In 1925, Power Corporation of Canada pioneered the development of the hydroelectric industry, supplying power to homes and business across the country. But today the company is no longer about electric power; it’s all about the financial services industry. Instead of generating kilowatts, this family-controlled management and holding company has responsibility for overseeing many billions of dollars in assets.

“He was very opportunistic in his approach” Desmarais Jr. says of his father,“and therefore was able to shed things depending on how things were going …” And shed he did. He soon pruned the company holdings down to about 10 companies, retaining specific areas such as transportation, pulp and paper, communications and finance. “My father had, I’d say, an unusual financial acumen to be able to see opportunities - and then (had) a great ability to meet people, negotiate and get things done. He was a true entrepreneur: opportunistic when required but always maintaining a long-term perspective.”

With the acquisition of an insurance company, The Great West Life (still a staple of the company's portfolio) and a mutual fund company, Investors Group, Desmarais, Sr. created the foundation of what has become PCC’s strongest investment sector: financial services.

Today Paul and his brother André, PCC’s Deputy Chairman, President and Co-CEO, share the leadership of the family firm whose media and financial services sector investments literally span the globe. Thanks in part to their conservative management philosophy and strategic approach to growth, PCC made it through the recent financial crisis relatively unscathed. “We had a very strong culture … of keeping a low-cost approach to the back office, focusing on product design and sales, and not getting into the trap of … trying to get risky assets to increase your profit margins on a short-term basis,” says Desmarais Jr. “We have to remain vigilant, however, because the turbulence of recent years is a reminder of the potential perils in the business world.”

Since becoming co-CEO’s in 1996 the brothers’ principal strategy was to focus on one or two sectors in which to become number one in. Knowing that capital in a family business is at some point limited, they focused on financial services as they already had a strong start there. “We were very lucky because over the last 15 years we were able to consolidate the insurance industry in our country, and went from being number six … to number one by buying two of our competitors.” With the acquisition of their biggest competitor in mutual funds, the Desmarais brothers vaulted to number one there also, and continued that strategy by acquiring US company Putnam in 2006-07.

Desmarais says that strategic planning had always appealed to both him and his brother “so we started a culture of strategy and analytics … things like: ‘Who are the competitors? What are their margins? How can we compete more effectively? How do you get to where we want to go?” thinking derived from both brothers’ early training in strategy with companies such as Standard Brands and Nabisco which had a “fantastic strategic department which they’d hired in from GE, (who were) gurus in the area”.

Desmarais's road to INSEAD, however, was not exactly part of a strategic plan.

“INSEAD was a very lucky turn of events in my life” says Desmarais. After attending McGill University, Desmarais spent a year as assistant to his father, fully intent on completing an American MBA education. However a chance meeting changed that and he found himself working for Paribas International (now part of BNP Paribas), attending INSEAD and then going on to work for Sir Sigmund Warburg in London. “Of course the school has a great tradition with Warburg’s … and I loved it. I am happy that I succeeded in encouraging my eldest son to attend INSEAD following his undergraduate studies at Harvard and he enjoyed the experience very much. So I now have an ally in trying to get my other sons to attend to get the benefit of an INSEAD education. I like the INSEAD spirit of saying it truly embraces the world … and not just the business world, but the social world and other things of that nature so that INSEAD grads can really be people who can move the dial.”

“If you’re going to lead a large group, you have to have more than just a business side ... You’ve got to have a sense of the world, of history, of culture and particularly of caring. A comprehensive perspective on a number of issues is required to analyse a situation properly and energize and rally people around a successful course of action.”

But the family heritage still runs strong today. "My brother and I like to think we still have some of our father's entreprenurial blood," says Desmarais. "So we do like to have an opportunistic instinct. And of course if you’re going to take over the competitors, you’ve got to be somewhat opportunistic …”

This article was written by Mike Pedersen based on an interview for INSEAD Knowledge.