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Executive Summary
Company. Tervis Industry. Manufacturing, retail Key. Company is shifting into third-generation leadership.

Rogan Donelly spent most of the past seven years in a tryout of sorts at Tervis.

He touched nearly every department at the 70-year-old Venice-based drinkware manufacturer, one of the largest privately held locally owned employers in the Sarasota-Manatee region. He did the ribbon cuttings and the handshakes, ran staff meetings and oversaw product tests, among other tasks, during his tour de jobs. “I loved being in sales,” he says, a stint that included working out of the company's New York office. “I feel like you get into operations without even asking when you are in sales.”

Donelly, 31, grew up in the business, which gives most of his stints a familiar, and familial feel. “It was always around the table,” Donelly says. “It was always something we talked about.”

Donelly's grandfather, Casey Key entrepreneur John Winslow, bought the company in the 1950s and moved it from Michigan to Venice. (The name Tervis comes from the inventors, Detroit engineers Frank Cotter and G. Howlett Davis, who created a double-walled insulated tumbler in 1946 that keeps cold drinks cold and hot drinks hot. They named the company Tervis after the last three letters of their names.)

Winslow died in 1989. His son-in-law, onetime Wall Street banker Norbert Donelly, took on a leadership role with the business. Donelly, with the help of two CEOs, a company president and other leaders, grew the business from a local quirky cup company to a $100 million manufacturing juggernaut over the next 25 years.

Rogan Donelly's tryout, meanwhile, ended in early May, when he was named president of Tervis. The company, with about 1,000 employees, makes everything from wine cups to water bottles from a state-of-the-art 90,000-square-foot plant, where it utilizes its double-wall insulation technology process. It also has a wide array of sports and entertainment licenses so customers can personalize the products. Tervis doesn't disclose annual sales, but Norbert Donelly says 2015 was a strong year, and 2016 looks strong, too.

Rogan Donelly replaces Pat Redmond, president at Tervis since early 2012. Redmond will remain on the Tervis board and help with Rogan Donelly's transition into his new role. Rogan Donelly reports to Norbert Donelly and the firm's board of directors. “He brings a great perspective and a clear vision to the company,” says Tervis board member Jim Gregory, a
marketing and branding executive. “He's open to ideas, but with a steady hand. It's been fun to see him mature into a great leader.”

The shift to the third Donelly generation is more than a year in the making, part of a deliberate succession plan the board's compensation committee put together in conjunction with Norbert Donelly. It was cemented in recent months, says Norbert Donelly, when multiple executives and managers sought him out in the company's offices to talk about how much Rogan Donelly seemed ready for the next step. “This wasn't a spur-of-the-moment thing,” says Norbert Donelly.

'Prince Charles syndrome'
Rogan Donelly isn't the only third generation of the family involved in Tervis. Norbert Donelly's daughter, Amory Donelly McAndrew, is an active board member, and her husband, Sean McAndrew, has been Tervis' in-house attorney since 2010. The couple lives in New York City and isn't involved in the day-to-day operations of the business.

While some challenges Rogan Donelly will face in his new role will be Tervis-centric, another side is external, in that third-generation family business successions are ripe for failures, according to multiple studies. For example, less than 12% of family-run businesses survive the third generation transfer, down from 30% in the second generation, according to a 2014 study from the Family Business Alliance. Only 3% make it to the fourth generation, the report adds.

“There are a lot of potential conflicts in third-generation succession,” says family business consulting expert Denise Federer with Tampa-based Federer Performance Management Group. “Any transition of power has its pitfalls if things aren't communicated well in advance.”

When it goes poorly, Federer, also a columnist for the Business Observer, calls it the Prince Charles syndrome: responsibility without power.

Rogan Donelly has read some of the third-generation-in-peril reports. He's aware of the shirtsleeves to shirtsleeves in three generations proverb, which translates to wealth gained in the first generation will be gone by the third. That's why father and son, each with quiet but commanding leadership demeanors, have put considerable time and effort into avoiding transition issues.

A helpful step, says Norbert Donelly, has been attending the annual Family Business Conference hosted by the Kellogg School of Management at Northwestern University. The Donellys have gone to several conferences, where the networking and chance to meet others who face similar situations is sometimes more valuable than the breakout sessions, says Norbert Donelly. “It's like osmosis,” he says. “You just pick up things.”

At one conference Norbert Donelly befriended Jim Stephen, the second-generation president and CEO of the company that makes Weber grills. While the Weber-Stephen Products transition is more complicated than Tervis, with cousins and granddaughters and more, the executives clicked. Norbert Donelly has since had many chats with Stephen, particularly about the challenges of relinquishing control in a succession plan.

Rogan Donelly, a 6-foot-4 former Division III college football player — he was an all-conference offensive lineman at Bowdoin College in 2006 and 2007 — also goes with his dad to the Family Business Conference. “There are unique situations that come up in a family business,” says Rogan Donelly. “The more like-minded people you can surround yourself with the better.”

Open window
On the inside of Tervis, away from the boardroom and executive level transition, Rogan Donelly has other challenges — and opportunities.

One task is to continue to build trust with employees and departments companywide. One worry, he says, is when he's at meetings he will get agreement because that's what people think he wants.

But Donelly wants Tervis employees to challenge him, saying he learned the value of that from watching his dad work. The younger Donelly adds that one of his goals is to help Tervis become less hierarchical, which could further help foster an atmosphere where challenging the boss is accepted and encouraged.

Donelly says his tour through the company's departments has also helped build up a trust level with employees. “You have to know the core of the business,” he says.

And Donelly has had help from fellow Tervis executives, especially Gary King, a former Hallmark and Crayola sales executive named general manager and chief commercial officer in August 2014 and Redmond, the president. “There haven't been any locked doors or closed windows,” Donelly says.

From a product and sales perspective, both Donellys agree on the biggest obstacle Tervis faces: Stay ahead of customer buying patterns. That includes how millennials buy, and it also relates to how and when older customers buy Tervis cups and accessories.

To Rogan Donelly the answer is to have the right sales outlet at the ready, from mobile purchases to the company's fast-growing portfolio of boutique style stores that sell everything Tervis. The company's board, including both Donellys, planned to hash out the details of how to execute that strategy during an offsite retreat in early June.

Says Donelly: “We have to be ready to sell whenever and wherever the customer is ready to buy.”

Film break

Rogan Donelly has spent most of his post-college working life, about eight years, with Tervis, the drinkware manufacturing business his grandfather and father previously oversaw. He was named president last month.

Donelly also took a two-week work diversion to an unusual place a few years ago: Hollywood. Donelly was a credited producer on a movie, “Boys of Abu Ghraib,” a film about the 2004 U.S. military detainee torture scandal in Iraq. The movie starred Sean Astin, from “The Lord of the Rings,” among several other prominent actors. Executive producers included Academy Award winners Edward Zwick and Marshall Herskovitz.

Donelly got involved in the film to support a college buddy, Luke Moran, who wrote, directed and starred in it. Donelly says he made a small investment in the film, which led to the producer credit, and he spent a few weeks in New Mexico during filming. The movie was released in March 2014, and is now available on iTunes and on DVD.

The new executive says the movie business was an interesting diversion, but he's not going to make it a career. “It was an awesome experience,” says Donelly. “It's cool to be able to look at the back of a DVD and see your name on it.”

Guiding Principles
Employees at Tervis, from the board to the assembly line, are guided by the company's shareholder principles, which have evolved over time. The list includes:

Remain a family owned and operated business;

Continue manageable growth rates;

Maintain strong profit margins;

Increase enterprise value;

Finance growth internally;

Create an aspirational, national brand;

Be an employer of choice;

Meet then exceed consumer expectations.