Hugh and Donald Smith

This short case study profiles father and son, Hugh and Donald Smith, and outlines the
origins, growth and eventual demise of the family business, Albyn Combs. The company,
founded in 1973, manufactured handmade, natural horn, hair combs for a niche consumer
market and would later diversify its product range across the retail pharmaceutical industry.
This case can be used to form the basis of debate around the nature of the entrepreneur,
and entrepreneurial behaviour.
Hugh Smith
Born in 1928, in Coatbridge, Lanarkshire, Hugh Smiths early teenage years were marked by
the loss of his father; killed in a work-related accident. This tragic event carried with it further
unhappy consequences as his father did not hold life insurance1 and the family were left
facing significant financial difficulties. With no income, living in a company house, it was a
matter of months before the family were asked to move out of their well placed home and
had no option other than moving to a slum. As the only man of the house, Hugh felt an
extremely strong responsibility 2 to help provide for his family. He contributed to the family
income in whatever way he could, including decorating plates to sell as ornaments, until he
was old enough to leave school and gain full time employment. On leaving school at 15, he
served an engineering apprenticeship at Lustroid Limited, Coatbridge and paid for evening
classes to help him gain further qualifications; an Ordinary National Certificate. His hard
work and determination were rewarded, facilitating his promotion to Works Manager age 20.
In 1964, at the age of 36, Hugh was married with his own family, and a strong determination
to provide a financially secure environment for his wife Chirsty, and sons Donald and Alex.
When the company he was working for bought Aberdeen Comb Works in the North east of
Scotland, Hugh was asked to move up North to run the newly acquired company. He eagerly
grasped this opportunity. As Managing Director of the Aberdeen Comb Works, Hugh was
running a company with considerable history. Founded in 1880, Aberdeen Comb Works
bought together a number of cottage industries under one roof and was one of the first
factories in Scotland. At its height, manufacturing hand-made, natural horn, hair combs the
company processed more than 5 million buffalo horns and won awards for innovation in
production.3
The drive and determination Hugh showed in achieving his career goals typified his work
ethic. As an example, his son Donald identifies the occasion in 1967 when a fire destroyed
the Aberdeen Comb Works factory and his Father managed the extraordinary feat of getting
production up and running within 10 days. The fire was to prove a significant event in Hughs
life. In discussing the options for rebuilding the factory, the Board of Aberdeen Comb Works
decided to cease manufacture of hand-made combs and re-build their factory to cater for
another growing source of revenue; making bottle tops for the whisky industry. Ironically, at
around the same time, Aberdeen Comb Works was approached by GB Kent, a key
consumer brand in the comb and brush industry, with a manufacturing contract offer. Given
Aberdeen Comb Works new focus, the opportunity was rejected. This was fortuitous in
relation to Hughs growing passion for traditional comb making in the North East and his
ambitions to be Master of his own Fate2 Hugh persuaded GB Kent that he could deliver the
1

His fathers religious convictions prevented him from holding life insurance
Quote from a phone interview with Hugh Smith in November 2009
3
The manufacture of hand-made combs was an expensive and labour intensive process producing a comb with
a superior, smooth finish to the injection moulded combs that are favoured today. Handmade combs are still
made today, and whilst manufactured from plastic, produce a product of similar finish to the original horn combs.
2

contract independently and in 1973, despite some reluctance from his wife Chirsty, Hugh set
up Albyn Combs as the vehicle to deliver this contract promise.
Using a loan secured against his house, and the shares he owned in the McFarlane Group,
which owned Aberdeen Comb Works, Hugh was able to rent a factory in Stonehaven,
Aberdeenshire and buy equipment. Hugh laid the foundations of Albyn Combs whilst working
his 6-month notice period with Aberdeen Comb Works, and by the time he left employment,
Albyn Combs was up and running, manufacturing hand made combs for GB Kent.
Throughout his career, Hugh had developed some firm ideas about what constituted
effective management practice and Albyn Combs presented him with the opportunity to
freely enact his ideas. Many of these ran contrary to common practice and management
fashion of the time. For example, he did not understand why hourly staff had to clock-in but
monthly staff did not. When setting up Albyn Combs he determined that the practice would
apply to everyone or no-one. Contrary to the conclusions of his peers that he would suffer
attendance problems, he successfully managed his team of factory workers, none of whom
had to clock-in. Similarly, at a time when small companies did not tend to consider the use of
Non-Executive Business Advisors, Hugh, recognising his own weaknesses, and lack of
formal education, appointed a Lawyer and Accountant onto the Board of Albyn. A Finance
Director was to follow at a later date. Whilst Hugh regrets his relatively limited education, he
believes there have been positive as well as negative outcomes:
If you dont have a good formal education all you have is your wits. You can become quite
streetwise and quite resourceful (more so than if you have been through the education
system) but you dont have the tools to do the things you want.4
It was in 1977 that the company made the first of many strategic changes to their product
range. OGEE, a large distributor to the salons had indicated to Hugh that they saw growth
potential in the new Afro combs and Hugh took a leap of faith 5 and invested his time and
money creating a mould for an afro comb. With this, he was able to secure a contract with
Boots and the huge success of this allowed the company to wind down their contract with
GB Kent. From then until 1998 when Hughs son Donald took over the role of Managing
Director, the company diversified its product range across the hair care industry and into
other areas of the Retail Pharmaceutical Industry; sourcing or manufacturing a range of lice
detection and prevention products and dental hygiene products. Their customers ranged
from Boots and Superdrug to suppliers to the Airline Industry.
Hughs son Donald describes his father as a visionary with a high tolerance for risk;
someone who is able to see opportunities and is willing to take them. The story of the
companys diversification into head lice products would seem to reflect this. On reading an
article in the Sunday Observer on the subject of Head lice, Hugh called the Doctor who had
written the article and proposed they combine their expertise to make a unique range of lice
detection and removal combs; combs that did not compromise on design to ease the task of
manufacture. Hughs own reflections on entrepreneurial behaviour portray an accessible
version of the entrepreneur where persistence and determination are key:
.finding solutions, going over, under or through obstacles, thats entrepreneurial.
Now retired, Hugh identifies his key career motivation as the need to provide financial
security for his family. This pursuit, ironically, called for significant sacrifice in terms of family
time and Hugh is aware that the business often took priority over family. He was incredibly
focused on the business; leaving early in the morning before his children left for school and
coming home to eat before returning to the office.
4
5

Phone interview with Hugh Smith, November 2009

Interview with Donald Smith in October 2009

Donald Smith
The impact of the business on family life was compounded by the loan secured on the family
home. Hughs younger son, Donald, recalls how strained family life could be when the
business faced difficult times. Donald feels these experiences of the family business shaped
his attitude towards risk, making him risk averse. Donald does not appear to have been
particularly drawn towards enterprise and entrepreneurship at an early age; he recalls
viewing his Fathers entrepreneurial career path as just what he did. I didnt really think
anything of it.4 Perhaps as a result of this, as a boy, Donald had no particular plans to get
involved in the family business, or indeed follow in his fathers footsteps as an engineer. At
school Donald describes himself as a typical schoolboy, playing football morning, noon and
night, with a Saturday job in his fathers factory doing the jobs no-one else wanted to do.
He was not particularly inspired by his academic studies and at one point fully intended to
leave early and pursue a career as a van driver.
Hugh and Chirsty did not explicitly push their sons down a particular career path but it was
apparent that Hugh in particular, was keen for them to persevere with academic
qualifications and go to University. Hugh encouraged Donald to consider the realities of life
on a van drivers wage versus life on a graduate wage. It seems that the dirty, boring jobs 4
Donald was asked to do at his fathers factory were part of a master plan intended to instil an
appreciation of the benefits of study and self-development! This seemed to be sufficient
motivation for Donald and he remained at school to gain the Higher Qualifications that would
help him gain a place at University. In 1978, he began an engineering degree at the Robert
Gordon Institute of Technology (RGIT). He had been accepted for both engineering and
business, his decision to choose engineering was prompted by a number of factors; his
brother was already at University studying engineering, his father was an engineer and one
of his hobbies was working on his motorbike.
Donald found his University course very challenging and by the end of his first year had two
papers to resit. In an effort to improve his chances, he sought the help of a neighbour, an
engineering Professor from Aberdeen University, and took his two failed papers along for
review. Donald describes the response from the Professor as life changing; on looking
through the papers, the Professor exclaimed You failed this?! Despite his anger at such
unhelpfulness, these comments spurred Donald on to work harder and he graduated with a
2:1. On graduation Donald started a job as a Design Engineer at Baker, the first graduate
engineer Baker had ever hired in Aberdeen. Whilst he enjoyed the job, he was dissatisfied
with the lack of promised training, in particular, a promised 3-month secondment to Houston.
He had worked at Baker for two years when the Chairman of the family business, Albyn
Plastics as it was then called, asked Donald to come and work for the company as
Production Manager. Despite some protests from his mother, but with his fathers support,
Donald joined Albyn Plastics in 1984.
Donalds formal role was Production Manager, ensuring that the product went out on time,
though Donald describes his initial role as being little more than a glorified foreman. Initially,
he had a team of 12 to manage and despite having no management experience Donald had
no doubts about his ability to do the job. He puts this initial confidence down to the
arrogance of youth, though it is apparent the job was not without its challenges. Donald feels
he was viewed by many, both internally and externally, as little more than the bosss son
and this prejudice made it harder for him to succeed in his own right. Indeed his father Hugh
admits to higher expectations of Donald than other employees. There were no particular
expectations on the part of father and son regarding Donalds future within the company
though it was clear that the company Chairman hoped to gain a long term commitment from
Donald. He was afforded some excellent development opportunities and was encouraged to
develop networks, joining business networks such as Junior Chamber and attending trade
events. Donald was quite happy to engage with these activities and he still clearly

remembers his first business travel overseas, to a plastics convention in Dusseldorf, as a

highlight of his early career.
With hard work and commitment which, like his father, necessitated the sacrifice of a
significant amount of family time, Donalds role grew and evolved from Production Manager
to Works Manager to Manufacturing Director, by which time Donald sat on the Company
Board along with his Father and three other Board Members. By this time Donalds role had
grown to encompass the operations of the entire factory. As Manufacturing Director, Donald
was responsible for production planning, purchasing, equipment, logistics and customer
liaison. In liaising with customers Donald demonstrated a particular talent for sales and Hugh
encouraged this, seeing Donalds social skills and methodical nature as ideally suited to
sales and business development. When Hugh retired in 1998, aged 70, Donald had the
familys support to take over as Managing Director, though there was a transition period
during which Hugh continued to play a significant role within Albyn. Hugh did not retire
completely until 2008.
As Managing Director, Donald had some clear ideas regarding the companys future though
his ideas were, at times, in contrast to his Fathers, and he often felt he had little authority to
execute his plans whilst his Father was so actively involved. Perhaps for this reason, Albyn
changed little during the first four years that Donald ran the company. However, in 2002,
external pressures forced Donald to execute the first major shift in the companys strategy.
The company was finding it increasingly difficult to compete on price with manufacturers in
the Far East and began to reduce its production volume, buying in low cost products from
the Far East. This trend continued until, in 2004, the decision was taken to outsource all
Albyns manufacturing to a company in Ireland, with purchases from the Far East also
growing significantly. With hindsight, Donald reflects that this move was made a few years
too late, as his father had identified the potential threat from China in 1999 but the issue had
never been discussed by the Board and no action was taken. 6 At around the same time,
Donald had proposed to the Board that the company split into two entities, Albyn Sales and
Marketing, and Albyn Production. The Board did not approve Donalds proposal but it was to
prove prophetic. In 2004, as a result of moving production to Ireland Albyn had closed its
factory and moved to the Aberdeen Science and Technology Park where it rebranded as
Albyn Limited, focusing on sales and marketing in the Retail and Pharmaceutical Industries.
Albyn Limited built up a reputation for itself as a product researcher, designer and
procurement business for the hair care industry, which included growing existing product
lines in the Head Lice Detection and Treatment Industry.
These tumultuous events had a significant impact on the nature of Donalds role as
Managing Director. The physical move introduced geographical distance between the
company and his fathers home reducing the time his father spent at work and the move out
of manufacturing freed up a lot of management time. Donald was able to focus on the
strategic direction and growth of Albyn. He felt strongly that the company should be market,
rather than product, focused which meant a focus on the hair care industry, leveraging
existing resources, including relationships with companies such as Boots and Superdrug.
Donald feels strongly that If you sell the customer one product and they like it, you need to
be able to sell them something else.7 It was this rationale that encouraged Donald to pursue
opportunities in the supply of electrical hair care goods. Whilst Hugh was concerned about
the risks involved in supplying electrical goods the company won a lucrative contract with
Boots at the beginning of 2007 and Donald gained the Boards agreement to progress with
this.

Hugh had prepared a paper analyzing the potential threat and this was tabled for discussion by the Board. At
the time, other matters took precedence and the Board ran out of time to discuss Hughs paper.
7
Interview with Donald Smith November 2009

Unfortunately, this opportunity was to prove the source of the first, in a series of unfortunate
events. Shortly after the product was released, and despite the product having passed all
industry and customer testing, the discovery of a design fault meant the entire product range
had to be recalled, and without relevant insurance in place, this had to be done at Albyns
expense. The product recall dominated 2008 and severely damaged Albyns cash flow. At
the beginning of 2009, when one of Albyns biggest customers, Bayer, lost a significant
contract with Wal-Mart, the consequences for Albyn Limited were devastating. They lost over
1 million in business with Bayer. As Donald puts it we were unable to square the circle 8
and in May 2009, despite Donalds best efforts to find a buyer for the company, Albyn Limited
went into liquidation.
The same month that Donald began working with the liquidator to maximise creditors
returns, he set up the Health and Beauty Company to design and supply health and beauty
products that enhance customer's brand reputations. With particular expertise in the design,
sourcing and supply of products in hair care 9 Donald explains the speed with which he
built up a new company by alluding to the need to protect the market share Albyn had
established:
If I didnt have a go at this I would have regretted it. There is a window when a company
goes under.the opportunity to win businessif I didnt leap through the window somebody
else would.10
Just a few months later in October 2009, with just 200 in start-up funds, Donald expanded
into the consumer market, using his experience and expertise to create an entirely new
Business to Consumer web site. BlitzLice 11 provides head lice detection and treatment
advice and related products to parents. Donald is pursuing various opportunities in relation
to both the trade and consumer business, including linking up with the manufacturer that was
one of Albyns biggest competitors in China and building up relationships with schools to
reach parents with his BlitzLice offerings. Despite having set up a new business, and new
consumer web site, in 2009 Donald does not see himself as a typical entrepreneur
suggesting that
I will only take calculated risks...........the closest I get to entrepreneurship is finding new
ways to sell things or new markets to sell them into.10

Key Questions
1. What you have learned from this case study?
2. Apply major definitions of entrepreneurship to this case study with justification.
3. Three major themes of entrepreneurship: Innovation; opportunity recognition
and risk-taking should be pointed out from the case study with examples.
4. Compare and contrast the key entrepreneurial characteristics of Hugh and
Donald Smith.

Quote from an article in the Press and Journal, 23/06/09

http://www.thehealthandbeautyco.com
10
Interview with Donald Smith December 2009
11
http://www.blitzlice.com
9