2014 Leadership Award Winner: Brown-Forman Family

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April 2014
Brown-Forman Presiding Chairman G. Garvin Brown IV and CEO Paul C. Varga accepted the 2014 Kellogg Center for Family Enterprise's Family Enterprise Leadership Award in front of an audience of alumni, students, business leaders, other practitioners and faculty in Allen Center on the Northwestern campus.

Founded over 140 years ago, Brown-Forman Corporation brands, including Jack Daniel's Tennessee Whiskey, Southern Comfort, Finlandia, Tuaca, and Woodford Reserve, are sold in approximately 160 countries worldwide.

Brown-Forman's Collaborative Leadership Model

Part of what makes Brown-Forman unique is how receptive the Brown family was to bringing in Varga in 2005 to be CEO of the previously family-led company. "Their collaborative leadership model has enabled a transition to and broader inclusion of the fifth and sixth generations of the family, while enhancing the company's governance, global footprint, product mix, profitability, and market capital value," said John Ward, co-director of the Center for Family Enterprises. This leadership model "has also provided the frastructure for continuity and the benefit of long-term thinking. As historic contributors to their communities, the Brown family and company have also improved coordination of and broadened commitments to philanthropy as a result of that infrastructure."

"Typically that's a situation ready for conflict of some kind," said Professor Lloyd Shefsky, who founded and is co-director of the Center for Family Enterprises. "All of them were able to come together and say Paul's the right guy."

Brown and Varga are currently co-chairmen of Brown-Forman, with Vargaholding the title of Executive Chairman and Brown Presiding Chairman.

The two, along with several Brown cousins, came to Kellogg in 2008 for a Governing Family Enterprises session, a five-day program that teaches family members and executives to take advantage of their differences to benefit the company.

Family Business is a Powerful Segment of the Global Economy.

Shefsky says family-owned businesses represent a powerful segment of the economy. "They generate a majority of the GDP in the United States and 80 to 90 percent of the GDP in other countries," Shefsky said. "They probably account for more jobs than any other sector other than government maybe."

Brown-Forman's durability exemplifies one of the strengths family-owned businesses - "They tend to be long-lasting for a reason. They tend to be long-term thinkers - they're not as concerned with the quarterly result as the quarter-century result," Shefsky said.

Mixing drinks

One way Brown-Forman has kept the long-term approach has been in the acquisition or creation of new product lines. They add products that will preserve the core brand - like the new Jack Daniel's Tennessee Honey in the American market or pre-mixed Jack Daniel's and Cola popular in Australia - but avoid what they see as market blips like the flavored vodka trend of a few years back.

Of course, the distiller's long history gives a certain perspective to market shifts and jolts. "Is it as bad as Prohibition? No? Then let's not worry about it," Brown joked to the audience.