In praise of heirs

So often when people think about a business it is the founder who springs to mind, the charismatic, buccaneering, larger-than-life geniuses, like Warren Buffett or Bernard Arnault. But multi-generational family businesses arguably owe more to a quieter sort of hero: the heir.

An recent article in the Harvard Business Review by two family business consultants, Josh Baron and Rob Lachenauer, said that founders often “grumble that the next generation lacks the single-mindedness needed to run the business”, that they get “bogged down by family matters”, and “lack the right stuff.” The right stuff, of course, being the stuff required to pull themselves up by their bootstraps, like the founders did.

But, of course, the second-gen don’t need to do that. The skills needed to consolidate a family business are very different from the ones required to create one. As Baron and and Lachenauer put it: “Inherent in these complaints is the belief that there is really only one kind of leader.”

Entrepreneurs are “conquerors”, but consolidating a business requires “rulers”, administrators and consensus-builders who have to juggle the competing interests of maybe dozens of family members. This is seen in all businesses, but “the dichotomy between these two types of leader is greatly intensified in family-owned business.”

Many family businesses are dominated by the myth of the larger-than-life, heroic founder, but rulers arguably have a harder job. “Rulers have to think strategically about both the business and the family ownership group from a broad emotional and developmental standpoint.”

They are “360-degree leaders”, and “multidimensional”, they must be “masters of organizational strategy” and have to deal with all sorts of nuanced, tactical concerns that the founder never did.

The shadow of the founder often hangs over family businesses - spare a thought for Howard Buffett and Antoine Arnault, the sons of famous fathers. But second-gen skills shouldn’t be underestimated. Few businesses make it through the third generation. That, surely, is because the work that falls to the second is so hard.

Good heirs are hard to find. Are they, in fact, rarer than good founders?