Book review: Family Wars, by Grant E Gordon and Nigel Nicholson

A new theory of relativity

Television series such as Dallas, Dynasty and, most recently, Brothers and Sisters have done much to colour the general public's perception of family businesses. Instead of being places where people with close ties to each other work together to create something worthwhile, they are hotbeds of intrigue, characterised by sibling rivalries and worse. But real life isn't like that, is it? Well, anybody reading Grant Gordon and Nigel Nicholson's book could be forgiven for thinking that the scriptwriters had underplayed their hands.

Using examples from around the world, the two men describe how such well-known companies as the Ford Motor Company, the McCain chip-producing business and the Gucci fashion house went through various traumas, including in the last case murder. Given this catalogue of woe, the reader might think that family businesses are such poisonous affairs that they should be discouraged.

But Gordon, director general of the Institute for Family Business and a scion of the Scotch whisky business William Grant & Sons, and Nicholson, professor of organisational behaviour at London Business School, take the opposite view.

"We believe strongly in the positive magic of family firms, but recognise this comes at a price of increased vulnerability," they write at the outset. They continue: "Family firms have to be smarter and more alert than other kinds of firm to regulate the flow of positive emotional energy and avoid the dark side. They need to practise constant vigilance to manage the risks that are germane to this form of business." Indeed, they add that the book is designed to show how "quite simple measures and good risk management" would have saved many of the firms they have examined from their unfortunate fates.

Those fates make entertaining reading. In places, they come over as the typical foibles of the wealthy, where descendants of the firms' founders – blessed with time and wealth and perhaps lacking the drive of those who set up the businesses in the first place – get themselves into the usual sorts of trouble.

But there are serious points to be made and, in attempting to draw lessons from the stories, the authors set out the "roots of family warfare", covering such issues as family dynamics, culture and personality and group the examples accordingly. Not surprisingly, struggles over succession loom large.

These stem from a variety of sources, including the original entrepreneurs not making their intentions clear, through squabbles among the siblings over who is best suited to take on the business, through to the trouble caused when the business founder has a second family.

Rather than throwing up their hands in despair, the authors have come up with some principles for – if not avoiding it – dealing with conflict when it arises. They set out various warning signs, ranging from "perceived unfairness" and "procrastination", through to "lack of planning" and "nepotism" to "bad gossip" and "factionalism", and then describe various methods of dealing with the main risk factors in family firms.

Given that entrepreneurs tend to be strong personalities and that, as the authors point out, some of their genes are likely to be shared by at least some of their family, it is hardly surprising that conflicts occur. The issue is how that conflict is dealt with.

One of the more fascinating – if less lurid – stories in the book concerns the Dassler family. Adi had in the 1920s founded a sports shoe business that took off after attracting the attention of the German athletics coach in the run-up to the 1928 Olympics. After a short while, he brought in his brother, Rudolf, to help with the running of the burgeoning business. But the brothers had very different personailities. And these were accentuated by inter-family suspicions and disputes stemming from the brothers' contrasting fortunes during the Second World War and its aftermath. When they decided they could no longer work with each other, the brothers split the business, with Adi registering his part as Adidas and Rudolf his as Puma. To this day, the rivalry continues.