Stockholder and client needs must be balanced against those of the founding clan. Should a skilled outsider or a family member run the company? And what happens when the offspring want a bigger dividend and the company requires more capital -- whose needs take precedence? Even the descendants of Henry Ford, whose business has mostly succeeded over generations, have had to overcome family squabbles and the departure of talented managers.
This month Contributor Rob Cox offers a behind-the-scenes look at one of the world's great industrial dynasties -- Italy's Agnellis -- as they try to cope with the January death of 81-year-old patriarch Gianni as well as a crisis at their money-losing Fiat automotive unit ("Fixing Fiat," page 52). Gianni's successor, his 68-year-old brother, Umberto, has asked his relatives -- 70 adults and scores of their children, virtually none of whom work for the company -- to put some of their inheritance back into Fiat. Most have agreed, but as Umberto concedes in his first interview since taking the top spot at the Agnellis' key holding company, their reinvestment merely amounts to a "chance" that Fiat can be saved.
Fiat must hive off a long list of unrelated businesses that it acquired around the globe and plow the money back into the ailing carmaker. Even then, it's doubtful the company can stay in family hands much longer; most observers believe that the pragmatic Umberto is cleaning up Fiat to merge it into major shareholder and partner General Motors Corp. -- a move Gianni resisted for years, but one which would restore the battered family fortune.
The tightly focused, efficient business model Umberto seeks to install at Fiat is well established at another family-dominated enterprise -- Spain's Banco Popular, overseen by the septuagenarian Valls brothers. Luis and Javier Valls refused to follow bigger rivals Banco Bilbao Vizcaya Argentaria and Banco Santander Central Hispano on their expensive Latin American acquisition sprees in the 1990s and eschewed the seemingly easy riches of investment banking. Instead, as Staff Writer David Lanchner notes in "Popular's Choice," starting on page 29, they concentrated on Spain's retail market and watched their pesetas closely. The result: Banco Popular has become the country's most consistently profitable bank. There's no guarantee that Luis and Javier won't have to sell their bank some day, but they're in a far better position to dictate terms than are the Agnellis.