Why There Is Disconnect Between Founder & 2nd Generation & How to have a smooth transition from a generation to the other

By Matt Williamson

I often think about what the disconnect is, between the founding generation and the 2nd generation. One of the ways that Founders Trust is valuable to founders and business owners, is partnering with the second generation of the family, because statistically, the vast majority of businesses fail in the transition to the second generation.

But most second generations do not want to be a part of the family business. Why is this?

1) Is it lack of motivation? Many times, this is offered as the most prevalent explanation. And it might explain some of the cases. Not feeling the necessity to do things because they have already been done could take the fire off of young people that dream of doing something new, pioneering, and building something of their own. That motivation is a good thing because people will make their dreams happen, either within the family business, or outside of it. But not all cases fall under this category. And it doesn’t explain why Vision.

2) Could it be that there is no compelling vision for the family? And that therefore, there is no compelling vision for the family-owned business? Sure, that might be a significant reason. In this case, I would look to find why there is no compelling vision. My assumption is that there is no identity. Why is there no identity? It might be that there is no specific “entity” of the family. If the family is not an “entity,” then it cannot have an identity. Now, you would ask: why is there no entity? Here I have a couple of things to say:

Non-existent entity of the family
3) Maybe because the family’s entity was not created consciously, it just happened. So, you have an accidental entity that has no identity. Or, there is an identity that it is not worthy for anyone to assume. No reason other than because this actually is who you are.

It might be a less deep cause too. It might be that the business just happened and as such there wasn’t ever any vision.

Founder is the company
4) Another reason for lack of vision could be that the founder hasn’t allowed a vision to take place, because the identity of the business is him only. He worked too hard to build this business, and he will not allow anyone to take it away from him or to dream about taking it to the next level without him.

The business is its founder, and the founder identifies with his business, and no one will separate them. If this is the case, then this is for sure the reason the second generation doesn’t want to be part of the business.

Educational practice
5) The effect of school is a book in and of itself, but here we will just state the obvious, which is that identity, culture, beliefs, and world view of an individual, are formed by peer group. Kind and well-intentioned teachers and peer groups at schools and colleges, the blind leading the blind, and all being led by television. A beautiful and brightly painted vision of the future, which is not the same as that of the previous generations, or your vision. What do you mean? If you look at the culture of your grandparents’ generation, and the culture of your children’s generation, they are two completely different cultures, ways of talking, dressing, speaking, acting, beliefs, world views, accumulated wisdom, two completely different cultures.

They are watching you
6) Another reason is that when the second generation has been watching the founder, all their early life, working long hours, worried for the business, taking no breaks or vacations (or even when he takes vacations, he still can’t escape emotionally from the business or he has to stay stuck on his lap top and phone)… they consciously or unconsciously decide that they do not want to do that.

So, they gradually start authoring their lives with a less stressful script that doesn’t include their family’s business. The family never discusses this with their children, and by the time they see that, the children are so stuck in their corporate jobs or any other path they have chosen in life, that they are not coming back. And then they have to think about another succession plan, but at that point in time, it is too late for any other kind of succession planning.