David Barnard
Chair
Vitamix
Technology Disruptors
We all know about the poor buggy whip manufacturers that were trampled by the motorized car industry. Let’s take a minute to mourn our fallen predecessors to slow-moving, but massive technological disruptors. Once you’re done, open your eyes and realize that this is not a nineteenth-century risk.
I just overheard a private business executive lamenting that composites are taking over the aircraft parts that were previously manufactured in metal. This gentleman serves a business that considers themselves a metal aircraft parts manufacturer. He said, “Why would anyone want to fly in an airplane made of plastic?” I guess the answer is most people don’t even think about it. Engineered composites are not new. At Vitamix, we have been considering them for years to add certain structural characteristics. Some, especially those impregnated with fiber, are stronger in certain environments than metal. For example, sheer strength is a characteristic that would be important in building an aircraft and of course they are significantly lighter. As long as this company considers itself a metal aircraft part manufacturer, rather than an aircraft part manufacturer, they run the risk of being trampled by slow-moving technology disruptors.
Vitamix, a 100-plus-year-old appliance manufacturer, deals with the changing landscape of materials on a regular basis. I think we are good there … I hope. What has me worried over the next 15 years is the “Four Horsemen of Technological Change”: Gen AI, robotics, bioengineering and quantum computing. I know these are all familiar in a mystical sense. Each one of them on their own is going to disrupt massive industries in ways most of us cannot yet perceive, and they have the potential to touch us all. But once the four of them merge and their individual technologies can work together? Oh boy, we will see the mother of all technological disruptors. I predict disruption of a seismic scale equivalent to electricity to gas lamps (and all things nonelectric) or the combustion engine to buggies. At this moment, we all might be proverbial buggy whip manufacturers. If so, we need to consider ourselves individual people-moving equipment manufacturers. Unfortunately, I do not know what the modern equivalent will be.
Family Succession
As you are likely aware, privately held businesses and, in particular, family-held businesses have less government regulation to worry about, but they have more long-term governance to consider.
Vitamix is now initiating its second 100 years of existence as a closely held and controlled family business. I have recently become the chair of the board as a fourth-generation family member and realize that, if I’m going to retire, I need to have a capable family member to replace me. This is generational thinking. If the subject was “the issues that will impact my company in the next 5 years,” the answers would be more typical: AI, political uncertainty, economic headwinds, etc. These will affect every business. But 15 years suggests longevity, something that many public companies spend very little time thinking about.
Family succession isn’t as simple as picking the best candidate out of a well-proven pool. A recruiter can’t help. Yet, we still must pick a candidate. If they aren’t proven, then whatever choice we make — if there is one — may put the company’s ability to continue as a family-controlled business at risk. The difficult and time-consuming work is in making sure you have proven (and ready) candidates to pull from. For me to retire, I need at least one qualified family member standing in the wings. It’s my job to ensure that the company will be well-governed for the next 40 to 50 years. We need to be working with more than one generation at a time.
We work with the next generations to help them understand what the business is, what values the business and the family hold, and the benefits of their participation in the business. We provide tools for them to sharpen their business skills — MBAs, accounting classes and board certification courses. The business is large enough that the track I took — working heavily in the business throughout my career — is not readily available to future generations. As the company grows, that track will be more elusive. Future generations need to qualify in leadership and governance skills without having run the business. Many family businesses are lost to the family because of failed or unprepared family successions. A strong family business needs family counsel/office leaders, family directors and experienced owners. So, if I and my fellow fourth-generation family leaders are going to retire, we need to replace ourselves through well-managed family succession.