How Much Do You Learn From Your Failures?

Fratelli Cosulich utilises a unique system of family governance to ensure the business survives and prospers from generation to generation. It’s not often we get to hear from a 6th generation family business so I am so excited to share this conversation with the audience today.

Implementing family governance rules that “protect the business from the family” has worked out well for Fratelli Cosulich who have successfully transitioned and prospered for six generations.

In this episode, we welcome Tim Cosulich, Tim is the sixth generation CEO of Fratelli Cosulich, an Italian shipping group established in 1857. Across more than 160 years, the Cosulich family has seen numerous changes and weathered many challenges. The Group is involved in most aspects of the shipping industry, has a global footprint across 18 countries, more than 1,000 employees and an annual turnover of 1.8bn USD.

Tim explains why the performance of his family business during World War I and World War II cannot be compared with the current pandemic due to the differences in management and time. He talks about the importance of having family values that are translated into the leadership of the family business while still protecting it.

Listen in to learn the process of hiring family members to be part of a generational family business without promoting conflicts of interest. You will also learn the non-meritocratic governance strategy that is good for the overall success of a family business even with its shortcomings.

Key Takeaways:

• Factors that contribute to the success of a family business
• How to keep a valuable relationship between a family business and the founding family
• How to remove the conflict of interest when hiring family members to become part of the business
• The advantage of building an effective leadership style that ensures all family leaders operate as a team
• How to come up with a structure that helps “protect the business from the family”

Standout Quotes:

• “When we select the next generations, it is important that we focus on those who are motivated by similar things and not necessarily by money.”- Tim Cosulich [14:43]
• “I don’t think the business must be run by family members; I think the business must be run by the best people.”- Tim Cosulich [29:13]
• “If you invest in the wrong businesses, you can destroy your business.”- Tim Cosulich [38:22]
• “If I think about my own life and when and where did I really grow and learn things, it’s mostly in my failures, not my successes.”- Tim Cosulich [44:11]

Episode Timeline:

• [0:04] Intro
• [2:10] Tim narrates the resilient history of his family company that has overcome many challenges.
• [5:38] The impact of the Coronavirus on the shipping business and how they’re handling it.
• [7:24] Why leading by example in a family company is a powerful message as opposed to written values.
• [9:11] He explains why his company’s style of governance ensures the company is protected.
• [11:47] How Fratelli Cosulich keeps its principles and relationship with the family.
  
• [15:59] He explains the process they use in hiring family members and how they were able to eliminate unnecessary rules.
• [19:13] The unique leadership structure that helps the business run smoothly.
• [25:30] The strengths and weaknesses of a non-meritocratic system of leadership that is exercised at Fratelli Cosulich.
• [28:37] Tim paints a possible scenario that would occur if future generations don’t want any involvement with the family business.
• [30:44] Why Fratelli Cosulich has two sets of founders- the ones who founded the physical business and the ones who founded a structure to protect the company.
• [36:16] He explains the advantages and disadvantages of the company’s culture of reinvesting with caution.
• [38:40] Why they do not talk about business at home.
• [43:52] Why Tim wishes minor failures and the spirit of learning for his children in the future.

Relevant Links:

• Fratelli Cosulich

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Special Guest: Tim Cosulich.

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