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Evolution: Putting a Premium on Collective Happiness

PUBLISHED : Friday, 13 October, 2017, 10:42am
UPDATED : Friday, 13 October, 2017, 10:50am

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Lee Kum Kee was founded in Nanshui, Zhuhai, Guangdong in 1888 and its Chinese-style sauces have gone on to sell around the world. In response to diverse aspirations of individual family members, the decision was made in 1992 to evolve the business into a holding company that places an emphasis on a governance structure, and a modus operandi, that aim to maximize harmony within the family.

Mr David Lee, Director, Lee Kum Kee Company Limited, recalls how, in response to the growing tension of family members, a decision was made a quarter of a century ago to reshape the management bonds within the business. The discussions Mr Lee had with his three brothers took place on a skiing trip to Europe, and the resulting broadening of the company’s focus has led to even greater commercial success, and to stronger personal ties within the family.

“At that time we were all working together within the business, each with a different role and function, but we found that the internal conflict was too great,” he says. “All of us had very good ideas and we decided in 1992, in the mountains of Switzerland, that we would start to diversify.”

Evolving into a business family

In the following ten years, the company - as now, under the chairmanship of Mr Lee’s father Lee Man Tat - diversified from the sauce business into a range of areas, including health products, restaurant chains and property.

“Right now, the original sauce business only accounts for part of our entire portfolio,” Mr Lee explains. “I think each of us has talent - and the question was, how do you create a system that allows everyone to be the best we can be.”

The establishment of the Lees’ Family Council in 2002, and the drafting of a family constitution, were amongst the key steps in the development of the current governance system of the business family.

“We told each other about our aspirations and what we wanted for the family. Then together we built a mission and vision statement for the Generations 3 and 4,” Mr Lee says. “We’ve spent the last fourteen and a half years developing the values and principles that hold all these businesses together. Now, of course, we have the Generation 5 coming.”

Integrating G5 and leveraging their creativity

Mr Lee traces the roots of the particular team spirit and level of trust that has developed within the family back to its restructuring in 1992, and through facing crises together. Earning the trust is always the key, but they see a different approach in grooming the fifth generation of the family (G5s).

Up until around three years ago, the G5s had to work externally for three to five years before joining the business. But this didn’t fully qualify the G5s to lead. Now, the older members of G5 are being trained from the top down as governance owners, and can even join the Family Council. The family also has the GOLD (Governance Owner Learning Development) program to accelerate their development.

“Constant entrepreneurship” is in the blood of the Lees. While the whole family is very actively embracing the digital revolution, the input of the young generation is increasingly important. “We know that in the future the world is going to be completely different to the way it is now, so we are in the process of breaking up the holding board into subsidiary boards to allow the G5s the scope to innovate,” Mr Lee says.

“Our generation (the fourth generation) is very proactive, and this means the next generation has had a hard time to find the space to try things out,” Mr Lee explains. “We must allow them the opportunity to do this and make some mistakes.”

Beyond the balance sheet

Though he admits that what is true for his family may not hold for others, Mr Lee does wonder if simply focusing on making more money can be like storing up dynamite that will eventually blow a family away. “You must work on the relationship side if you want to have a family as well as a business.”

He says that, for some time now, the hardware side of Lee Kum Kee ‑ including its constitution and ownership structure ‑ has been solidly in place. More recently, work had been carried out on strengthening the soft side that puts an equal footing on the family.

“This includes philanthropy work and relationship building with the in-laws,” Mr Lee says, adding that it was members of G5 who first raised the importance of developing a more inclusive sense of family.

These days the extended family socialize together at all sorts of events and activities. “This is new to us, as previously we were focused on making the business work. I find it very joyful - it’s a real family now, not just a business family, and to me this is just the beginning.”

Mr Lee is also Chairman of the Lee Kum Kee Family Foundation, which was founded in 2008 to promote happy family relationships through collaborations and related activities. In addition, the foundation also supports family members in developing initiatives that are not only worthwhile ideas, but can also be run jointly with other members of the wider family.

“We want to promote happy relationships within families - not just for businesses but for any family,” he says.

The Lee family organized a retreat in their production plant in Xinhui in 2008 and pictured next to a “willow” sculpture that marks the 120th anniversary of Lee Kum Kee.