Meaning
Organizational phases occur when the children or successors of a founder take over the leadership of a company. This second generation management often involves a shift from an entrepreneurial style to a more professional and structured approach. It is a period of transition where the company must define itself apart from its original creator.
The phase is complete when the successors have established their own record of performance and authority.
Cultural Evolution
Changing the habits of a company that has been led by one person for decades is a major challenge. During second generation management, the new leaders must balance respect for the past with the need for innovation. This process requires a lot of emotional energy from the founder, who may see changes as a rejection of their work.
It also forces the successors to prove their worth to long-term employees.
Professionalization Drive
Introducing formal systems for HR and finance is common when the next generation takes the lead. These managers often bring new ideas from their education or outside work experience. This shift can cause friction with the old guard who liked the informal ways of the founder.
The cost of this change is the time spent on new software, processes, and corporate governance structures.
Legacy Integration
Success depends on how well the team can carry the founder’s values into a new reality.
