Home » Opinion » Book review
Family feuds, breakups rock multi-generation firms
By Ni Tao |
December 19, 2009, Saturday
|
Print Edition
Print Edition
I'M hooked on karate.
Every weekend I take part in a training session at a local dojo affiliated with the school of IKO Kyokushinkaikan (kaikan means organization in Japanese), which is a spin-off of the Kyokushinkai founded by grandmaster Masutatsu Oyama.
On his watch, the martial art was catapulted to worldwide fame. But soon after Oyama died, the organization splintered into multiple factions and none of them has since recognized each other.
Some have even been engaged in protracted lawsuits over the use of trademark, another blow to previous fraternity among practitioners.
This experience also applies to other martial arts such as aikido, in which a close-knit association disintegrated into distinct groups after the founder's death.
Oftentimes legend has it that the founder left no will in a bid to play his disciples off against each other as they all strive to claim his mantle.
Although martial artists are not necessarily bound together by blood ties, they share the same lineage. They are in a sense descendants of a grandmaster as family members are of a clan. And this "family" breakup story is also played out in the business community - with wider repercussions.
In "Family Wars," authors Grant Gordon and Nigel Nicholson explore the fault lines that threaten to tear reputable family firms apart.
Contrary to conventional wisdom that a high level of trust and cohesion helps unite family members in pursuit of a common goal in a family-owned business, the authors argue that trust easily evaporates when some family members feel they are subjected to unfair treatment or stripped of their due roles in decision making.
Once the bond of kinship and shared values crumbles, internal bickering takes hold.
As case studies in the book reveal, infighting usually starts with succession. Wills left by family patriarchs often sow the seeds of disaffection.
If a hand-picked successor happens to be the favorite of everyone, that's perfect. Otherwise, family elders and potential rivals are liable to gang up on him, or her, after the handover.
Competing desires for money, power and influence also create discord.
So putting the right person at the helm is essential in warding off intra-family rivalries, or at least keeping them in check.
Furthermore, as the lesson from the martial arts world indicates, the practice of choosing successors through brutal cage matches is likely to create fissures among disciples.
Another source of boardroom disputes in family firms is related to succession, but it's more a matter of capability than personal charisma.
China's so-called "second-rich generation" is a case in point. A life of unearned comfort sometimes turns these kids into callow slobs, ignorant of the trials and tribulations their parents went through to build up their fortunes.
Here the authors put forward one vital piece of advice: "Don't depend upon your kids inheriting the traits that enabled you to build the business."
"Education and training" is necessary to ensure a continuation of family values as well as to gauge the "gene lottery" of prospective CEOs - what they excel at.
In ancient dynasties regents ruled in young princes' stead. This arrangement in modern-day family companies can get overly paternalistic.
When they come of age, junior executives desperate to call the shots always find themselves up against the bulwark of "retrograde" old guardians who refuse to relinquish control.
Hence, shrewd balancing acts often have to be brought into play to mediate differences.
Family firms are a millennia-old phenomenon. They played a pivotal role in the evolution of human business activities before the emergence of modern corporate management spelled their decline.
But it does not mean they are at the end of their tethers.
Take Japan. Despite the fact that the country's zaibatsus, or gargantuan family conglomerates, were dismantled after World War II for bankrolling its imperialist expansions, they soon mounted a comeback - economically of course.
While their ownership nature remains unchanged, iconic enterprises such as Panasonic and Toyota gradually whittled down the stakes held by family members and sold them to the public.
As their share-holding structure became more convoluted and senior executives increasingly were chosen from outside the family talent pool, these companies gained more diversity that enabled them to adapt better to the changing global business landscape. What could have been fodder for internecine strife has turned out to be a defining choice of their revival.
Every weekend I take part in a training session at a local dojo affiliated with the school of IKO Kyokushinkaikan (kaikan means organization in Japanese), which is a spin-off of the Kyokushinkai founded by grandmaster Masutatsu Oyama.
On his watch, the martial art was catapulted to worldwide fame. But soon after Oyama died, the organization splintered into multiple factions and none of them has since recognized each other.
Some have even been engaged in protracted lawsuits over the use of trademark, another blow to previous fraternity among practitioners.
This experience also applies to other martial arts such as aikido, in which a close-knit association disintegrated into distinct groups after the founder's death.
Oftentimes legend has it that the founder left no will in a bid to play his disciples off against each other as they all strive to claim his mantle.
Although martial artists are not necessarily bound together by blood ties, they share the same lineage. They are in a sense descendants of a grandmaster as family members are of a clan. And this "family" breakup story is also played out in the business community - with wider repercussions.
In "Family Wars," authors Grant Gordon and Nigel Nicholson explore the fault lines that threaten to tear reputable family firms apart.
Contrary to conventional wisdom that a high level of trust and cohesion helps unite family members in pursuit of a common goal in a family-owned business, the authors argue that trust easily evaporates when some family members feel they are subjected to unfair treatment or stripped of their due roles in decision making.
Once the bond of kinship and shared values crumbles, internal bickering takes hold.
As case studies in the book reveal, infighting usually starts with succession. Wills left by family patriarchs often sow the seeds of disaffection.
If a hand-picked successor happens to be the favorite of everyone, that's perfect. Otherwise, family elders and potential rivals are liable to gang up on him, or her, after the handover.
Competing desires for money, power and influence also create discord.
So putting the right person at the helm is essential in warding off intra-family rivalries, or at least keeping them in check.
Furthermore, as the lesson from the martial arts world indicates, the practice of choosing successors through brutal cage matches is likely to create fissures among disciples.
Another source of boardroom disputes in family firms is related to succession, but it's more a matter of capability than personal charisma.
China's so-called "second-rich generation" is a case in point. A life of unearned comfort sometimes turns these kids into callow slobs, ignorant of the trials and tribulations their parents went through to build up their fortunes.
Here the authors put forward one vital piece of advice: "Don't depend upon your kids inheriting the traits that enabled you to build the business."
"Education and training" is necessary to ensure a continuation of family values as well as to gauge the "gene lottery" of prospective CEOs - what they excel at.
In ancient dynasties regents ruled in young princes' stead. This arrangement in modern-day family companies can get overly paternalistic.
When they come of age, junior executives desperate to call the shots always find themselves up against the bulwark of "retrograde" old guardians who refuse to relinquish control.
Hence, shrewd balancing acts often have to be brought into play to mediate differences.
Family firms are a millennia-old phenomenon. They played a pivotal role in the evolution of human business activities before the emergence of modern corporate management spelled their decline.
But it does not mean they are at the end of their tethers.
Take Japan. Despite the fact that the country's zaibatsus, or gargantuan family conglomerates, were dismantled after World War II for bankrolling its imperialist expansions, they soon mounted a comeback - economically of course.
While their ownership nature remains unchanged, iconic enterprises such as Panasonic and Toyota gradually whittled down the stakes held by family members and sold them to the public.
As their share-holding structure became more convoluted and senior executives increasingly were chosen from outside the family talent pool, these companies gained more diversity that enabled them to adapt better to the changing global business landscape. What could have been fodder for internecine strife has turned out to be a defining choice of their revival.
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