"My world is orange."

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14 STIHL 20190710 DSF3781

Family business. The first generation founds the company. The second one makes it big. And the third? "My task is to strengthen our position as the world market leader in an increasingly complex world and to ensure that Stihl remains a true family business at the same time," explains Nikolas Stihl. How the chairman of the advisory board as chief strategist sets the course for this.

If you look at the world map through the eyes of Nikolas Stihl, you will see orange above all. Only two or three small grey spots disturb the picture. There's North Korea, for example, or Somalia, or Kyrgyzstan. "That," says the entrepreneur, "are areas where it is very difficult to do business. Or extremely dangerous. Or both."

Everywhere else, in 160 countries on five continents, Stihl is present with agencies, its own factories, sales and marketing companies. "50000 specialist dealers sell our products worldwide, more than 17000 employees generate sales of more than 3.8 billion euros, 90 percent of which abroad."

No doubt about it. Stihl is a real lighthouse in the ranks of German family businesses, ein Paradebeispiel for successful "Made in Germany", which conquered the world markets. A no longer "hidden" champion, who became a synonym for a product: Since 1971 the company has been the world market leader in the field of chain saws and power tools. A company characterized by steady growth and by the absence of crises.

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What makes Stihl so successful? Can other family businesses learn from Stihl? "To be successful, it's not enough to just manage the company. It is just as important to manage the family," says the entrepreneur, formulating the basic requirement.

The family consists of four tribes with currently a total of eleven shareholders. Each tribe owns exactly 25 percent of the company. They are on an equal footing. Basically, this is a starting situation with explosive force. There could be coalitions. Or blockades. Quarrel. And standstill. So that this does not happen, the family has made clear and binding agreements.

In principle, all family members are excluded from the operating business. This is done by an external board of directors chaired by Dr. Bertram Kandziora, who has been managing the company with great skill since 2005.

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However, the major strategic decisions are taken by the Advisory Board. There each tribe sends a spokesman. Nikolas Stihl is the chairman of this advisory board. The chief strategist, so to speak. "We meet weekly, sometimes daily," he says. The committee would then discuss and also debate controversially. "But almost always we finally make our decisions by consensus. We've found that good decisions were often compromises."

According to Stihl, it is a great advantage that all family members are able to compromise. "We're pursuing the same goal: the well-being of the company. "So that we can pass it on to the fourth generation."

In addition to the internal advisory board, which consists of the four family members, there is also the external advisory board, which meets four times a year. Franz Fehrenbach, for example, Chairman of the Supervisory Board and former Chairman of the Board of Management of Robert Bosch GmbH, is one of them. Or the CDU politician Friedrich Merz. You have the necessary distance to the company and the family to analyse the business development with a neutral view.

A detailed partnership agreement regulates all internal rules of the game that affect the family. If, for example, a family member wishes to assign shares, his own tribe has a right of first refusal. If he is not interested, the other members of the family are called upon. "The price, the conditions, the amount of the instalments - all this is regulated in the shareholders' agreement. Nothing would have to be negotiated in the event of a case."

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Stihl's grandfather already drew up this contract. "Of course, it's always been adapted, it's a living document." However, the clarity and transparency of the rules of the game are an important guarantee that conflicts can be avoided. Every shareholder knows the requirements. Because everything is clearly and unambiguously regulated, there are no points of friction. "In this way, we avoid conflicts that can be extremely harmful in family businesses - for the family and for the company," Stihl explains. "The ultimate entrepreneurial goal is to keep the company going." Getting both is not always easy. Because sometimes it means taking on restrictions in one's personal life in order to live up to one's corporate responsibility.

In the conversation it becomes clear that this topic occupies Nikolas Stihl, yes, moves, that he has thought a lot about it. "That's why it's so important," he emphasizes, "not only to take care of the company, but also the family. We do a lot of things together. We make sure that every shareholder is heard and feels considered. Because we want Stihl to be a company of Stihl's descendants in 90 years' time."

Nikolas Stihl is the third generation of the family dynasty. His grandfather, Andreas Stihl, founded the company 93 years ago - in 1926 - in Stuttgart. A. Stihl Ingenieursbüro was initially just a small one-man business that designed and built steam boilers. In order to be better utilized, Andreas Stihl additionally takes over the representation of the "Rinco tree felling machine", a kind of chainsaw. But sales are not going very well. The customers are dissatisfied, Andreas Stihl stops selling again. Nevertheless, it is precisely this small excursus that will give the impetus for the creation of the global company. Because a little later he decides to develop his own better chainsaw.

1927 The first chainsaw with electric motor is built. In 1929, Stihl's first portable petrol chainsaw came onto the market. It weighs 63.5 kilograms and must be operated by two men. When Andreas Stihl presented them at the Leipzig Spring Fair in 1929, the success was so great that he could hardly keep up with the production.

Stihl expands, moves into new premises, acquires its own property. But then comes the global economic crisis - and it also hits the young company hard. Stihl has 51 employees at this time and urgently needs further orders. The way in which Stihl dealt with the crisis at the time already shows what success factors the company should continue to have today - courage, expansion abroad, innovation. He himself travels to Russia to open up new markets. And relies on the development of new technologies.

When Stihl finally launched the universally usable one-man motor chainsaw in the 1950s and the legendary Stihl Contra in 1959 became a real bestseller, Stihl's way to the top of the world was unstoppable. In the early 1960s, export demand for Stihl's products was so high that the company had to rent charter flights to deliver orders to the USA and Canada.

Andreas Stihl revolutionised work in the forest with his invention. His son Hans Peter has turned Stihl into a global player. "Today," says Nikolas Stihl, "we have reached another important milestone. We are practically on the threshold of the next industrial revolution. No one can predict what the world will look like in 20 years."

When we talk about the Nikolas Stihl era later on, we will probably focus on how the company was led into the age of digitalization. "Digitization is an important topic for the future for us. We see enormous potential in creating even greater customer benefits with digital technologies and generating added value along the entire value chain. In production, for example, we use collaborative robots that make our employees' daily work easier. We also offer smart products for end customers. Our robotic mower iMOW can be controlled via app zum Beispiel".

Working with 50000 resellers also means that Stihl has 50000 contact points through which the company learns what its customers need. Worldwide. And in real time. Stihl is therefore probably closer to its customers than Amazon with its algorithms. "Today, we can network our supply chains in such a way that we always know what the specialist trade has in stock and what it sells. In this way we can always manufacture and supply the right products and the right spare parts." And not only that. The Internet of Things makes intelligent devices possible. "Our chainsaw signals when it needs the next maintenance - before the user has to think about it. This means that no one will suddenly be confronted with a defective part in the forest."

But how can a company whose products are already present almost everywhere in the world continue to grow? Isn't the market saturated at some point?

"Well, we're in a niche with primary needs. We're operating, so to speak, in a growing business." Trees, bushes, grass - what grows has to be cut and cultivated in a cultural landscape. The demand for Stihl's products therefore thrives on its own. As long as there is vegetation, Stihl's products are needed.

There's competition, but Stihl obviously doesn't have to fear it. "We are technologically so far ahead in important product segments that if we can only maintain this lead, we will remain very competitive in the future."

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To keep it that way, Stihl invests a lot. In 2018 alone, the company spent almost 325 million euros or 8.6 percent of its annual sales on investments.

"We budget about four percent of our sales for the development of our products alone. These efforts guarantee that we will continue to be successful on the market in the future," explains Nikolas Stihl. "The minimum requirement we place on our Executive Board is that we earn enough to be able to generate all investments in the coming years from cash flow. That doesn't sound like much, but I'm telling you, this requirement is not small. Everything we plan must be consistent: Either we're the best. Or we don't."

The intensive development work also enables Stihl to open up completely new applications. For example, the company recently launched an olive harvester on the market. "So far," explains Stihl, "the olives have been shaken from the trees with sticks. Our device automates this. This allows the harvest to be much faster and more productive."

There are a number of crops that are currently still harvested manually and where Stihl's new equipment could lead to very high productivity gains: Cocoa, for example, or tea or cashew nuts. "There's still a lot of potential for us all over the world."

Precisely because the Stihl family is a true global player, the family members have always spoken vehemently about economic policy issues in Germany. Hans-Peter Stihl, Nikolas' father, was President of the German Chambers of Industry and Commerce (DIHK) from 1988 to 2001 and during this time he was very actively involved in politics on behalf of the German economy. His role was legendary during the seven-week industrial action in 1984, when the 38.5-hour week was introduced instead of the previous 40-hour week in the metal industry.

Basically, Hans-Peter Stihl was of the opinion that "politics should largely leave the economy alone because it has no competence in the field of economics". For his tireless commitment to a value-oriented economy, he and his sister were awarded the "Social Market Economy" prize of the Konrad Adenauer Foundation in 2009 - one of numerous awards.

Even Nikolas Stihl does not mince his words when it comes to Germany as a business location. "We are currently experiencing a drastic mismanagement of government spending. 53 percent are expected to go into social work soon. Only a small fraction of the federal budget flows into investments for the future. This is an imbalance that we cannot afford in the long run at one of the most expensive locations in the world. We're already living off the substance. If we were to run our company like this, we would have the combined smelting works here and not one of the most modern in Germany."

A further point of criticism is the tax burden on partnerships, especially with regard to inheritance tax. Inheritance tax would massively weaken SMEs because it would deprive them of important liquidity. "It is precisely the medium-sized family businesses that are responsible for the largest increase in employment in the last decade.

A study by the Family Business Foundation shows that the largest family-owned companies increased their number of employees in Germany by 23 percent between 2007 and 2016. The 27 non-family-controlled DAX companies achieved a domestic increase of only four percent in the same period.

"If inheritance tax remains as it is today, this will lead to a massive change in the corporate landscape in Germany. And that will be irreversible," Stihl prophesies.

A warning? Of the more than 17000 employees, almost a third are employed in Germany. "That's more than sales would justify," calculates Stihl, "because we only generate ten percent of our sales in Germany." When the site securing agreement expires next year, Nikolas Stihl will renegotiate with IG Metall. Compromising. Like all members of the family. "We are a German company. We like being in Germany. We will stay as long as we can." ®

Author: Sabine Holzknecht

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