A Real Family Jewel - Merck KGaA

When I signed up to go on this trip there were a few in my family that may have had some doubts as to the validity of this exercise. "Studying family businesses in Germany? Sound more like something you say to justify buying a month -long Eurorail pass." But after toda's visit to Merck headquarters in Darmstadt I can assure all parents, spouses and mother-in-laws that we are getting some amazing exposure to corporate governance education.

Today we spend 5 hours at Merck, starting with a lengthy discussion with a high ranking member of their Family Board, Mr. David von Klackreuth. He generously flew down from northern Germany to spend the day with us and share Merck's story of success over the past 12 generations of chemistry and pharmaceutical dominance in Europe and internationally. There are over 219 members of the Merck family that are actively holding shares. These family members own 70% of the company's value. Not bad for a company that had sales of $7.6 billion in 2008. In fact they are so big, that even with only 30% trading out in the market they are still part of the DAX (Deutche Exchange) Top 50 index.

Merck headquarters cover over 1.2 square kilometers and just at this site alone there are over 8000 employees (over 32,000 worldwide) and 450 buildings, some dating back to the 18th century. The scope of the company is vast adn it seemed like every time we went somewhere they told us of another innovation they had discovered or implemented to become more effective or efficient.

The tour of their warehousing facilities for potentially dangerous chemicals was a highlight for me. You'd think we'd be in danger but the warehouse is almost completely automated. They have six stories of warehousing where each combustible chemical is separated from the other potentially bad chemicals and these automated forklifts come and select just the pallet they need. It's right out of science fiction novels. By being automated they mitigate most of the risk for employees too.

Merck's products have an impact on our daily lives that I had no awareness of too - whether it's cancer treating beta blockers, or liquid crystal manufacturing for our cellphones or even cosmetics or vitamin C, the company seems like they do most everything.

In the end though it was the family, the values that they embody, and their vigilance to those values remaining the backbone of corporate culture over 12 genreations that impressed me the most. Their approach precipitates life long loyalty with employees and pride in work that seems missing from north american companies looking for increasing their quarterly returns.

We weren't allowed to take pictures anywhere, but we did get one photo with Mr. von Klackreuth and the "A" + group. I suppose sometimes family secrets are best kept when they are held as treasures and shown only in rare moments. We felt like we got a glimpse of that today.

On the Rhine - Steep Incline - Monks with Wine

(Note: I will be adding more photos as time goes on but the battery on my camera died in my first day here).

The first full day in Germany was beautiful. The sun was shining like a bright July day in Edmonton (but this is May) and to ease into our jet lag Professor Peter Jaskiewicz (Peter from now on) had organized a boat excursion down the Rhine river originating in Rudeshiem. The "A" was now being fully adopted by the group and we took it to its first fully Germanic tourist trap - the Drosselgasse. This narrow street reminds me of Harry Potter's Diagon Alley with shops lining its narrow passage as you are targeted for sales of postcards, coo coo clocks, and german chocolate. I narrowly escaped with only a few Christmas ornaments in tow.

We shuffled between ice cream parlors and "gasthauses" (restaurants) back to the docks where we boarded a ferry that would take us from Rudeshiem to St. Goars. It was a relaxing, fun time and along the two hour tour we saw examples of 12th and 14th century castles along the way every 15 minutes or so.

Roshanne and Barb in Rudeshiem

We docked at St. Goars along the famous cliffs of Loreley where legend tells of a young maiden with a golden voice. She would sound so beautiful and look so lovely that ship captains would run their barges against the shoals just to get a closer look. It was here that Peter suggested a short climb up the cliff where we would have a wonderful view of the Rhine and we could grab a bratwurst and some coffee or beer. It sounded lovely.

Of course the hike was a shock to many of our systems. We had been lulled into a state of sedentary complacency and now the 20 year old BComs were jogging up the hill and the old MBAs were forced to keep up. Someone offered me water upon reaching the top, another offered me a difibulator as a joke. I took the water...barely.

After gathering our breaths, our strength, and some lunch, we headed off to Kloster Eberbach, one of the best preserved and oldest monasteries in Europe. In fact it is so pristine it was used as the backdrop of the movie "The Name of the Rose" with Sean Connery. Seeing it up close and learning its history was interesting and it set a good base for what I'm sure will be a theme during the trip - Germany is steeped in history. We toured its different rooms and visited the wine cellars (which had no wine but many casks) and enjoyed learning how religion played the major role in settling the Rhine Valley - a UNESCO Heritage site.

So after the Rhine, the Incline and Wine we trundled back to Wiesbaden to rest up for a full day of Family Business studies at Merck tomorrow.

Transitioning into Deutschland

As we arrived in Frankfurt on Saturday afternoon, most of us were still feeling a bit of a shock to our systems from the time difference. Sleeping on planes has never been something I do well, and I knew that the first day was going to be one where I was up for 30 hours or more. As it turned out, so were most of my classmates.

One thing you need to know about this trip is the “famed A” that we brought. The “A” is 2 feet by 2 feet by 5 inches, made of foam, and created at our friends in Industrial Design at the U of A. I brought it to show people that wherever your degree takes you, whatever your experience, the U of A is with you too. It’s cheeky, it’s symbolic, and it has caught fire and the attention of tour guides so far. Look for the A to be our own version of Travelocity’s gnome.

Bleary eyed and yet excited at arriving without any hassle or hiccup through customs or baggage, we stepped out to humid, sunny Germany. The consensus is that a) this place is very clean and b) it is much greener and prettier than we’d all imagined. Driving to Wiesbaden we saw forests and fields of canola in full bloom, vineyards and hills dotted with 18th century towns, castles (I’ve lost count there are so many) and gothic churches rising out of a lush vibrancy of green everywhere. If this was the carpet being rolled out to greet us then I couldn’t imagine what would be next.

The first day we had time to explore, and as it would have it, Doug Matheson and I found the street that turned out to be the most popular one for hanging out. We walked for a few hours before reposing at an outdoor café for some schnitzel and beer (hey we ARE in Germany after all) we collected back to join the others for dinner. Lloyd Steier and Chantel Blanchette joined us for an hour of people watching on a beautiful Saturday afternoon.
After a tasty meal at a Cuban restaurant, the group walked back through Wiesbaden’s beautiful park. There were trees as old as time shooting up past seven stories and a large pond with a fountain that reminded me of Hawreluk Park (though not as expansive). Rhododendron bushes and lilac trees filled the air with wooded perfumes and the walk back to the hotel was a wonderful way to end the day. We walked through the Casino which is housed in a building going back centuries out to an old car exhibition that happened to be wrapping up for the evening. We posed against cars that James Bond might drive in olden days, VW wagons, Porsches and other exotic vehicles that made the first day seem pretty fantastic.

As we meandered back to our hotel, with the full European summer's eve and the jet lag still in its early stages, I think we had a pretty good first day. - MH

3 sleeps and counting...

The Europe Business Family Tour starts Friday and I'm really getting excited. It's part of a joint BCom MBA course put on by the Alberta School of Business at the University of Alberta. Of course it all seems glamorous...off to Europe? Why yes...but the intensity of my real work and the load I'm trying to plow through seems to get worse as the date of departure creeps forward. I take solace in the fact that by Saturday morning I will leave that all behind and be sipping a strong "kaffe"(I'm not German so I may have this wrong) and a ...what do Germans eat for breakfast?

The EBFT tour is based upon learning more about intenational Corporate Governance, a hot topic these days especially in light of the decline of the stockmarkets, the outrageous paychecks of corporate executives and the overall impact a lack of regulation has had on all of us. Who hasn't had their meagre stock portfolio drop to the point where we discuss our wealth in terms of the extra years we now have to work. Freedom 75 baby! Looking good.

But in Germany the system is different. The businesses are less reliant on the stock market because of the control families have retained in operating their businesses. Governments, banking systems, and shareholder rights are unique. This trickles down into what motivates management, employees and creates culture in the company.

So with a few sleeps left I'm starting this blog to record our journey. Plus I needed to post something ahead of time...I'm not saying I won't find coffee on Saturday morning, I just want to put my full effort into that.