What Drives Sustained Growth in Family Business?

De Agostini Chairman Drago addresses MBA 50th Anniversary celebration in Milan

09/10/2015 Milan, Italy

Marco Drago

Innovation in tradition: Marco Drago at the MBA 50 Anniversary celebrations in Milan / Photo: Sergio Rinaldi

“Innovation. Diversification. And a clear roadmap to generational transition. These are the key factors to our success throughout the years.”

So says Marco Drago, chairman and president of the family-owned global conglomerate De Agostini, S.p.A.

Drago addressed IESE alumni at the MBA 50th anniversary event in Milan this month. “Innovation in tradition has always been our motto,” he said. “Today, the market is changing faster than ever, and anticipating new trends is becoming vital. We were among the first publishing companies to understand the extent of the change the Internet represented. Geographical diversification and entering different businesses areas besides publishing have also helped improve De Agostini’s risk profile."

Riding the Rapids of Change

Founded in 1901, De Agostini is active today in 66 countries worldwide; and across multiple business areas that include publishing and finance. Drago’s tenure as CEO of its Editorial Group saw De Agostini experience rapid global growth in the 1980’s and 90’s. He was appointed chairman in 1997 and has guided the business through a strategic development and diversification phase, which in recent years has seen changes to the group’s corporate governance system. External management has been hired to drive growth — a move whose success, says Drago, has hinged on “clear distinctions” between the roles of managers, board members and shareholders.

"The key revolution has been managing the relationship between the family and the company in changing times. Defining the new strategy required long discussions, but I think that our family has shown incredible strength and wisdom in dealing with this delicate period of transformation”.

The Generation Game

Determining guidelines and criteria for new generations wishing to join the business can be a “flash point” in family businesses, says Drago.

“While family members who wanted a career in the De Agostini Group were once welcomed without any particular selection, today they must fulfill strict criteria, including a solid education, knowledge of languages and at least five years’ experience in another company,” he said.

Under his leadership an intergenerational council and a “strategy lab” were created to help younger family build competency as decision makers; while a specific career service supports the professional development of fourth-generation shareholders, such as Drago himself.

The change is significant. And had to be ratified by a group of more than 20 different family members. No mean feat, but one made possible, says Drago, by keeping a tight focus on results.

"You need recognized and accepted leadership within the company, a leadership based on the economic results achieved in the medium to long term”.