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Case Study

Grundfos (A): “Be, think, innovate”

By Peter Vogel and Colleen Lief

6 pages

June 2023

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Reference: IMD-7-2374

Poul Due Jensen (PDJ), the son of a Danish workhouse manager, had seen first-hand how harsh life can be. He understood early on that he needed to stand on his own two feet. After being orphaned aged 17, he worked as a machine operator, but soon founded his own water technology company, Grundfos Holding A/S, in 1944. He responded to a customer’s need for a high-quality water pump by designing and manufacturing something completely new. As the company grew and expanded, its competency as a technological innovator and a quality employer became apparent. These dual passions were mutually reinforcing. A broadly educated and incentivized workforce pushed the boundaries of what was possible in providing water solutions to customers worldwide. The growing realization of the impact Grundfos’ product line could have solidified the company’s foundational commitment to helping the world’s poor. Although the business was successful, PDJ – by now 63 – needed to think about the future. Of PDJ’s four children, his son Niels was technically inclined and had worked in different positions in the company. He was ready to assume more of a leadership role. After speaking with colleagues and advisors, PDJ considered whether to change the organizational form of Grundfos from a company to a commercial foundation. A company owned by a foundation has greater focus on its purpose rather than the interests of the founding family. PDJ had seen examples of firms in which the family retained a leadership role in the enterprise, albeit from a distance on the foundation board. And a minority shareholding, along with the accompanying dividends, was often held by the founder’s family. The foundation model seemed to hold real promise for Grundfos’ future, but with less family engagement, would the corporate culture remain durable and authentic? Would being free of potential business disagreements keep his family intact? And would Grundfos still be a “family business”?

Learning Objective

Explore the pros and cons of a foundation ownership model for long-term, sustainable, success of a business.
Examine the dichotomy between family culture and corporate culture that can arise in certain situations.
Does such a move help the family avoid major tensions and conflicts in the future?

Keywords

Family Business, Sustainability, Foundation, Ownership, Succession, Award, Clean Water, Sanitation, Climate Action

Settings

Europe, Denmark
Grundfos, Services, Water Supply and Sanitary Services
Foundation until today

Type

Field Research

Available Languages

English

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This case study is part of a series

Grundfos (A): “Be, think, innovate”
Grundfos (B): “Solved in a better way”

Selected for the 2024 Schlesinger Global Family Enterprise Case Competition

This case study is part of a series

Grundfos (A): “Be, think, innovate”
Grundfos (B): “Solved in a better way”

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