Below is the first post in a three-part series exploring this summer’s Market Basket leadership struggle. Ted Clark, professor of entrepreneurship and innovation and executive director of the Center for Family Business at D’Amore-McKim School of Business, explains what stakeholders from all angles should learn from the saga of the summer.
The epic battle over popular low-cost grocery chain Market Basket sparked a worker strike that captivated New England this summer. The weeks-long walkout ended when Arthur T. Demoulas was awarded ownership in a deal that cost him $1.5 billion. His cousin and rival, Arthur S. Demoulas, was on the other side of the grocery isle and ended up being the monetary beneficiary.
While some criticize Arthur S. for his execution of the deal, others praised Arthur T. for his unrestrained loyalty to the brand name; Arthur S. stuck to his guns and scored a big payday while Arthur T. took on significant debt and the challenge of rebuilding the family business to where it once was.
Ted Clark, professor of entrepreneurship and innovation and executive director of D’Amore-McKim’s Center for Family Business, explains that there may be more than meets the eye in this family feud.
Now that the dust has settled, the shelves are stocked and shoppers are filling carts, one has to wonder, who really won the Market Basket battle?
Arthur T.: The Public Winner
Whether you read the papers or talk with your neighbor, chances are they’ll side with “Artie T.” Employees and residents alike came out in droves – often to the tune of thousands – to support Arthur T., who has a longstanding history of putting employees ahead of the bottom line, paying modest dividends and keeping prices low for shoppers. With the $1.5 billion purchase, Arthur T. has taken full operational control of the business, but Clark explains he is headed into uncharted waters.
“The management team has changed and they’ve introduced creditors and equity partners into the mix,” said Clark. “Arthur T. should expect to see added pressure on the bottom line, slowed expansion and it will be interesting to see how his relationship progresses with the board. He has the support of the public, but he’ll now need his investors’ support to really bounce back strong.”
Arthur S.: The Private Winner
Clark believes Arthur S. is in some ways the under-the-radar victor, giving up the company he relished but walking away richer in the end. While some argue that Arthur S. could have handled the situation better publicly, he was able to keep a low media profile and he ultimately sold the company to the one person who was mostly likely to pay full price.
“Arthur S.’ involvement is interesting because though he certainly still came out financially a winner, Market Basket could be even stronger now that the conflict is gone,” said Clark. “When companies remove that internal family stress, businesses soar.”
So, what’s the executive leadership lesson here?
“Family businesses are complex – you have to factor in not only a company’s needs but the dynamics of interpersonal relationships,” said Clark. “With the proper networking opportunities, guidance and business counseling, family-run businesses can work to ensure their long-term success and avoid interfamilial breakdowns.”
When it comes to determining an overall winner in the Market Basket battle royale, Clark says it’s tough to say.
“The two Arthurs truly are polar opposites – one seemed to care more about the money while the other seemed more concerned about maintaining the brand’s public and internal image. A blend of the two probably would have been the best option – that is, if only they’d been able to get along.”
To learn more about how the D’Amore-McKim School of Business is helping to advance family-owned businesses or to connect with Professor Clark, please visit our website or the Center for Family Business.