If you scratch your memory, you will realise that many, if not most, first-generation entrepreneurs choose to work till they are well past retirement age: Mohan Singh Oberoi, Captain C P Krishnan Nair, Har Prasad Nanda and Bhai Mohan Singh, to name a few. Many years ago, Sunil Mittal would say he will retire at 50 - he is still going strong at 57.
Having known many such businessmen, and their kids, the reason for this looks pretty straightforward to me: a first-generation entrepreneur is always daring, bold, adventurous and somewhat rash. He has an insatiable appetite for risk. Such people generally come from modest, or not-so-affluent, backgrounds and this makes them very strong from inside. They have great conviction in their abilities and their instincts.
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The second generation, because it grows up in luxury, does not have the same aggression and mental toughness. There is certain softness about them. They are somewhat laidback and their hunger for risk is low. Their concern is to preserve and consolidate the family wealth, not grow it. If you look at families where the second generation has also joined the business, you will find this is by and large true.
The business means everything to the father - he carries it to the point of obsession. But the business fails to ignite the same passions in the son.
This worries the father. He begins to wonder what will happen to the company once he retires. The nagging doubt on the son's ability makes him reluctant to give up the reins. Many, therefore, assign their sons small or peripheral jobs, like the responsibility for a vertical or a factory, and run their company themselves even after they have sailed past retirement age. This is a recipe for disaster: it narrows the son's vision, which deprives him of the wider perspective and plays havoc with his confidence.
Unfortunately, the sons are often unable to make sense of this divergence in worldview. The result is discontent and strife. Some choose to rebel against their parents, displaying what in business parlance is called the Aurangzeb syndrome, while some choose to suffer in silence. Many struggle all their lives to gain the respect of their father. The end result is the same: father exasperated with his son, and son unable to figure out how to work with his father. The problem runs deep but is kept under wraps by families because of societal pressures.
The results are always disastrous. Senior executives begin to take sides if the situation develops into a father-son spat. It helps them divert attention from their own inefficiencies and incapability. In some cases, there emerge two power centres within the organisation, each pulling in a different direction. The business suffers.
It is nobody's case that the second generation is incapable: it is just a clash of cultures that happens. It calls for patience on the father's side and some large-heartedness on the son's part. There are no formulas on how to avoid inter-generational conflict.
The biggest such "misunderstanding" between father and son happened in Ranbaxy. Bhai Mohan Singh, the founder of the company, fought a bitter battle with his son, Parvinder. He just couldn't understand why his son was so keen to let professionals run the company. In his scheme of things, business was something that was to be run by the family. One thing led to the other, and it soon became a no-holds-barred boardroom battle, at the end of which Bhai Mohan Singh had to cede control to his son. The pain and hurt would show on him till the very end.
The situation requires families to assess dispassionately their role in business. In the initial years, when it is nascent, the business feeds the family - it helps the family sustain itself. Subsequently, once it acquires scale, the role reverses: it is for the family to sustain the business. That is when families need to think strategically and figure out what is best for the business. If the cause of business would be helped if it were to step back, so be it.
That seldom happens. I can't think of too many families that have willingly given control of the business to professionals. One example that comes to mind is the Burman family of Dabur which has given up all executive roles in the company. Most others are paranoid about control.