“The purpose of Roche is not to make money; the purpose of ours is to satisfy a community and in particular to satisfy the patients’ community.”
“I think that one of the legacies a family business has is this long-term thinking. It’s this backbone that is always there."
When the Paris-based business school INSEAD received a donation of €40 million in the summer of 2018, it was the largest gift made by anyone in its 61-year history.
The donor was André Hoffmann, Vice Chairman of pharmaceuticals group Roche and a member of the family with a controlling shareholding in the group since 1948.
Yet the money – actually gifted in his name and that of his wife, Rosalie – was not just an eye-catching case of corporate and personal largesse. It is being used to set up the Hoffmann Global Institute for Business and Society which, as an INSEAD announcement said at the time, “promises to bring fresh perspectives and innovative solutions to the most intractable global issues that threaten our sustainable future.”
Projecting a vision for business in society: André Hoffmann, Vice-Chairman of Roche Holdings Ltd. [14:28 mins]
The Institute will explore issues such as ethics, gender balance, humanitarian operations, social impact, sustainability, technology for good, wealth inequality and other topics related to the role of business in society.
These are issues of great importance to Hoffmann, who has a clear vision for the role of business in society and in particular for how it gives his family’s business a clear purpose beyond generating profit. Business is often too focused on short-term gains, Hoffmann says, and is rarely interested in its impact on society and the environment. This needs to change, in his view.
“The economist Milton Friedman once said, ‘The business of business is business.’ So, what he was saying was: ‘Let us make money, and the rest will take care of itself. We don’t have to worry about externalities.’ But this is clearly, to my understanding, not true,” says Hoffmann.
“We need to look at financial returns, because without that, there's nothing. But you also need to look at environmental and social returns. We can satisfy shareholders; we can have a profitable business; we can have a forward-looking business. But we can also minimise the impact of our footprint on society and the environment. My dream is to position Roche and many other companies into this territory where they can become net contributors to societies – and not the opposite.”
Hoffmann, who earned a Masters in Business Administration from INSEAD in 1990, believes one of the main ways the Institute can help to bring about that change is by influencing how business is taught. “The Institute for Business and Society aims at changing the norm in which business is taught,” he says. “We have to realise the way we teach business management is only aligned on the single metrics, which is financial return. The rankings of business schools are often based on the salary you earn when you graduate. But judging success just on the amount of money you receive, as we know now, is no longer suitable. And business schools need to wake up to this fact.”
Purpose has a particular role to play at Roche itself, too. “The purpose of Roche is not to make money; the purpose of ours is to satisfy a community and in particular to satisfy the patients’ community,” Hoffmann explains. “How can we create new ideas which will make the life of the patient easier and perhaps even cure them?”
A family business structure supports that purpose, thanks to the multi-generational, long-term approach taken by many family businesses – including Roche, which was founded by Hoffmann’s great-grandfather Fritz Hoffmann-La Roche in 1896. The structure of Roche’s ‘hybrid’ ownership helps in this regard. The family has most of the voting shares but doesn’t control the quoted shares on the stock exchange, Hoffmann explains. “So, we have two types of security: we have the voting shares, and we have a dividend certificate. That means that we are under the scrutiny of every investor on the planet, but we’re also able to take long-term decisions because we have the majority of the vote.”
This means that when the company makes a decision, it is likely to influence the fifth and even sixth generations as well, says Hoffmann, who is a member of the fourth generation of the family. “This means business thinking has to be transgenerational.
"That’s what separates us from non family-owned businesses. It’s the concept of sustainability, which, I’m glad to say, is much in favour at the moment. And this sustainability is lived by the family.”
To illustrate this, one need look no further than Hoffmann’s early life. His father, Luc, was one of the co-founders of the World Wide Fund for Nature and dedicated his working life to conservation projects. The younger Hoffmann was brought up in the Camargue region of France, where his father had set up an institute to protect the Mediterranean wetlands. And he was deeply influenced by his father’s commitment to the environment.
“I grew up in this conservation environment, and I spent a lot of time trying to protect species. Today, I’m more and more convinced that what matters is the interface between humanity and nature,” he says.
When it comes to the more than 93,000 employees at Roche and its future employees, Hoffmann believes that having a strong sense of purpose is an excellent recruitment incentive. “How do we make sure that the people who want to make an impact on public health or even on disease solutions come to Roche rather than go to other businesses? We need to be able to provide the right environment and have sufficient stability while still maintaining a certain amount of excitement.”
For Hoffmann, all of this lays the foundations for Roche’s legacy. “I think that one of the legacies a family business has is this long-term thinking. It’s this backbone that is always there, despite changes in fashion, despite the change in technologies, despite digitalisation, despite all these challenges that the world is throwing at business.”
Global Family Business and EMEA Entrepreneurial and Private Business Leader, Partner, PwC Germany
Dr. Peter Bartels
Global Entrepreneurial & Private Business Leader, Partner, PwC Germany
Tel: +49 40 6378-2170