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Family business

Tradition and innovation: the paradox powering family business 

Published 31 January 2025 in Family business • 8 min read

Tradition is defined as the transmission of customs or beliefs from generation to generation. Innovation is the process of changing something established by introducing new methods.

Enterprising families often find themselves in anxious limbo, somewhere between wanting to evolve and fearing change. While narratives tend to pit the two against each other, new research suggests that tradition and innovation aren’t mutually exclusive after all. In fact, they can make quite the pair.

Along with co-authors Emanuela Rondi, Vittoria Magrelli, and Francesco Debellis, I recently unpicked the power of this paradox in a new research paper titled: “The Evolution of Craft Work in the Strategic Development of a Family Enterprise”.

Together, we explore the evolution of artisan family businesses and their desire to preserve traditional craftsmanship while embracing industrialization. We use lessons learned to present a recipe for success for enterprising families who want to evolve without compromising their traditional values. These include the four Ds: Distilling, Diverting, Diluting, and Dropping. This article cuts through the whimsical language of craft and offers tangible next steps for family businesses looking to innovate without losing sight of tradition.

Top of the list is adopting a brand strategy, embedding the next generation early, and embracing change. We also question the role of mentoring and external hires in the transition from traditional family business to strategic entrepreneurship and explore the importance of succession planning and organizational structure.

The Thun story begins with a Countess sitting in an Italian castle and molding angel sculptures of her sleeping sons, one of whom would grow into a leader who would take her artisan craft and turn it into an industrialized legacy.

Introducing the story of Thun

The research is centered on Thun, a Czech multinational and diversified family holding spanning seven decades with artisan creations still at its core. We analyzed its success over 70 years and the result is thought-provoking, offering a sense of optimism, nostalgia, and romanticism – and hopefully leaving readers inspired and ready to make a change.

The Thun story begins with a Countess sitting in an Italian castle and molding angel sculptures of her sleeping sons, one of whom would grow into a leader who would take her artisan craft and turn it into an industrialized legacy.

The story is then simplified into four phases: pure craft, technical craft, narrative, and ecosystemic craft. This structure is used to categorize Thun’s evolution from a small, artisan family business and manufacturer, to retailer and wholesaler, to an omnichannel group and digitized logistics center.

“Our research emphasizes the need for an aligned set of values, a succession plan, an efficient organizational structure, and an openness to learn and change.”

From craftsmanship to industrialization

The paper may have been centered on crafting families but the takeaways for enterprising families across all sectors are vast and extend beyond the world of artisan products. They also pose insightful questions for family businesses on the verge of change. These include:

  • Distilling: Do you have an aligned set of family values that can be distilled in future successors?
  • Diverting: How can you adapt your business today to divert these elements and make them make sense in the modern world?
  • Diluting: What additional opportunities can you take that can dilute your current focus and decentralize your risk?
  • Dropping: What can you drop to become more efficient?

In the example of Thun, the Countess continued to take care of new designs, but rather than hand-creating each ceramic, unable to meet the demand of mass popularity, she would quality check designs created by molding. This was the first and boldest step Thun made in the transition from traditional craftmanship to industrialization.

Outsourcing production to Asia also meant a ‘dropping’ of the hand-made element and the local roots that the intimate family business was built upon. Thun paved the way for a lifestyle that created unwavering support across the globe.

Our research emphasizes the need for an aligned set of values, a succession plan, an efficient organizational structure, and an openness to learn and change.

Today’s enterprising families need to ‘mentor’ the next generation to impart wisdom accumulated through lessons learned and bestow family values that offer distinctiveness.

Intergenerational learning

Thun would not have seen the success it did without the introduction of the second generation. In fact, we found that the overlap between generations drove the entrepreneurial development of the family firm.

Embedding the next generation might sound like a colossal task for your family enterprise, but it doesn’t have to be disruptive. A simple tool that works well in the corporate world to bridge intergenerational learning and achieve diversity of thought is reverse mentoring. It is already championed by several FTSE, MSCI, and Fortune firms today and relates to a mutual transfer of knowledge, differentiating from mentoring as a principle that relates solely to a one-way relationship.

Today’s enterprising families need to ‘mentor’ the next generation to impart wisdom accumulated through lessons learned and bestow family values that offer distinctiveness. They also need to listen and be the ‘mentee’. This is vital if family businesses are to bridge the gap between tradition and innovation.

In 1978, Lene Thun’s second son Peter joined the business and, in her words, ‘let in a volcano’. His success was explosive. Through strokes of creativity, innovation, and forward-thinking, he took the pure and technical craft and transformed it into a lifestyle. Consumers had such a strong attachment to the Thun brand that they wanted to have more of it every day and in every form possible.

The new generation brings with them a new lens.

Selling a lifestyle

This lifestyle or as Thun calls it, “a fairytale in a fairytale” is symbolic of the generational shift we see and need today. We are experiencing the greatest wealth transfer in history with $84tn set to be transferred over the next two decades but it isn’t the only thing one can expect as the next generation rises through the ranks of family business.

The new generation brings with them a new lens. This lens is shared by your future customer which is why it is pivotal that you include it in the evolution of your business. Lene Thun spoke of her son’s involvement with apprehension, seeing him as a negative change agent and challenging his move to outsourcing. This change was the key to their success and the first step the firm took to creating a lifestyle for customers, focusing less on the handmade element and more on human involvement.

Thun began using language such as magic and imagination in a quest to create a way of living and even began using ‘Thunic’ to describe the lifestyle. There was a creation of a Thun café, a hybrid retail formula, and a Thun club exclusively for local customers. The death of Lene Thun was a tragedy yet, it had a hugely positive impact, infusing the past and future through the launch of a social impact offering in her name.

From members clubs to the metaverse in a digital dawn, the next generation of leaders can build an empire that won’t tumble in the event of macroeconomic factors or external events. This requires branding. For Thun, their customer-centric brand was almost resistant to the coronavirus pandemic despite their supply chain being moved exclusively to Asia.

Thun brand resilience
Thun's customer-centric brand was almost resistant to the coronavirus pandemic despite their supply chain being moved exclusively to Asia

Creating a family narrative

The family even branded their decision to outsource as a necessary step taken to preserve the quality of hand-made products rather than for supply chain purposes. They spoke of the quality of Thai and Hindu temples, reinforcing the whimsical and romantic language of the craft while taking a giant leap into industrialization.

When the family faced obstacles regarding their intellectual property, they were awarded copyright protection for industrial design for their ‘creative character’. An unusual precedent considering that, in most of Europe, one cannot copyright an idea, let alone an artistic value.

Thun’s intergenerational leaders crafted a branding strategy that took their mother and grandmother’s vision and turned it into an industrialized legacy. The family did this while keeping Lene and her creations at their core.

The incoming generation may hold the keys to your kingdom, but they might also need a little help.

While Simon Thun is now at the helm of the firm as third-generation CEO, he breaks 15 years of Thun leadership under the control of non-family chief executives.

The role of non-family members

While Simon Thun is now at the helm of the firm as third-generation CEO, he breaks 15 years of Thun leadership under the control of non-family chief executives. During this time, the company experienced significant global growth. Equally, Simon’s father Peter was the first chief executive after Lene Thun, but he was her second son. Skillset and passion aren’t always hereditary, nor should they be assumed.

This is a crucial point to take away for family enterprises. You need stories about your heritage, family, and values to be imparted by a family member, but you also need the competency and skill set required to lead its evolution. You need to then structure these resources with organizational efficiency and allow them to make changes. In the story of Thun, “each successive family leader reinterprets the past, leaving an entrepreneurial legacy and engages in strategic actions that foster transgenerational entrepreneurship.”

Thun angels, which the family likens to the Porsche 911, now represent just 0.5% of sales, but they remain a flagship item. They will always be part of the family legacy and remain at the core of the Thun empire, which continues to evolve to serve customers of the future while beautifully respecting the traditions of their past.

Our research presents a recipe for success for family businesses wanting to innovate without losing sight of their heritage, and it starts with two simple steps: identifying the traditions you wish to instill in the next generation and giving them the power to innovate. It’s a paradox that is powering the family enterprise ecosystem, and it could just be the key to your family’s success.

Read the full paper here.

Authors

Alfredo De Massis

Alfredo De Massis

Professor of Entrepreneurship and Family Business

Alfredo De Massis is ranked as the most influential and productive author in the family business research field in the last decade in a recent bibliometric study. De Massis is an IMD Professor of Entrepreneurship and Family Business at IMD where he holds the Wild Group Chair on Family Business and works with other universities worldwide.

Emanuela Rondi

Emanuela Rondi is an Assistant Professor at the Center for Family Business Management at the Free University of Bozen-Bolzano. Her research lies at the intersection of family business and social capital, with a particular interest in the impact of family external relationships in succession and innovation dynamics. Her doctoral work on management has received awards and recognitions at various academic conferences. She is a member of the Education and Professional Development Sub-Committee of IFERA. Emanuela is also on the review board of the Journal of Family Business Strategy.

Vittoria Magrelli

Vittoria Magrelli is an Assistant Professor in the Faculty of Economics and Management at the Free University of Bozen-Bolzano and has been affiliated with the Center for Family Business Management. Her research focuses on intergenerational dynamics, innovation, and family boundary organizations. She holds a BSc in Politics, Philosophy, and Economics from the London Metropolitan University and an MSc in Philosophy of Science from the London School of Economics and Political Science. In 2019, she earned her PhD in Management from Lancaster University Management School in the UK.

Francesco Debellis

Francesco Debellis is an Assistant Professor at the University of Vienna, in the Department of Marketing and International Business. Besides academia, he works as a business consultant advising many family businesses on their succession and internationalization process. His research focuses on governance and internationalization of family firms. He is a member of the Editorial board of the European Journal of Family Business and has received several awards for his research, such as the Lazaridis Institute prize for the EIBA 2019 best paper award in international entrepreneurship.

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