[Podcast] Scotland’s Family Businesses in a Post-Brexit World

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Brexit is now a reality, and businesses across the United Kingdom are scrambling to deal with the implications of this geopolitical shift.

In this podcast episode, Tharawat Magazine editor Ramia El-Agamy travels to Scotland where she speaks with Dr. Claire Seaman of Queen Margaret University to talk about the state of Scottish family businesses as they navigate in a post-Brexit world.

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Ramia: Welcome to our podcast episode here live from Edinburgh. This is Tharawat Magazine for family businesses and entrepreneurs. I’m sitting here at the Queen Margaret University in Edinburgh with Dr. Claire Simon who is a leader of the family and smaller enterprises research group here at the university. Hello, Claire. Thank you very much for having us. How are you today?

Claire: I’m very well. Indeed thank you for coming to visit Queen Margaret and for coming to hear a little bit more about our research work with family businesses and also about the strides forward that Queen Margaret University is making in family business education for Scotland.

Ramia:  Wonderful. We’re looking forward to that. What we are also very curious to learn about today Claire is to learn more about Scottish family businesses in general. We are here to pick your brain to understand more about the landscape that Scottish family businesses are facing politically, economically, and socially. We are going to ask you a few hard questions maybe too good to answer and you let us know, give us some insights about what you found out through your research and what you found out through your interactions with family businesses over the years.

First question, what does the family business field here look like? Are we seeing a density of family businesses in Scotland? Are there many of them? Are they few?

Claire: Absolutely. It’s worth starting from the beginning. The family business research in Scotland is a relatively young field. There were some things we knew very clearly. We knew that depending on definition somewhere between 65 and 80% of our businesses are family owned and run. We are fairly sure that in rural areas the economic importance of family businesses is actually rather higher than that. Scotland is an interesting country. If you drew a line between Inverness and Fort William across the map and look north of that lane, you’d find areas that are really quite sparsely populated or where they are much fewer in the way of big business, chain stores or things like that.

We are fairly sure that many of our rural areas are, in fact, very dependent on family businesses, but then it’s our rule really to research and to find good evidence to support that. We are also fairly sure that in Scotland we have key sectors where family businesses have a particular importance. They include some of the Scottish government’s economic priorities like food, and drink, and tourism. Over and above that, we also know that many of our biggest family businesses are in areas such as construction, and transport, and food, and drink. It’s really quite a diverse picture, the population that we are researching.

Ramia: Can you tell you us a little bit more after having interacted with them for so many years and researching for so many years, what do you find are sort of the common challenges that you see the Scottish family businesses are facing?

Claire: Researching family businesses in Scotland is interesting because in many ways the challenges they face are those that the way the body of research would indicate. Those things like innovation, succession, resilience in changing economic climate which, you know, those are common to family businesses everywhere. Then we have some specific things that are happening in the UK at the moment which include Bruit and the opportunities and the challenges that that presents. One of the possibilities of that, of course, is being that Scotland may go forward for a second independence referendum. We don’t know yet whether that will happen.

Ramia: It’s a very interesting point in time actually as you just mentioned. With facing Bruit and even the potential or a possibility of an independence of Scotland is to some frightening, to others exciting prospect. What do you feel will be the role of family businesses if they ever were to become an independence of Scotland? Do you feel like family business will be playing an important in making Scotland a viable independent nation?

Claire: I think it’s a really interesting question because to some extend political uncertainty brings uncertainty in the business environment. We’re fairly sure that whatever the political changes that come along, there will be opportunities and there will challenge businesses. They will be very different for different business. What I would say is that we do know from our research that family businesses are the economic bedrock of Scotland and whether Scotland continues as part of the UK or whether it becomes independent, the economy still matters and businesses who play a key economic role will be absolutely vital to that future.

What I think is interesting looking at the environment at the moment is the extent to which the businesses are aware of uncertainty but surely nobody really knows how quite a lot of that is going to work out. A lot of it is about resilience and innovation in the face of quite deep politically uncertainty locally.

Ramia: It’s also interesting because not only does this uncertainty come at this incredibly volatile time globally, but also there is, of course, this transition now of the millennial generation actually really taking over the reigns in terms of leadership in the family businesses at the moment. With all those transitions colliding at the same time, where do you see the opportunities like Scottish family businesses have right now? Do you feel like these are inflection points or do you feel like it’s actually business as usual, family businesses will always come across such times, or do you also feel like everybody else seems that is quite a special moment in time where everything seems to collide?

Claire: Wow! It’s very fair to say that there is an unusual level of political uncertainty present. To some extent, yes, those things do collide. For the millennial generation, I think each generation faces new challenges and part of our role at Queen Margaret University is a rent designing education to help them go out and meet those challenges. We can’t know exactly what those challenges will bring, but we can know that for our businesses having robust governance structure that help a family manage the business, having ways of creating good innovative products and services that will create value for the business going forward whether that [inaudible 00:06:38] sales in the UK or whether that means exporting.

We know the least principles will continue to be useful and that’s rather what we try to build education around for the future.

Ramia: You’re in this very interesting position also to tell us a little bit more about the future of education itself. I think this is a very important, again, here also again a fork in the road where education obviously can become relatively obsolete or more relevant than ever I guess in terms of what it has to offer to people in this times of uncertainty. Where do you see the role of research group such as yours in shaping or supporting the business community out there? How do you go about it?

Claire: The role of a research group is an interesting one. What I would say is that if we start the other end, if we look at what we want from education, we want business education to be evidence-based. What we want from a research group is the best knowledge that we can have about family businesses in Scotland and the best lessons that we can learn from researchers in different countries who have faced similar but slightly different challenges and found roots through. The rule of a research group is primarily about creating the best knowledge that we can.

Once we have created that knowledge, the next part of our rule is to use that to impact upon the business community. That means finding good solutions and good ways of getting that knowledge out in a form that is digestible with the business community. In many ways at that stage what you want is the right education and the right place at the right time. There is no one size fits all so some of that will be your own developing specific programs of education. Queen Margaret University also works with Family Business United in Scotland who have put together an education pathway.

One of the pieces of thinking behind the education pathway is that you’ve got, for example, seminars for people who want to [deepen for enough to do 00:08:50] and think about things. You carry through the pathway at different levels of intensity all the way through to the specialist master’s programs that we designed at Queen Margaret University. In fact, we now have PhD and professional doctoral students looking at family business practice. We have a very wide range of opportunity. The idea is let people deepen and see and to pick up the opportunities that are right for them and for their business.

Ramia: I really like what you’re saying here, so very much about creating spaces and different opportunities for people to take on digest different formats of education that’s of course great to me, that’s accessible in that way for the wider community. In terms of the world we’re facing I think that when we talk about the changing that are coming and the changes that are happening right now or the future now, future yesterday basically, I think one of the greatest maybe fears or the changes that we tend to freeze facing it are the digitalization changes so the changes that are brought in by technology.

The question here is what’s Scotland’s position there? Is Scotland an early doctor? Is Scotland an innovator? In Scotland’s history actually, there have been many inventors. It used to be a huge leader in the industrial times and even before that. It used to invent things that are still in use today. Where do you think Scotland will position itself? What is the role family businesses in fostering innovation and technology and digitalization?

Claire: There is so much there. Historically, you’re absolutely right. Scotland has played a major role in terms of inventions, in terms of technology, in terms of development. Many of our universities particularly around the Science, Technology, Engineering and Maths, the STEMS subjects as we knew them, they continue to be at the forefront of international developments in technology. In terms of family business, I find it helpful to think of innovation in two broad groups because we have the very technical innovation that comes with Science, Technology, Engineering, and Maths. We have service innovation which is probably more where Queen Margaret University focuses.

We have different universities doing different things. Both the technology innovation and the service innovation fits out to the family business community. If you like, we have a body of university knowledge that contributes to innovation. In parallel, we have family businesses out there innovating on their own behalf. I’m very much applying both the general principles and specific ideas that they have. That to me is part of the delight of working in family business is that I get to cross across those different worlds from technological and service innovation in the university sector all the way out to individual businesses, creating value, and building a new future through their own innovation.

Ramia: The last question, what do you feel Claire, are the biggest priorities family businesses should set in their development in order to face as we set uncertainty but said opportunities? Where do you think the family should start? Are there like three points where you’re like, “Okay. You really need to get those things line now in order to be able to face whatever is coming”? Do you have those points in your mind right now?

Claire: Absolutely. I tend to think of it as two major strands that are intertwined. The first is the business, the business itself, the innovation, the vision for the future, the strategy that that business is following. That has to be there because at the end of the day they are family businesses but they are businesses. Then in parallel with that, you have family strand so you have all the bit about succession, yes, but succession is the end point of putting successful governance processes in place. It’s about all sorts of things, everything from the family council, through to formalized ownership structures through to education for the next generation.

It’s quite interesting that you should ask that question because when we were putting together the master’s programs in family businesses that was very much the philosophy that we chose that for a program like the MBA, they would study some subjects with the main MBA cohort because things like finance, marketing strategy family businesses need those. They need those because they are after all a business. Then in parallel with that, you need the education specifically designed for family business, specifically designed to look at things like governance structures and to help them to find good groups forward for individual family businesses because families vary a lot and thus so do the family businesses.

Ramia: Fantastic Claire. Thank you so much for having us here today. We are looking forward to getting to know more about your research as the years pass. Thanks for speaking to our listeners.

Claire: It’s been a pleasure.