Five tips for surviving sibling businesses

Last month the three Samwer brothers floated their business Rocket Internet for €6.5bn, making it a success by any standard. But sibling businesses, and especially ones involving brothers, are responsible for some of the most famous feuds in business history, such as the one between the Ambani brothers in India, and the falling-out of the Dassler brothers in Germany, which spawned both Adidas and Puma sportswear brands when they went their separate ways.

So how do you survive sibling businesses? Here are five tips.

1: Be aware of the psychology at play

“Sibling relationships are our longest-lasting relationships,” says Randel Carlock, a professor at INSEAD business school, and a trained therapist. “You are with your parents, children, spouse for maybe 40 years and can be with a sibling for 90 years.” And they can be intense relationships. “Our siblings are where we start our life in terms of rivalry, jealousy, love, hate, problem-solving - these are really quite demanding relationships.”

Birth order also shapes how siblings behave. Younger children tend to use “low power strategies” to get approval, says Carlock. If an older child gets into a good university, a younger one might skip university altogether - it’s been done, and they will only get half the praise - and set up a business instead. Birth order can influence character.

Other expectations and archetypes can also be at play. Professor Kavil Ramachandran of the Indian School of Business says he knows of a younger sibling who described himself as like Lakshamana to his older brother’s Rama, referring to the Indian myth about a younger brother who obeyed his older brother’s every wish. Would a Westerner fall so easily into this role? Do they fall into others?

2: Keep business and family roles separate

It is easy, says Ramachandran, to see the business as an extension of the family and try to behave towards people as brothers or sisters rather than “saying: ‘we are professionals and we are here because of our professional abilities'."

He gives the example of Apollo Healthcare, and Indian healthcare firm run by four sisters who are all married, but whose husbands are all uninvolved in the business. Culturally, this is unusual, but it is an excellent example of keeping professional and family roles separate.

However, keeping culture and business apart is not always possible. Carlock says that the idea of letting the most competent member of a generation - or the one who wants to - run the business “isn’t going to fly in Saudi Arabia, because you have to have the oldest son, because it is his responsibility to look  after the family. Nobody wants to deal with the youngest daughter, even if she had an MBA from a top-notch business school.”

3: Communicate

“Everything we do in family therapy is about helping people to share information, because giving information is the only way you can get a change,” says Carlock. If you want people to treat you differently, you have to give them information that will make them do so. That doesn’t have to be verbal, but can be about behaviour. “If your father or brother to see you in a different way, you act in a different way, that is the only way to change a relationship,” he says. 

Ramachandran says that the Ambani brothers were once so close that one could leave a meeting and the other take his place, and continue the conversation in exactly the same way. And yet they didn’t communicate about emotional issues, which caused the business to break apart. So poor communication can become a governance issue.

Crucially, there is no prescription about how to communicate. “Every family has its own boundaries and rules and roles, even a definition of who counts as family,” says Carlock. “Some families consider sons and daughters equal, others don’t. For outsiders, it’s almost like a foreign language.”

4: Be prepared for spouses

“When siblings get married that are new forces in the family,” says Ramachandran. The sibling in the family business finds their priorities changing, as their own “unit” of the family, especially when there are children, becomes their priority. “Assumptions about what family is might be changing,” he adds.

Business issues can poison the family relationship, and if the new wife of a brother in a business discovers that he is earning the same as his sibling who has less experience, that can seem unfair. So resentments about business and family can start to bleed into one another.

“Your spouse is in love with you, and when you come home and tell them what your brother or sister did to you at work, they can start seeing the other person as someone there is conflict with. This messes up their relationship with the in-laws,” says Carlock.

5: Plan

“If you don’t plan properly, then all the things that happen in life - death, divorce, not enough money for the dividend - can get nasty,” says Carlock. A falling-out between siblings over what to do about their mother’s healthcare, for example, is even more problematic if you have to go to work together on Monday. Plans give direction when the going gets tough.

There are always situations where a plan has not been made - like in the example above where a patriarch won’t talk about which sibling will take over from him - and this can cause problems “when the brothers do not have clarity about why they are together and what they should do in future.” Understanding siblings’ current and future roles is vital.