• Sabine Holzknecht

The colourful world of Sebastian S.

(Reading time: 7 - 13 minutes)

Family business. The company name - Schwan-Stabilo - is familiar to everyone who has used a highlighter before. However, the majority of the company's turnover is generated with products under a foreign name. Sebastian Schwanhäußer does things a little differently - and not only has to convince the market, but also 42 partners.

Sebastian Schwanhäußer is relaxed. He has every reason to. Business is good. In the past 2015/16 financial year, sales jumped by 100 million euros or almost 20 percent and exceeded the 700 million euro mark for the first time. It was the most successful year in the company's history;

The company history - that is 160 years in this case. In the fifth generation, Sebastian Schwanhäußer runs the business. Not even every tenth German family business manages to remain in family hands for so many generations. Schwan-Stabilo has succeeded. What's the matter with you?

When you talk to Sebastian Schwanhäußer, you get the impression that you are dealing with the right mixture of letting go and holding on. Let go of the doctrine that the business must always be run by a member of the family. But to consistently adhere to the motto that everything that is done in the company must be really good.

The company was almost always under the management of a swanhouse, but there were also gaps - even when there was no suitable head of the company from the family available. Between 1999 and 2006, for example, when Ulrich Griebel and Wolfgang Handt shared the Group Executive Board. "That didn't hurt us. On the contrary - it has broadened our view," explains 53-year-old Sebastian Schwanhäußer.

He joined the company in 1997, but first took care of national and international sales before taking over the management of the stationery division in 1998. Finally, in 2006, he was promoted to Group Management, which he shared with Ulrich Griebel until 2014 following the departure of Wolfgang Handt.

"We don't have any supply posts anyway." If a family member wants to be active in the company, he has to prove himself. Only those who had previously worked successfully for a foreign company could be considered as candidates for a position at Schwan-Stabilo. "In principle," says Sebastian Schwanhäußer, "family members must meet the same criteria as external applicants."

Currently, he is the only member of the family who works in the company. And since 2014, he has shared the management with Jörg Karas, a long-standing member of the management board and formerly responsible for the Research and Development division.

Such a dual leadership is admittedly unusual, but it has its justification. "This organizational form results from our strategy," says Sebastian Schwanhäußer. "We are organized as a decentralized group." With the dual leadership, decentralization as a basic idea is also reflected in top management.

"We meet at eye level," says swan cobbler. "When there are two of you, you have to convince each other. The best argument wins. You can't overrule me."

The fact that this strategy has worked in recent years is proven by its success: constant growth year after year. Swan-Stabilo stands today on three stable legs.

Schwan-Stabilo has long been a big player in the writing instrument sector. There is hardly a desk or household in Europe without a Fineliner Stabilo point 88 or a Stabilo Boss light marker. After the French manufacturer Bic and the US-American Sanford Group with brands such as Papermate, Rotring, Parker or Waterman, the Heroldsberger are number three in Europe.

However, the company generates more than half of its sales with products that hardly anyone associates with its name: cosmetic pencils. Today, every second cosmetic pencil purchased worldwide comes from Schwan-Stabilo. Schwan Cosmetics produces for almost all well-known cosmetic brands in the world. The only difference is that the pens don't have their own label on them, but L'Oréal, Revlon, Chanel or Yves Saint Laurent, for example. Schwan Cosmetics is the undisputed world market leader in the field of decorative cosmetic pencils. With a turnover of 364 million euros in the past financial year, the cosmetics division contributed almost 52 percent to the company's turnover.

A few years ago, Sebastian Schwanhäußer began to build up a third mainstay by making acquisitions in the outdoor market. In 2006 he took over the rucksack specialist Deuter - not just any outdoor brand, but the rucksack specialist in the German-speaking market alongside Vaude. Even before the First World War, the company focused on the manufacture of backpacks and equipped its first expeditions to the Himalayas with Deuter backpacks as early as the 1930s.

In 2011 he bought the sporting goods manufacturer Ortovox. Ortovox produces highly functional garments and enjoys a leading position in the alpine market. The company from Taufkirchen near Munich was the first manufacturer of avalanche transceivers that could transmit and receive on two frequencies. An innovation that saved the lives of many ski tourers.

In 2015 the Maier Sports Group followed with the bicycle clothing brand Gonso. The company had introduced the first synthetic cycling shorts in Germany and was a pioneer in the development of today's functional cycling jersey.

At first glance, the outdoor industry has little affinity with the other two business areas. At second glance, however, an inherent logic reveals itself. "We make", explains Sebastian Schwanhäußer, "products to touch. We strive for a market-leading position in each case. We're not going in width. We're going to the top. And we are characterized by a high level of innovation. In the cosmetics sector, for example, 95 percent of all the products we manufacture originate from our own ideas and developments. That's what our three subgroups have in common."

And of course a family business has a very special risk assessment. After all, it is always about continuing into the next generations. "With our entry into the outdoor industry, we therefore deliberately chose a third pillar in order to be able to compensate for risks in the other business segments if necessary. This diversification means greater stability for us, it reduces the financial risk, leaves room for new ideas and makes us more diverse," says Sebastian Schwanhäußer.

In order to realize cost savings in the individual divisions, the company reorganized itself 20 years ago under the umbrella of a holding company. Today, synergies result from the fact that the individual companies of the group are relieved of everything that is not part of their core business: financing, taxes, law. "These areas of responsibility are in good hands at the holding company. In this way, we give companies room to cultivate their brands and drive innovation forward."

A calculus that, for example, was a textbook success with Ortovox. "Since the brand has been in our group of companies, it has developed excellently," says Schwanhäußer. "A fast-growing brand naturally needs a corresponding cash flow - and we have made that available." The current trend back to natural fibres and materials, which Ortovox - who has always relied on merino wool and Swiss wool for his clothing - can fully exploit, has also helped.

The companies Sebastian Schwanhäußer bought clearly obey the company's typical calculation: "strong brands with top products and a high level of innovative strength". Strictly speaking, the history of the company can therefore also be read as a history of innovation.

Gustav Adam Schwanhäußer, the great-great-grandfather, laid the foundation stone for the company in 1865 by purchasing the bankrupt pencil company Großberger & Kurz based in Nuremberg. He, the son of an innkeeper, succeeded in doing what the owners had previously failed to do: he led the company to solid success at a time when manual labour was increasingly being replaced by machine production.

"Every generation a milestone," Schwanhäußer sums up the history. The great-great-grandfather developed a new process for the production of coloured copying pencils and established the first overseas export agencies. Pencils were easy to transport, and this early internationalisation was decisive for their later success.

The sons Eduard and August - generation number two - succeeded in developing a thin-core coloured pencil with a very break-resistant lead, i.e. stable. The Stabilo brand was born.

The third milestone in the company's history, which also falls into the third generation's phase of action, came about more or less by chance. During the First World War a lot of operations had to be done. Schwanhäußer had a pen in its range that could be used to mark the skin of patients, known as dermatographs. It later developed into the first make-up pencil for eyebrows. The company thus found its way into the cosmetics industry - the most important pillar of the company today. Max Factor, the legendary Polish-American cosmetics manufacturer, negotiated personally with the Schwanhäußer family about the delivery of eyebrow pencils to the USA. Today Schwan Cosmetics is represented by ten subsidiaries on four continents; in 2015 a 40 million euro cosmetics plant went into operation in Tennessee.

Günter Schwanhäußer, generation number four and Sebastian's father, was the one who strongly promoted international expansion. With branches in France, England, Spain, Singapore, the Netherlands and Belgium as well as production sites in Malaysia and the Czech Republic, the writing instruments division achieved high growth rates under his leadership. This period also saw the development of an innovation that has remained a central pillar of the range to this day: the invention of the illuminated marker pen. The Stabilo Boss is still a bestseller today. The marker was christened "Boss" because it was designed to save people in management positions time by allowing them to mark important content in their records. The concept was completely new and innovative at the time. Helmut Kohl was an enthusiastic user of the Stabilo Boss. Mikhail Gorbachev too.

The milestone of generation number five, Sebastian Schwanhäußer's milestone, was undoubtedly the courageous advance into the outdoor industry, which until then had been far removed from the company. In the past financial year, sales in the outdoor segment grew by 40 percent and now account for 22 percent of consolidated earnings - almost as much as the core stationery segment, which accounts for 26 percent of earnings.

However, the fact that last year was such a record year was also somewhat surprising for him. "Normally," Schwanhäußer explains, "the cycles develop differently in the three industries. If one grows, maybe the other stagnates. And vice versa. In the past fiscal year, however, all three grew strongly independently of each other."

In the cosmetics division, it was not only new product developments that helped, but also an early presence on the Asian market. Halal-certified cosmetic pencils for the Arab world are just as much a part of Schwan Cosmetics' portfolio as special products that take into account the different skin textures, the different shapes of the eyelids or the high temperatures in Asian countries.

Particularly surprising was the positive business development in the traditional writing instrument segment - an area that many in the era of the digital no longer believed to be capable of great leaps. But it was precisely to escape the dictates of the digital that adults discovered their passion for colouring books in 2016. The market for paints, pencils and the like was booming. And Schwan-Stabilo profited strongly.

"We didn't see that hype coming ourselves. But when a wave comes, you must ride it." It was then above all important to be fast. And speed is clearly a discipline in which an owner-managed family business can play to its strengths. Short distances, little need for coordination, quick implementation. "At the top of a family business, there is much more room for operational influence. The managing director is less a man of numbers than a man of products."

This is another reason why family businesses are more likely to experiment. To channel this better, Sebastian Schwanhäußer has come up with a special way. While other companies participate in many different start-ups, he organizes so-called in-house start-ups within the company. "This makes us faster and more flexible," he explains. "It also creates learning effects for the entire organization." There are currently two such in-house start-ups in Heroldsberg: Stabilo Education and Digivision.

The researchers are investigating the possible symbiosis of analogue and digital products. For example, they are working on the development of a special pen for ergotherapists that records and evaluates the basic graphomotor properties of writing on the basis of the pressure and frequency of the writing movements. "We know that the use of 26 muscles is necessary to write by hand. How complex learning to write is overall, however, is still little known", Schwanhäußer informs. That is why he founded the Writing Motor Institute in 2012, a unique institution in Germany that conducts research in the fields of writing motor skills and writing ergonomics. Sebastian Schwanhäußer himself sits on the board, but the institute is completely independent in its work. A scientific advisory board steers the orientation of the institute together with the managing director.

It is important to remain open in all directions. "And sometimes coincidence helps." Recently, Schwanhäußer had introduced pastel markers to the market - a product that some had already called a flop. What would be the point of a luminous marker that does not glow but is matt? Then an Italian blogger discovered the pens. She tried it. I was thrilled. Blogged. And found three million followers. Within a very short time, all the stores were sold out - even in the Philippines.

"This example shows the opportunities offered by digitisation. So much becomes possible that was not conceivable until recently. The division of roles between manufacturers and retailers is becoming blurred. The way of shopping changes. I don't see it as a threat, I see it as an opportunity."

When generation number six joins the company, it will have to cope with its own milestones. None of the young family members is ready to start yet. But Sebastian Schwanhäußer is relaxed about it. After all, he knows that an external dual leadership can also work well. The important thing is not who does what, but to do it well;


How the family influences.

"Schwan-Stabilo is a family business," says Sebastian Schwanhäußer, "and Stabilo stands for stability." 43 members of the Schwanhäußer family hold shares in the company. Twice a year they meet to discuss the concerns and strategies of the company. "The goal of our co-partners," says Sebastian Schwanhäußer, "is clearly the long-term preservation of the company in family hands. The amount of the dividend is also always subordinate to this calculation.

Four family members are elected to the Advisory Board from among the 43 shareholders. Three further members of the advisory board come from outside, from business. "We need good advisors. And above all a good control function," says Sebastian Schwanhäußer. Advisory boards that are not part of the family and that have an unbiased view of the company can often judge things from a different perspective.

If the advisory board has to come to an agreement, for example when it comes to buying a company, it always votes by head. The amount of shares represented by the four family members is irrelevant. It is not the majority of the capital that decides, but the majority of votes.


Author: Sabine Holzknecht

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