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The encyclopedia · Strategy & Leadership · Strategic decision · 2002

Lee Kum Kee wrote a family constitution to prevent feuds

Lee Kum Kee wrote a family constitution barring in-laws from shares and requiring heirs to work outside first, so disputes settle by document, not leverage.

Lee Kum Kee Group

the move

Lee Kum Kee, founded in 1888 as a small oyster-sauce maker in Guangdong, had already fractured twice in earlier generations over control of the business, and by the late 1990s patriarch Lee Man Tat was again facing open battles for control within the family, including with his own brother, threatening to repeat the pattern into a fourth and fifth generation.

Rather than resolve that particular fight and move on, the family concluded that the underlying vulnerability was structural: with no agreed rules for who could own shares, who could work in the business, and who decided what, every generational transition would reopen the same fight from scratch. In 2002 they set out to write those rules down while relations were calm enough to agree on them, rather than during the next crisis.

The centerpiece is a Family Council of seven family members meeting quarterly, which sits above a formal Family Constitution governing the whole clan's relationship to the business, deliberately separating who owns the company from who runs it. The constitution's specific rules include: only descendants in the bloodline may hold shares; the company will not hire in-laws; and heirs must work outside the family business, in an unrelated organization, before they are permitted to join it -- Lee Man Tat's own children first earned degrees and outside work experience in food science, chemical engin

why it works

  • Writing rules while calm avoids negotiating under the high emotion and leverage of an active feud.
  • Binding eligibility rules remove the ambiguity that makes each succession a fresh power struggle.
  • A family council with enforcement teeth ensures the constitution is applied, not ignored.
  • Mandatory retirement ages and non-family executive options prevent any one generation from entrenching.
the payoffwrote binding ownership rules while calm, before next feudneat

what transfers

When a shared asset becomes a recurring battleground, write rules for who qualifies, who decides, and who is excluded while calm, so future disputes settle by document, not power struggle.

what came after

The council has run since 2002 with no repeat of the earlier splits, guiding the firm through a 5th generation and to ~$15B in value.

references

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