Family Matters
a talent management blog focused on the family business
by Kevin Logterman

While many instances warrant outside the family management, there are sound cases for family owned and managed businesses, but maybe not in the US. In April 2007, Businessweek reported that the world's oldest continuously operating family business ended its impressive run in 2006 after only 14 centuries. Japanese temple builder Kongo Gumi, in operation under the founders' descendants since 578 , succumbed to excess debt and an unfavorable business climate. To put this in perspective, this family owned business had been in operation for almost 1200 years when the first shots of the American revolution were fired. At its demise, it had operated 6 times as long as the United States has. 
 
 
 
How do you make a family business last for 14 centuries? Kongo Gumi's case suggests that it's a good idea to operate in a stable industry. Few industries could be less flighty than Buddhist temple construction. The belief system has survived for thousands of years and has many millions of adherents. With this firm foundation, Kongo had survived some tumultuous times, notably the 19th century Meiji restoration when it lost government subsidies and began building commercial buildings for the first time. But temple construction had until recently been a reliable mainstay, contributing 80% of Kongo Gumi's $67.6 million in 2004 revenues.  
 
 
 
Kongo Gumi also boasted some internal positives that enabled it to survive for centuries. Its last president, Masakazu Kongo, was the 40th member of the family to lead the company. He has cited the company's flexibility in selecting leaders as a key factor in its longevity. Specifically, rather than always handing reins to the oldest son, Kongo Gumi chose the son who best exhibited the health, responsibility, and talent for the job. Furthermore, it wasn't always a son. The 38th Kongo to lead the company was Masakazu's grandmother.  
 
 
 
Another factor that contributed to Kongo Gumi's extended existence was the practice of sons-in-law taking the family name when they joined the family firm. This common Japanese practice allowed the company to continue under the same name, even when there were no sons in a given generation.  
 
 
 
So if you want your family business to last a long time, the story of Kongo Gumi says you should mingle elements of conservatism and flexibility—stay in the same business for more than a millennium and vary from the principle of primogeniture as needed to preserve the company. 
 
 
 
To sum up the lessons of Kongo Gumi's long tenure as a family owned business; pick a stable industry and create flexible succession policies. If sustained success came easy, then all family businesses would have a 1,400+ year run.