The Curse of the Bambinos Bambino (Circa pre-2004)

By Andrew J. Birol, President, Birol Growth Consulting, Inc.

The curse lives.

All baseball fans know of the Curse of the Bambino, the enduring hard luck that has plagued the Boston Red Sox since their ill-fated decision to trade Babe Ruth to the Yankees. Decades later, the Curse is still invoked as the cause of the Red Sox perpetual stint in purgatory. The latest proof? Losing Alex Rodriguez to … the Yankees.

When I say the curse lives, however, I'm not just talking about the Red Sox. In family-owned businesses, a similar curse stalks the shadows, waiting for the right time to strike. This is the curse of the third generation to own and manage a family business.

Superstition aside, facts show that businesses are particularly vulnerable during this period of management. Department of Commerce and Small Business Administration statistics reveal that less than 20% of all businesses survive a third generation. Stereotypically speaking, the founder launches and grows a successful business through determination and hard work. His or her heir either grows the company further or at least stabilizes its revenues. When the third generation takes over, often several decades into the company's history, times have changed dramatically. The business may have run its first course. For example, a carriage tire company founded in 1870 prospered throughout the founder's 20-year tenure and remained stable under his son's management. The third generation took over the business in 1908 — the same year Henry Ford's Tin Lizzie debuted and a lousy time to inherit a company that defined transportation only in terms of horse drawn carriages.

As this example suggests, by a company's third generation, its markets, customers, production, distribution, finances or purchasing has radically changed.

Regardless of which changes impact the third generation the hardest, the underlying truth is that the critical and invaluable relationships that the previous generations built are probably in decay and are likely to cripple the company if not reinvented. So the new management faces a great challenge: either change the business, or manage it into decline. Presented in these black and white terms, the decision seems easy but the reality is more muddled. For one thing, the family aspect of a family business often makes it difficult for the "kid" to enact sweeping changes that deviate from the founder's original plan or conception of the company. In some cases, a feeling of intimidation by his or her parents' success makes it difficult for the third generation to face the fact that the business has run its course and needs an infusion of fresh ideas, strategies, and focus. In addition, having watched his or her elders struggle with family expectations and issues of control, the new leader(s) may believe they are free of this kind of baggage … only to discover that baggage comes in many different shapes.

If you are the third generation of a family business, you must be aware of the challenge you face and recognize that you have one choice to make. Do you relax, or do you reshape your business? The following are the four habits of the relaxing owner:

  1. It's all about you and your personal agenda.
  2. Every decision you make is rooted in reducing your personal risk and holding on to what you inherited.
  3. You become a prisoner of your legacy.
  4. You are too smart to help.

Conversely, if you choose to reshape the business, you can model yourself according to these four "best practices" of successful third generation business owners:

  1. You have chosen and passionately know your business purpose.
  2. You know what you don't know and seek out help when necessary.
  3. You are reinventing the business in your own image.
  4. You worked somewhere else and are able to bring in fresh ideas.

To be an effective third generation owner, you must use your own Best and Highest Use® to mold and reshape the business you inherited. You must gather all of your genetic talents, personal experiences, agenda, and conviction and commit yourself to making the company a force in the modern marketplace. You've probably heard the joke that if most second generations made a movie, it would be called “Daddy, I Shrunk the Company”. By the third generation, chances are that the business is shrinking and it's time for a sequel. The good news is that by reshaping your business, you will truly earn the right to see your name on the shingle.

Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:

© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080, by email at abirol@andybirol.com, or on the web at www.andybirol.com.


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