Many times we’ve heard the anecdote that the first generation creates the business, the second generation develops it and the third reduces it to dust. Within this paradigm, it’s suggested that the third generation is responsible for the decay of the business and holds the reputational capital of the entrepreneurial family. But is this really the whole picture? Perhaps it’s more reasonable to suggest that the first two generations are co-responsible for the failure of the third generation. And that these failures could be avoided if the first and second generations better understood what made them successful and intervene in ensuring this intergenerational legacy continues.
In the beginning, there was an innovation
Family businesses are often born out of a committed entrepreneur who is passionate about an idea that he or she has decided to make a reality. The successful execution of this idea is called a distinctive entrepreneurial orientation: the ability to ‘envision’ a project, a market, a business differently from others, at the right time, in the right territories, with the right people.