The Duchossois Group focuses on developing leadership for the future

By Margaret Steen

A commitment to diversity and reinvention is powering the company into its second century.

 

The Duchossois Group Inc. has come a long way since its founding in 1916 by A.J. Thrall and his brother-in-law as Thrall Car Manufacturing Company, a small freight car component repair shop.

The family has re-engineered the company several times since its founding. "Any time you get a family business that is 100 years old, there is an extraordinarily high probability that they got there because they reinvented themselves—they adapted," says Craig Duchossois, 72, the chairman and CEO.

"We went from Rust Belt manufacturing to knowledge economy companies involved with commercial products," Duchossois says. "Then we turned around six years ago and said, 'We need to reinvent ourselves one more time.' "

Today The Duchossois Group, which is 100% family-owned, consists of two units: an investment company and an operating business. Duchossois Capital Management is the investment arm. The operating company, The Chamberlain Group, is a leading maker of access control systems such as garage door openers and gate access devices. It has more than 5,000 employees and generates more than $1 billion in annual revenue.

Investments in technology helped transform the company. One of The Chamberlain Group's recent offerings, for example, enables a user in London to open and close a garage door in Chicago via an iPhone app.

In order to arrive at its present structure, The Duchossois Group sold some of its divisions. The family also sought—and received—buy-in from members of the third generation, who said they want to carry on the family business.

The company and family have been recognized for their leadership and commitment to diversity. The current focus is on building a leadership structure that will sustain the company through future transitions.

"My primary priority right now is to continue to work with the next generation of family leadership to prepare them for leadership positions in our companies," Craig Duchossois says.

Changes through the years

The company's first reinvention occurred as Craig Duchossois's grandfather, A.J. Thrall, worked to keep the business going through the Depression and World War II. He moved from repairing car components to repairing rail cars themselves, as well as leasing cars.

Craig's father, Richard L. Duchossois, now 95 and the company's chairman emeritus, served in World War II, where he earned a Bronze Star and Purple Heart. When Richard returned from the war in 1945, he had a sense of purpose. The war experience "helped form the rest of his life," Craig says. Richard was married to A.J. Thrall's daughter Beverly, his high school sweetheart, and worked at the family company. "He returned to a company with approximately 18 employees and said, 'Maybe we can grow this,' " Craig says.

And he succeeded in growing it: By 1966, the company had 1,400 employees. The business evolved from repairing freight cars to building specialty cars, then to building commodity cars.

Craig worked in the freight car operation during summers when growing up. "I always knew that I was going to work for the family business, and as a result I didn't take academics very seriously," Craig says. (This was one reason the family decided, years later, to craft a policy that encourages family members to get a college degree and specifies that anyone who wants to work for the family business must have skills the business needs and be willing to start at the bottom.)

Craig graduated from college and received his MBA from Southern Methodist University in 1967. He then served three years as a Marine Corps officer in Vietnam.

Upon his return in 1971, Craig joined the company, which prospered over the next nine years. "We really built a wonderful team and were able to enjoy a respectable reputation as a new-car builder," he says.

But starting in 1980, several major changes occurred.

Between 1980 and 1983, the rail car industry crashed. "I had to take the organization down from about 1,600 people to 247," Craig says. "I was in the position of having to early-retire people my grandfather had hired 40 and 50 years prior."

The company had diversified in 1980 by buying The Chamberlain Group, a publicly held maker of consumer goods and defense products, and taking it private. Richard restructured and rebuilt Chamberlain as Craig restructured and rebuilt the freight car part of the business. Thrall Car grew again and was ultimately sold in 2001.

In 1983, Richard and his family bought the Thralls' interest in the company, though the two branches remain close. (Beverly Thrall Duchossois died of cancer in 1980.) With the ownership change, the family "reset the clock," referring to Richard Duchossois as the founder from that point onward.

One of the company's investments, the Arlington Park racetrack in Arlington, Ill., burned in an electrical fire in 1985. Craig took over managing The Duchossois Group while his father worked on rebuilding Arlington, which the family had acquired in 1983. It became "one of the finest tracks, not only in the country, but some would say in the world," Craig Duchossois says. In 2000, the company merged Arlington with Churchill Downs, home of the Kentucky Derby.

At around the same time, the company sold the defense portion of Chamberlain to General Dynamics, repositioning the company yet again. The Duchossois Group sold most of its divisions and created the investment company between 2011 and 2015.

The Duchossois family reduced its stake in Churchill Downs in 2015 and again this year, although the family still owns more than 1 million shares. Churchill Downs announced in June that Richard and Craig Duchossois will leave its board when their terms end within two years.

JoAnna Sohovich, a former U.S. Navy officer and executive at Honeywell and Stanley Black & Decker, was named Chamberlain's CEO in early 2016. The family's "commitment to innovation and investment in the future" was one of the reasons she took the job, Sohovich says. "Innovation leads to transformation, which leads to reinvention," she says.

Chamberlain, which holds more than 350 patents, has pioneered innovations such as WiFi-connected garage doors and safety technology that causes a door to reverse if it detects something in its way.

Focus on family governance

Craig's daughter Ashley Duchossois Joyce, 42, didn't plan to be active in the business, though it was part of her life. She remembers accompanying her father to the company facilities on weekends. "My sister and I grew up every Saturday going to the plant with him and running around," Joyce says. "We knew what my dad did a little bit, but we were pretty removed."

Joyce built a career as a social worker. In the late 1990s, she started attending shareholder meetings and learning more about the business.

Then, about 10 years ago, family members began to participate in seminars on family governance. "We're a family that takes advantage of any educational opportunities, and we're really striving to make our family business succeed and be multigenerational," Joyce says. "What can we do to better ourselves?" These efforts led to the establishment of a family council and creation of a family constitution. The family also has a family office.

About seven years ago, Joyce says, "Dad really had this kind of 'aha' moment: 'Now is the time that I need to pass the torch.' " In the years since then, Craig has stepped up efforts to prepare the next generation of leaders.

The Duchossois Group's board consists of seven family directors and six outside directors. Three of the seven family directors are members of the third generation: Ashley Duchossois Joyce, Tyler Lenczuk (son of Craig's sister Kim Duchossois), and Kim Duchossois's son-in-law, Erich Struckmeyer. The other family members on the board are Richard Duchossois, Craig Duchossois, and Craig's sisters Kim Duchossois and Dayle Duchossois Fortino.

Lenczuk and Struckmeyer work full-time for The Chamberlain Group. Joyce is president of The Duchossois Family Foundation. The family worked intentionally to develop the three third-generation members for leadership roles in the business and the foundation.

"We are discussing succession planning, at the board level and within the family," Joyce says. Her children's generation, who are still pre-teenagers, participate in age-appropriate annual meetings.

"We want this to be a multigenerational family business," Joyce says. "We have worked very hard, with our family council and family office, at educating the next generation."

Empowering women

Four out of 13 of The Duchossois Group's directors—30%—are women. The WomenCorporateDirectors Foundation recently named The Duchossois Group as the recipient of its Visionary Award for Leadership and Governance of a Private Company. The award recognizes a company with a high-functioning governance process, family owners who give back to the community and a high level of commitment to diversity, particularly when it comes to women.

"They stood out," Susan Stautberg, founder and CEO of WomenCorporateDirectors, says of The Duchossois Group, because of the longevity of the company, the hiring of a female CEO and the high percentage of women on the board. "They seem to be very interested in trying to bring women up through the ranks, as well."

"The fact that a family-owned company has a woman CEO is not remarkable," Sohovich says. "But the fact that the Duchossois family brought in a woman CEO who was unknown to them, and really just looked at my professional qualifications through the interview process, is remarkable."

Donna Zarcone, president and CEO of the Economic Club of Chicago and a Duchossois Group board member, was one of the people who nominated the company for the award. Craig Duchossois "surrounds himself with strength and with a board that challenges [the family owners], and they listen to the board," Zarcone says. "They really want to take the organization to the next level."

When Sohovich was hired, for example, "I'm certain [Craig Duchossois] would tell you that he didn't start out looking for a female CEO. He was looking for the best candidate," Zarcone says. "But the fact that he's open-minded about what the candidate may look like or bring to the table is the benefit there—the commitment to diversity."

Commitment to philanthropy

The Duchossois family is known for its philanthropy in the Chicago area. The University of Chicago Duchossois Center for Advanced Medicine is named for the family. Another donation from the family endowed a curatorial position at the Art Institute of Chicago. Richard Duchossois' second wife, Judi, serves on the board of trustees of Loyola University Chicago.

One vehicle for the family's philanthropy is The Duchossois Family Foundation, a separate entity from the business for the past 32 years.

Recently, Craig Duchossois and his wife, Janet, and The Duchossois Family Foundation gave a $100 million gift to establish The Duchossois Family Institute at the University of Chicago Medicine. The gift will support research on preventing disease "by optimizing the body's own defenses and finding new ways to maintain well-being" by studying the interaction of the human immune system, microbiome and genetics, according to a statement from the university.

"What I've always been impressed with, being a lifelong resident of Chicago and being active in the Chicago business community, is the extent of the family's commitment to the greater community here," Zarcone says.

Kim Duchossois, 63, ran the family foundation until two years ago and remains its chairman.

Ashley Joyce, now president of The Duchossois Family Foundation, says she sees her work with the foundation as advancing similar goals as her social work did, only on a larger scale. She has worked to strengthen the foundation's board, which consists of eight family members, and to focus grant making in three areas: transformational impact, which centers on wellness; community, which gives smaller gifts to a wide variety of Chicago-­area non-profit organizations; and matching gifts, to encourage family members to make their own donations.

Joyce took over as president of the foundation around the same time that her uncle Bruce passed away and left a significant gift to the foundation.

"Ashley has been sitting in the wings and is very capable of taking over my role," says Kim Duchossois.

Looking toward the future

At the corporate level, too, there is a shift to the next generation. Kim Duchossois is planning to step off the board of directors at the end of her term. Her son and son-in-law serve on the board.

"I felt that it was time for me to step to the next circle back and let them continue to evolve," she says.

Meanwhile, the company is looking to the future. The Chamberlain Group recently moved into a new, state-of-the-art headquarters building, Sohovich says. The new facility offers energy savings, space for collaboration, and fitness facilities and walking paths for employees. "We're not just focused on how many hours people put into the job, but how productive they are," Sohovich says.

"I think there's a significant opportunity ahead for the company as it embraces technology and brings the wonderful history and experience in its marketplace, but also meld in new talent that can see a whole new path forward," Zarcone says.

Margaret Steen is a freelance writer based in Los Altos, Calif.

Copyright 2017 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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September/October 2017

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