazing restaurant Belvedere in a large royal park. This restaurant has been in the Michelin Guide for nine consecutive years already.

The Saturday morning began for the participants of the meeting with the large presentation “Abilities, justice or inheritance” delivered by Vladislav Burda, the president of the FBN Ukraine. After studying the latest philosophical and business literature on the nature of inequality and the behavior of 1% of rich people and having made an abstract of Thomas Piketti’s book “Capital in the 21st Century”, which was published in 2013 and has been sold already in the amount of 2 million copies, Vladislav carried out his original calculations, and also interviewed a group of businessmen and five leading Ukrainian economists. He shared the results of his reflections on the topic with the owners of family companies. Everybody wrote down the main formula R> G (return on private capital is always larger than the average growth of income of the population). And also they remembered the figure of $ 7.2 billion. According to Vladislav’s calculations, exactly such capital is annually inherited in Ukraine. For all of us, his presumable answers to the question – how to behave and what decisions to make, so that children would be closer to 1% and happy at the same time – turned out to be very relevant. The president of the association recommends transferring business inter vivos, and money and real estate – by inheritance. As to involving the next generation in the parents’ business, Vladislav believes, it is right that the heir after getting his education should work for 5 years in a “strange” company, then get a job corresponding to his qualification in the parents’ company, and work for another 5 years. Subsequently, if everything goes well, the heir must enter the board of directors, and then – in another 10 years – he will be ready to take up the baton from his parents.

A young company Autobooking and its Polish branch Autobooking Poland became a special host of the event. The initiator of the project Olga Gutsal who is well-known to FBN Ukraine members spoke about the new concept of the car owners’ service oranization at VSS via the online platform autobooking.com. The platform was launched in Ukraine a year ago, went through several stages of development and refocusing, and then entered the international market. Now it is actively developing in Poland and is preparing for start in Germany and Austria. The project office moved from Kyiv to Berlin. Olga with her partners (the Tatievskiy and Parkanskiy families) are confident today that the customers of VSS will be happy to use the online service of station selection, and to sign up for maintenance automatically. That opportunity was primarily appreciated by women. At the stations themselves, not everyone was pleased with the new format of service, as it demanded that an order taker should be more disciplined and more accountable to the owners, but here the matter is moving in the right direction too.
The CEO of Autobooking Poland Maciej Luboinski followed Olga with his speech and told about his contest for the position, what he started from, and why, in his opinion, the Polish VSS connect to the service faster and pay for it much more willingly than their Ukrainian colleagues.

A short presentation of the new magazine “Family Business”, which is published now by the association, pleased everyone with the familiar faces on the cover and inside. The magazine offered counselling and advices on setting up the Board of Directors and defining the language of love to be spoken in the family. The families of Taday, Mikhaylenko and Yevtushenko were the central figures of the issue. Diana Stavnitser, Aleksey Kavitskiy, Natalia Tarchenko, Vladimir Popereshnyuk shared their reflections with readers. And the editor-in-chief of the magazine Mikhail Veisberg confessed that he had dreamed of being a chief editor as early as in school.

Known far beyond Ukraine, the artist and innovator Oksana Mas specially arrived in Warsaw to share with the participants of the event her reflections on contemporary art and the ability to live in its ambience. Oksana talked about her understanding of the search for imaging and transforming reality through art, her projects that had been presented at the 54th and 55th Venice Biennale, about working on a copy of the Renaissance masterpiece – the Ghent Altar, which needed three and a half million wooden eggs. The artist boldly uses modern methods of crowdsourcing and involves a large number of people from different countries of the world in the creation of large-scale projects. Oksana’s reflections on the virtu and the methodology of creating family collections made many people fall to thinking and encouraged to explore actively the accessible museums.

The honest story of nextgen Roland Szymanski about how he had to take up urgently the company’s management after a bad injury his father suffered affected all the participants of the conversation. Roland’s father was engaged in import from China, the family owned a large fast growing company, but when the captain checked into a hospital for a long time, the Chinese partners started working directly with the company’s distributors and the family business was on the verge of bankruptcy. Roland took the lead and managed to stabilize the situation within six months, but after his father’s return, he was shelved again, and the projects he had started were closed. “Do not do it like we did with my father,” – Roland advised talking about the difficult years of conflicts and search for ways to manage family business together with his father.

The Ambassador Extraordinary and Plenipotentiary of Ukraine in Poland, the former Foreign Secretary in the first after-Maidan government Andrey Deschitsa and his spouse were the special guests of our event. The Ambassador told about Poland’s way to the EU and the current climate in the Polish society. Despite the fact that a lot of “historical agenda” has arisen recently in our countries’ relations, the business between the neighbors is developing actively and the Poles are pleased with a million Ukrainians who legally live and work in the country. From the Ambassador’s point of view, the Ukrainian-Polish relations have good prospects. It was important for us to hear that the Poles’ successes in the development of their economy were related not only to the active assistance of the EU, but also with the unanimity of the society regarding the western vector of the country’s development and the willingness of people to act rather than wait for something from the authorities.

On Saturday evening, the excellent reasturant of gourmet cuisine ARUANA was waiting for us, and the fans of bowling and billiards could measure swords with each other trying their skills, coordination and eye. The battles dragged on long after midnight.