Rags to Riches to Rags
for my engineer friends that would be R(TR)2
Most of us have witnessed, or at least read about, the classic “Rags to Riches to Rags in Two Generations” story, where the parent, often climbing from poverty in some far-off land spends a lifetime building an enterprise of some sort, then leaves it to their next generation who squanders the entire fortune. The same thing happens in corporations. It usually takes longer because of the inertia of marketplace goodwill and because more people are involved, with minds that change slowly, but the process and the underlying causes are the same. I will share three of my own experiences before ending with some observations on the process.
I joined Fairchild Semiconductor in the mid-1960s, at a time when the modern history of the technology world had just begun to be written. Bob Noyce, who would go on to patent the integrated circuit, partnered with Gordon Moore and later with Andy Grove, to flip the proverbial switch at Fairchild Semiconductor that would turn the world of electronic communication upside down. No one, including Sherman Fairchild, could have predicted what would happen next, but the genius that flooded those Company hallways soon started leaking out and Fairchild and his Company were left behind. A decade later it would be purchased by the French company, Schlumberger, never to be heard from again.
Noyce, Moore, and Grove then left Fairchild to found Intel, where their cumulative genius would pioneer not only semiconductor memory but the entire microcomputer industry as well. As the years passed and all three retired, Intel totally missed out on the biggest product explosion of all. Motorola had invented the cell phone much earlier but it took Jobs at Apple to propel it into the consumer marketplace. Meanwhile, Intel, having lost its founders, probably saw it coming but was simply not able to muster the management resources to dominate as they had in the past.
Joakim Lehmkuhl and Fred Olson had both fled Norway in the early stages of WWII. They met much later in Connecticut, where Lehmkuhl had taken over a company that had built bomb fuses for the war effort. The Company, later to be renamed Timex, would go on to dominate the entire world’s watch market for decades to come. Sadly, in his later years, Lehmkuhl was unable to manage the enterprise, and Olson lacked the skills or tenacity to carry on in Lehmkuhl’s tradition. Almost simultaneously, a sea-change hit the technology world that led to the final chapter of the Timex story, where Fred and his staff, having lost their mentor, were simply not capable of seeing and following the path laid out for them, and the Company died.
In the Fairchild example, I was a lowly wafer fab engineer with no management experience, so I had no understanding of what was to come. In the Intel example, I was not part of the senior staff, so what I thought would have had no effect, even if I had understood it. In the Timex example, I understood completely, but I was one guy sent there to turn around a company of thousands of people still living in the 19th century. When the Vice President of Technology told me that he was looking forward to the time when the world’s fascination with electronics was over so he could get back to making mechanical watches, I knew it was time for me to move on.
The common thread of the three examples lies in the process of succession, and I am aware of two common methods, which I will refer to as the “Understudy Method” and the “Not-Invented-Here Method”. One method works, and the other does not, but the choice lies entirely with the original founder(s).
Understudy Method
Often, when the second generation or the incoming management “grows up” in the business, they are able to absorb firsthand how the business works. Typically, the understudy starts working in the figurative “mail room” and progresses through the various functional parts of the business, learning every detail from the inside out and from top to bottom.
I learned a lot the hard way about that sort of conservative thinking in the 1990s while attempting to sell high-tech equipment to farmers. They tend to be far more conservative than the rest of the population because they only get one chance each year to try something new. If they “fix something that ain’t broke”, they run the risk of losing the crop. Consequently, they stick with what they know works, and “fix” only the things that are “broke”.
In those kinds of businesses, we see the understudies gradually becoming full partners and eventually taking the reins when they gain a full understanding of why things are done the way they are. Only then do they start implementing improvements to what has taken decades to evolve.
Not-Invented-Here Method
When the new generation of management is without the experience of actually working in the jobs that have made the enterprise successful, they often start changing things they don’t understand. They want to improve things, but they often don’t have the ability to “follow their noses” in decision-making. Since they lack the “workplace wisdom” needed, they often “fix what ain’t broke” and later return to the time-proven methods.
My friend Sanders recently passed on this quote from the late ruler of Dubai, Sheikh Rashid bin Saeed Al Maktoum.
“My grandfather rode a camel, my father rode a camel, I ride a Mercedes, my son rides a Land Rover, and my grandson is going to ride a Land Rover, but my great-grandson is going to have to ride a camel again.”
“Hard times create strong men, strong men create easy times. Easy times create weak men, weak men create difficult times. Many will not understand it, but you have to raise warriors, not parasites.”
In this quote lies another story within a story. The Fact-Checkers, aka
Fact-Fakers
, looking into the quote with a preconceived notion that it must be false, get lost in their quest to disprove it.
Whichever method is used, particularly in those unavoidable situations where the Not-Invented-Here Method prevails, advice is often rejected when it could be most helpful. However, a thorough job of documentation will ripen with age and eventually be discovered and appreciated.
By: Jim
Written: January 2022
Published: January 2022
Revised: June 2024
Revised: January 2025 (added Fact-Fakers)
Reader feedback always appreciated[i]thoughtful commentary perhaps more so than shallow thoughts
footnotes
| ↑i | thoughtful commentary perhaps more so than shallow thoughts |
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