Synchronicity is defined as a string of events that seem to be highly symbolic and meaningful in nature. Joe Okelo was driving to Nairobi in his Toyota Starlet with his young family when, at Mtito Andei, the car started overheating and eventually broke down. He was driving to Nairobi because he had been asked by his father to join the family business which was Makini School. As he drove to Nairobi, he was uncertain if he had made the right decision. At the time, his career was just taking shape and he was growing more independent and building a life for himself. And so when the car broke down, he interpreted this as a sign from the gods that he was better off in Mombasa and not in the family business. But was he? Here is his story.

Who is Joe Okelo?

I describe myself as someone passionate about society. Inequality intrigues me. I have a soft spot for those that are vulnerable and not so privileged in society.

How would you describe your background?

I am an urbanite. I was born in the United Kingdom (UK) but my parents moved back to Kenya when I was six months old. I did my primary and secondary education in Nairobi and thereafter studied in Canada and the United Kingdom.  My academic background is in sociology and business administration. I have worked in the UK but much of my working years have been with the family business at Makini School here in Kenya.

As a well-traveled man, do you speak any other foreign language aside from English?

Yes, Kiswahili…(laughs)

I learned Kiswahili by immersion. I did not use it much until when I was posted to work in Mombasa where I literally fell into the deep end of the communication pool. Kiswahili was the language of communication within the organization and I recall a time I was supposed to address the staff on the importance of writing down their beneficiaries for a life insurance policy.  I struggled to express myself as I did not know the Kiswahili translation of the word beneficiary. I have since learned the language and I now speak it with ease

Dear reader, how would you have fared had you been the one addressing the staff? How good is your Kiswahili?  Did you know that ‘mriithi’ is the Swahili equivalent for beneficiary?

Do you desire to learn any other language?

I have been thinking of picking up French again. I work with an organization that intends to expand its operations into West Africa. This is an incentive to learn French as West Africa is primarily francophone. With more time in my hands, I may explore this possibility.

Do you use emojis in your communication?

I do, but I abuse them. (chuckles)

I use them but to the annoyance of the people I communicate with.  For example, instead of putting one smiley face, I will put ten smiley faces. (laughs)

I do not use emojis in formal communication simply because I do not know how to insert them in an email.

Do you have any favorite emoji?

I use them liberally. I have no preference. When I see other people’s emojis, I realize that I have a narrow range. I need to find out where they get these emojis from.

Talk to us about Makini.

Makini started in February 1978 when I was about 8 years old. It started as a kindergarten right in our house as a side business for my parents who were both employed. My father was a lecturer at the University of Nairobi and my mother was a banker with Barclays Bank.

The initial business that my parents intended to start was real estate. The parcel of land where Makini kindergarten began was supposed to be subdivided to put up a maisonette.

Why the change of mind?

A deep love for children on the part of my mother and my father’s background in academia.  My mother desired to establish a school of excellence that would bring out the best in children based on their innate abilities. This went beyond academics and included co-curricular activities such as sports, music and arts.

Did your parents achieve their vision at the point of selling off the business?  

I think they did. Makini has impacted the lives of so many people globally and has contributed enormously to the education sector.

What does it take to grow a business to such international standards to eventually attract external investors?

My parents had a dream into which they poured their hearts and soul. In the seventies and eighties, Kenya was among the countries with the highest population growth rates in the world. My parents were aware of this and they did not think that the government would respond fast enough by putting up the necessary infrastructure and training enough teachers to counter this growth. This was an opportunity that aligned with my parents’ dreams and desires.  My father quit his job as a lecturer at the University of Nairobi to start his engineering consultancy. This freed his time and allowed him to focus more on Makini.

Were there any external insights beyond their motivations?

We were the first educational institution in Kenya to receive a loan from the International Finance Corporation (IFC). By working with the IFC, a whole new world was exposed to us. As an arm of the World Bank, IFC is extremely bureaucratic, but the plus side is that they have stringent standards that guide how and with whom they work. For them to engage with you, one must have structures and processes to ensure efficient and effective operations.

Their standards were set higher than the regulators in government. This relationship exposed us to best practices in business as well as global networks in the education space. We became more systematic and structured in how we ran the business and this enabled us to scale.

What influenced the decision to exit from the business, and how were the founders convinced to do it?

The idea of selling your family business is inconceivable. It had never crossed the minds of my parents. However, as the interest in the business grew, it dawned on us that we might one day let go of the business.

For something you have established and watched it grow, how difficult is it to let go of a business that some entrepreneurs would call their ‘baby’?

There is always an attachment to something which you have built. When it comes to selling your business, two key things that come to mind: money and control. The money might be an incentive but then losing control is difficult to deal with. In our case, it was a unanimous decision. We had achieved that which we had set out in the very beginning which was to establish a center of excellence.

Among the reasons that Michael E Gerber gives for selling a business is when the entrepreneur has achieved what they set out to do. When other players enter the market and there is nothing more you can offer to meet the expectations of your clients, you are advised to sell the business. We had been requested to scale into the counties but such major expansions would require a paradigm shift. Is that something we were ready to embark on?

Somebody else saw the value in what we had built and we opted to let them take the school to greater levels. We may initially have been hesitant in our decision to sell but in hindsight, I think it was the right thing to do.

How was it engaging with the external investor? Was it a courtship of sorts and who found who first?

It was a long courtship of about two to three years.

We had suitors who wanted to change the name of the school, but we chose not to go that route. The consortium that we eventually sold to initially wanted to buy us outright. The land and the school were two separate businesses and with the value of the land having risen over the years,  buying both businesses would not have been feasible for the investor as it would have been difficult to recover their investment. The alternative was to buy the school and then get into a lease on the land. They also agreed to retain the name, the ethos and the staff at the time.

Talk to us about the Association of Family Business Owners.

The Association which started in 2015 was born out of the recollection of the frustrations I had as a second generation offspring joining the family business. There is usually some antagonism between the founders and the second generation. I came in with all these grand plans, but I was always reminded that I was not asked to join the business so that I could start another business. (laughs)

I formed the organization with friends who were experiencing similar challenges of working in a family business. As we shared our experiences, I realized that my friends were having it rougher than I was. I did not get complete buy-in initially, but the Association has since grown to over a hundred members currently.

In your interactions with entrepreneurs through the Association, what key challenges do these owners of family businesses encounter?

Many family businesses especially those run by the founders are at best semi-professional. There is this façade that we do things professionally, but the truth is, it is just the founder who runs the show. It is a one or two-person show and that is the reality.

One challenge that tops my list is the lack of proper governance structures and procedures to support the business. Everything in the business tends to revolve around the founder. This is the reason why when the founder of a business dies, what follows is a huge fight for the assets of the business leading to the eventual death of the business. Sometimes the founder does not even have to die. They stay on for far too long past their season.

Closely related to governance is the lack of succession. In Kenya, our succession plan is death. We fail to plan and wait until death to determine who takes over. Talking about death is taboo for us but in truth, without proper succession planning in the business, the transition will be problematic.

The lack of governance and succession ultimately leads to conflict which is another challenge I see.

Joe mentioned that It only takes three generations for a family business to disappear. Usually, the founder makes the money, the second generation enjoys the money and the third generation destroys the money. He has observed that in Kenya, this cycle is even shorter because of the above challenges. He further noted that we are currently in the biggest period of wealth transfer from one generation to the next but over 80% of that money will be lost in transition. The reason for this is that the next generation does not know what the founders own and how the businesses are run.

Did you encounter these challenges at Makini ?

We had structure at Makini having already been exposed to working with the IFC. There was a lot of excitement when I joined the business but there was also a lot of frustration particularly with decision making. One of the jokes I share with my second generation friends is that there are two places where decisions are taken in family businesses. One is the boardroom and the second one, which is probably more powerful, is the bedroom. I learned this the hard way.

How was it working with your mother in the business? Did you have to create an official persona in the office to engage professionally and a mother/son persona at home?

The setup at Makini was somewhat family-oriented. My mother’s style of management is collaborative and consultative. Dealing with her in a professional and a personal capacity was not very conflicting. She was the kind of boss who would let me take charge in many areas of the business. When I compare myself to some of my peers, I find that I had a lot more responsibility and accountability than they did.

When I joined Makini, my role was not clearly defined and so I was consistently told that I was doing a superb job helping my mother in the business. This was hard to deal with initially because before joining Makini, I was well established in my career at Cargill. It is however something I learned to deal with. One time I told my mother that if she was the Chief Operating Officer (COO) at Makini, then my title would be similar only that it would read Child Of Owner.

Cargill is a 156-year-old American company that provides food, agriculture, financial and industrial products to the world. It is also one of the largest family businesses in the world.

Talk to us about the transition or succession if you will, of you becoming more established in the business in the position of a director and your mother taking a back seat.

It was not formal. I however had the autonomy to make crucial decisions and so I would say it was effectively done.

Succession planning is an inclusive process because stakeholders need to be certain and comfortable that your successor is someone they can work with.  My mother would take me to meetings with the regulator, our bankers, and all other key stakeholders. I found myself growing more into my responsibilities in the business and this is something I feel she handled extremely well.

What business lessons were passed on to you which you hope to pass on to your children?

My parents were quite open and transparent. I had the opportunity to work with my father when I joined Makini in November 2002 until his demise in 2004. During this period, he took me through the entire history of the school which gave me a thorough understanding of the business.

Involving the next generation in the business quite early on and giving them some autonomy and room to make mistakes helps to foster confidence and trust. This is important in building a sustainable business.

What do you do when you want to let down your (almost invisible) hair?

I enjoy traveling, exercising, playing golf and watching sports. I am a huge Manchester City supporter.

One other thing that only a few people know is that I play the flute. I have played the flute for close to fifteen years and I am considering playing it in the Nairobi orchestra when it comes up again.

Joe shared more than I could capture in this piece. Having seen Makini become the brand that it is today, Joe’s understanding of family businesses surpasses the theoretical perspectives.  His insights were thoroughly enlightening.

Here is the Inquisitor’s take: Joe’s experience is representative of the struggles most family businesses go through, particularly on the inter-generational aspects. A business has a life of its own and instituting proper governance structures is fundamental if you are to sustain the life of a business across many generations. Moreover, the Makini experience demonstrates that businesses do not necessarily have to be run by multiple generations. Founders or subsequent generations can focus on growing value and exiting the stage to let others scale the business to new heights.</>

The Inquisitor