Dominance Of Turkey's Family Firms
12th March 2017 Paul Andrews
Ya┼čar Holding is a great example: born out of a trading concern in the 1920s, it evolved into the country’s leading paint business in the ‘50s, and is now a diversified group in its fourth generation.
Turkey is one of the most vibrant markets in the world, with a young and tech-savvy population, an enviable position at the crossroads of Europe and Asia, and an entrepreneurial culture.
There have been many political upheavals in the last thirty years, and the region still faces significant challenges, but when it comes to emerging economies, Turkey is still putting the ‘T’ in MINT.
Around 95% of Turkey’s businesses are family-owned, and these firms are an absolutely vital part of the country’s economy, driving growth, prosperity, and innovation. Ya┼čar Holding is a great example: born out of a trading concern in the 1920s, it evolved into the country’s leading paint business in the ‘50s, and is now a diversified group in its fourth generation with nearly 80% of its interests in food production. And while the majority of its US$1.5bn of annual sales are within Turkey, Ya┼čar Holding remains true to its trading roots and exports successfully to the Middle East, Europe, and the former Soviet economies.
“When I became chairman,” says Selim Ya┼čar, “I said ‘we want to grow. How can we do that?’ Part of it was about maximizing our production, but we also looked more laterally – at growing our brand, and diversifying our revenue streams. The key to everything was flexibility: being flexible in how we utilised our manufacturing capacity, and being prepared to utilise our distribution systems to distribute other companies’ products."
"That was our strategy. And it has worked. And we have never stopped investing in innovation. You have to do that, if you are in the FMCG industry. Every year, we spend around US$100m on new machinery, better packaging, and more efficient processing. And we keep up with trends in food too – we have organic farms, and we make a whole range of healthy products, and we are expanding our private label business, which is a growing segment and very exciting for us. We also offer easy-to-cook meals, designed for the increasing numbers of people in Turkey who are working outside their homes and do not have time to create meals from scratch.”
Ya┼čar Holding has fully embraced the potential of digital: “We capture a huge amount of data and can access it on a PC or mobile device. Information such as the location of our transportation vehicles, for example. And our monthly reports are available eight days after the end of the month. That means I can see what is going on in all our companies very quickly, which makes us more agile, and allows us to take very fast decisions.” In fact, the Group has got so good at running ERP systems that it is making such expertise available to other businesses as a service.
Having established a business which leads in sectors as diverse as industrial paint and children’s dairy products, Selim has strong views about leadership from a family business standpoint. “We are experts in it. We have centralised finance and HR functions, and we have professional managers at senior levels. However, there is a limit to their commitment. We have brought in external managers many times, but some of them only stayed a few years, then they quit. But the family members do not quit. We are born to it. So you can have professionals working for you in areas like accounting, finance, marketing, and R&D, and they are really valuable. But sometimes for real leadership and taking risk, you need the family.”
One area where Ya┼čar Holding offers a valuable model for other family firms is in its approach to its Board, which includes three people from the family and three professional executives: “In my opinion, family members should work outside the business for a couple of years and then work for the company. And after twenty years of doing that they should become Board members. In each of our companies we have professional executives who have no relation to our company, because it is important to have outside views on a Board. And every year we change Board members – we remove directors who do not contribute and find other people who will. So being on one of our Boards is a challenging position. But that is what we want. That is what will help us grow.”