The price of an unresolved conflict

The lesson of the Dassler brothers and the splitting of capital

My professional insights · Lyudmil Karaulanov · 5 min read

Published: 16 October 2026 · Version 1.1

When owners and managers act without clearly delineated functions, even great operational talent can hardly compensate for the lack of a working order for resolving disagreements. The historical case of the German brothers Adolf and Rudolf Dassler allows us to examine the limits of natural complementarity between partners. Reading it through the architecture of governance develops the theme of the analysis “Clear roles, clear rules, clear responsibility”, without reducing a complex family history to a single organisational cause.

In the 1920s and 1930s the sports shoe factory Gebrüder Dassler built a strong reputation. Its shoes reached the Olympic stage, including through Jesse Owens in 1936. At the root of the early development lay a complementarity of abilities:

• Adolf (Adi) acted as innovator and craftsman, focused on design, patents and product technology;
• Rudolf (Rudi) took on mainly the commercial side of the business, sales and customer relations.

Such a division brings flexibility, but in itself does not answer the questions of who approves the common budget, who decides when product and sales conflict, and who evaluates the result. The division of work and the division of powers are different things. It is precisely this difference that makes the story useful for the modern owner.

The rift between the brothers developed against a background of family tensions, the war and post-war mutual accusations. Moreover, the chronicle of the Adi & Käthe Dassler Foundation records a partnership agreement as early as 1929, defining their rights and obligations. The lesson is therefore not simply “there were no rules”. The existence of a contract does not guarantee that relationships will withstand a deep conflict. [3]

The architectural problem is visible in the consequence: when trust between the key owners collapses, a personal dispute can draw in employees, customers and investment decisions. It is then not enough to say who is good at production and who at sales. An order is needed for the decisions that affect the common capital.

In 1948 Rudolf started the separate business from which Puma emerged. Adi registered adidas on 18 August 1949. The common enterprise divided, and the rivalry lasted for decades. Both companies subsequently developed successfully: the story shows the break-up of a common family project, but does not prove the destruction of all economic value. [1-3]

The analytical lesson for the owner is clear: a business is not only a sum of tasks but also a system of roles. It must distinguish the right of ownership, the right to take a decision and responsibility for carrying it out. Clarity does not remove personal conflicts, but it limits their ability to block the enterprise automatically.

In practice this means defining in advance the decisions the managing director takes alone, the questions reserved for the owners, and the time limit for resolving a dispute. An independent adviser can help test the arguments; he has the power to decide only if it has actually been granted. In the case of lasting incompatibility, a workable exit must also be provided for: valuation, financing of the buy-out and a transition for people, contracts and the brand.

Separation is not necessarily a failure of governance. It can be a reasonable decision when the cost of forced unity exceeds the benefit of the common business. The more important question is whether the owners choose the terms of the separation in time, or accept them after trust and liquidity have been exhausted.

Where is the point of instability?

What this concept means →

The point of instability arises when every operational disagreement requires the relations between the owners to be renegotiated. If there is no working path from dispute to decision, employees receive conflicting orders and the common asset begins to serve the personal confrontation. The opposite risk is preserving the common structure at any cost, even when an orderly separation would preserve more value.

This material is of a general analytical nature and does not constitute individual legal, tax, financial or investment advice.