“Rupert Murdoch could learn something by reading Buddenbrooks, Thomas Mann’s saga of a merchant dynasty. So could you if you own a family firm.”
James Murdoch has got himself into the sort of mess that only the son of the owner could manage. He now thinks he can extricate himself by resigning as chairman of News International, the UK part of the Murdoch Empire: the old-fashioned, paper bit. He is off back to New York, to continue in the rather vague sounding role of deputy chief operating officer at News Corporation, which will keep him involved with several satellite TV businesses around the world, most notably as non-executive chairman of British Sky Broadcasting in the UK.
Owners of family firms have conflicting interests when it comes to nepotism. They can easily advance their children’s prospects, as Rupert did for his youngest son, but does it make good business sense? Would the whole family be better off if the best person for the job got it? Then the business would have the best chance to be successful and to grow shareholder value. Or, is absolute success worth sacrificing for the benefit of helping your child?
Rupert Murdoch is a global business phenomenon. He inherited a business called News Limited from his father Keith Murdoch in 1952 and did something exceptional with it. Something that not many people could do. His combination of talent, ambition, opportunity and timing all came together to give us the Murdoch Empire as we see it today. He leveraged his cumulative advantage to the full. Along the way the business had to change and adapt to technological and social changes that could have stopped a less able and determined man but Rupert steered his ship safely through it all.
Not many men read novels, so it is possible that Rupert Murdoch, or most men who run family business for that matter, might not be too familiar with Thomas Mann’s first novel Buddenbrooks. It tells of the downfall of a wealthy mercantile family over four generations. Some say that the story actually reflects what is seen in the performance of most family firms in practice. For many reasons, if you keep handing the reins over to the next generation of the same family, business is likely to decline by the third or fourth generation, or earlier.
Well, whether you count James as a second or third generation family member in the Murdoch family saga is a moot point. However, his performance in his last job might suggest that there is something in this Buddenbrooks thing. So while Rupert might want to help his kids, for their own future prosperity someone should talk him out of it. Wealth is hardly an issue for the Murdochs, but his youngest son might actually like to do something else and no one can hope to emulate Rupert’s overachievement in his business life.
I think it is a mistake to make it too easy for your children to take over your family business. It can so easily turn out that they would have been much better off and happier doing something else. If they are going to take over, make them prove themselves outside your business first, or, if they fail, give the job to someone else.