Understanding Why Legacy Companies Often Fail

On the last page of Pearl Buck’s book; The Good Earth, the grandfather, who spent the first part of his life poor and suffering, and then due to his dead wife, was able to sell jewels she had stolen to buy land, and for the first become ‘somebody’, is being walked between his two grown grandchildren who mention they are going to sell the land.  He begs them not to, they claim they were joking.  But they weren’t.

The grandfather, in the book is very much like grandfather’s in business.  They struggled, they suffered, they did without, they sacrificed and created a business. Their sons or daughters stepped in, and helped manage it.

The Grandchildren were born into luxury and want more and better without working for it.  They are not interested in the business, they are interested in possessions.

When the Grandfather dies, when the parents retire or die, the grandchildren step in to destroy the business.

Grandfather may have been one of the richest men in the country, son is usually not as adept, and Grandchildren run the business into the ground so that they don’t even got on the top fifty richest.

The fact is, if one is not committed to something it often goes badly.  Whether an exam, a meal, or a business.  If one couldn’t care less, well, that shows, and what might have been a major company slides into oblivion until it is sold for ‘parts’.

Many companies wind up having to sell the land because the business on which it stands isn’t worth anything.

The fact is, the child born with everything doesn’t imagine having nothing.  Doesn’t often consider working.   As they are spoiled and pampered, they expect other people to do the job.  They are too busy posturing and preening.

In Jamaica, for example, there was a time of monopolies.  This company was the only one which could import X; whether X was lawn mowers, pipes or cell phones.  The second the monopoly was broken everyone ran to the competitor, whether the competitor was more expensive or not, because the feeling of being held to ransom by the monopoly was so strong that a hatred built up.

That hatred was the impetus to go to a competitor and let the ex-monopoly go out of business.

If the children and grandchildren of the monopoly holder had any business sense they would have taken all sorts of steps, whether to rebrand, whether to open another business under a different name, or change their policies.  But, because it was a legacy business that had worked in the past, and because they had as much business sense as a pumpkin, they made no step when necessary and now cling to what little custom they have left.

They have nothing to pass to their children, who will start at the same level as their great grandfather.