As an entrepreneur starts and grows a business, he learns how to acquire, manage, and cultivate power. Through the school of experience, this power is then used to manage the business through the cycles of growth, consolidation and further growth. In contrast, successors claim their power by virtue of their ancestry; they are “born powerful” by inheriting power. They know, as do others, of their place in their forefather’s business. This position of power usually is accompanied by certain priviledges, which unfortunately can cause some to forget that they are also born with obligations.
Henry Ford once checked into the Waldorf Astoria Hotel in New York late one evening, having missed the last flight to Detroit. Upon arrival, he was immediately taken to the Presidential suite. However, he made it clear that wanted a single room for the night, as he was leaving early the next morning. “Your son always stays here when he is in New York“, said the General Manager to Mr. Henry Ford. To this, he replied, “My son has a rich father. I don’t!”
Often, it is not easy for children to remember that in addition to power and wealth, they inherit an obligation. Daniel Vasella, Chairman of Novartis, described the concept of leadership with the following anecdote: A vineyard owner once pointed to a stone wall and explained how his grandfather had started building it many years ago. As time passed, his father added to the wall, and eventually, so did the vinyard owner, until it became a great structure. Just as no great cathedral was built in one generation, the stone wall was built over three lifetimes.
The implications of inheriting power responsibly
That priviledge and obligations are equal consequences of power and wealth implies that there are several important considerations for successors of a family business:
- First, successors are not there to take advantage of power and wealth, but to add to it.
- Second, the idea that the business starts and ends during the successor’s tenure must be relinquished.
- Third, it is important that the overall vision for the business is shared by both family and employees alike.
While these points may come naturally to the first generation entrepreneur, it is difficult to understand and implement them when one is born into the business with power in one hand and wealth in the other.
Some entrepreneurs try to preempt this generational shortcoming by guiding their children to begin their careers on the factory floor. To an extent, this can be a viable solution. However, this can sometimes do very little to imbue obligation into their psyche, as the co-workers might be mindful of the successors’ inevitable rise through the ranks. As a result, they treat the “trainee” with deference because they know that one day, he will become the boss.
Other entrepreneurs instruct their children to work for some other company and build up their careers over many years before opening the doors to the family business, because they believe that by proving themselves in a “neutral” environment, the successors will ultimately deserve their place at the high table.
It is said that some achieve greatness, others strive for greatness, and others have greatness thrust upon them. I believe that it is the same with power. Those in the second generation onwards are generally those belonging to the third category. However, with sincerity and discipline, they can very well move to the second and ultimately into the first category.
When the third generation member of the Ford family took over the CEO position (Ford had not known a family member at the helm of the company for some time), there was a devestating fire at a factory in New Orleans. Ford III was among the first to fly out to assess the damage. Seeing the tearful faces all around, he promised that the factory would be reconstructed so that no one would lose their jobs. Ford III emerged a hero, and ultimately added his share to the Ford stone wall.