The concept of ‘shirtsleeves to shirtsleeves in three generations’ dates back to an early 20th century proverbial saying, early 20th century implying that wealth created by the founding generation will be lost by the third. The saying is often attributed to the Scottish-born American industrialist and philanthropist Andrew Carnegie and has been widely quoted in the family business sector over the years.
We asked our Global Family Business Think Tank Panel if they thought that that the concept of very few firms making it to the third generation using the analogy 'shirtsleeves to shirtsleeves is really relevant today.
Is The 'Shirtsleeves To Shirtsleeves' Analogy Still Relevant Today?
0%Yes - 46%
0%No - 47%
0%Don't Know - 7%
Our panel were split as to whether or not the adage remains relevant today, highlighting plenty of other factors for consideration when looking to the future and the need to continually evolve and innovate in order to remain relevant as a business over time.
THE THOUGHTS OF OUR ‘THINK TANK’ REPRESENTATIVES:
“This analogy doesn’t allow for the evolution of a family enterprise and perpetuates the idea that a family should be in one business for multiple generations. I think it would be better to talk about how to nurture connectedness so that the family an change and evolve into new businesses as needed.”
Andrew Keyt
CEO, Generation6 Family Enterprise Advisers
“The power of a sustainable legacy comes from the foundational principles of family values and purpose for the family business established as the beginning of the legacy journey. The problem comes from many family businesses not knowing how to engage future generations
with those foundational elements to give them the inspiration to continue the journey instead of taking the benefits of the family business for themselves. That problem still exists today and will continue to until more families learn how to engage their future generations.”
Charlie Leichtweis
Founder and Managing Director, Experts in How LLC
“The idea of ‘shirtsleeves to shirtsleeves’ isn’t supported by the data on wealth preservation. The statistics on business survival rates mainly suggest that keeping a business going for a century or longer is incredibly difficult, not that anything is wrong with family companies.
Most of the longest lasting companies in the world are owned by families.”
Josh Baron
Senior Lecturer, Harvard Business School
"The concept needs to be revisited in our fast-paced world. Firm survival is contingent on any factors (mostly external ones) and the family/ownership succession is just one of many factors to consider.”
Peter Vogel
Professor and Director of the Global Family Business Center, IMD Business School
“Even if you believe the ‘shirtsleeves to shirtsleeves’ analogy to be true, surviving three generations (or roughly 75 years) significantly out-performs the lifetimes of most public companies.”
Nic Di Loreto
Partner, BanyanGlobal
“With so many developments within business families, the ecosystems they operate in and the wider business landscape, we can’t go back to these historical data points with any great level of reliability. This also talks to the need for further research and recognition around not just the role of family businesses in today’s global economy but how they are evolving between generations, sometimes not as a family business that continues but as a
business family.”
Daniel Trimarchi
Director, Family Enterprise Advisory, KPMG
“Yes, the analogy remains relevant as it highlights challenges in sustaining wealth across generations, despite modern advancements and changing economic landscapes.”
Kim-Adele Randall
CEO, Authentic Achievements
“I think that the concept of a family business not lasting past three generations is still very much prevalent. That doesn’t necessarily mean that the third generation destroys the company but could mean that interest change over time and that they no longer want to run the business in the way that it has been run. This might necessitate a sale but it is not as sad as the traditional analogy in my opinion.”
Kyler Gilbert
Vice President, Business Consulting Resources
“I think it is less relevant today due to increased education, access to advisory support and evolving wealth and professional management practices. However, the challenges around succession planning, family unity and the ability to adapt to changing markets remain very real.”
David Twiddle
Managing Partner, TWYD & Co
“Success can take many forms for family businesses and I find this analogy rather short sighted in that it only views success as continuation through family. What about business continuity? I think that is a way of measuring success too.”
Mairi Mickel
Founder, Mairi Mickel’s Business Families
"Although successfully navigating the succession process remains one of the most substantial challenges for family firms, this does not mean that all family firms are limited to three generations of survival. In fact, there are numerous examples of family firms that have far exceeded the ‘three generation curse.’ The risks highlighted by the three generation adage are indeed real but they are not insurmountable. The modern, evolving business landscape presents new avenues for family businesses to survive and thrive beyond the third generation.”
Josh Daspit
Associate Professor of Management and the Dean Paul R. Gowens Excellence Professor in Business, McCoy College of Business at Texas State University
“The adage suggesting wealth dissipates by the third generation probably needs updating. When a family business ceases to exist, that doesn’t simply mean they fail, they might have strategically sold their original business to diversify investments or launch new ones. This
shift suggests that the longevity of an operational firm isn’t the sole measure of success. Instead, their ability to adapt and manage wealth across generations is more relevant. This modern perspective challenges the traditional view and recognizes the evolving dynamics of family businesses into business families.”
Anneleen Michiels
Associate Professor, Hasselt University and Advisor, Generation6 Family Enterprise Advisers
“I see that between industries changing and families becoming more agile, and perhaps with its identity more anchored to the family, the re-framing of family business is happening. Consider a family enterprise where the family brings its values, purpose, talents and relationships to bear in all its shared activities. This means that selling a business is less likely to be viewed as a failure for the family or the business.”
Greg McCann
Founder and Advisor, Generation
"This needs to be contextualized. What is failure? Bad data in, bad data out. The trend for the last decade has been family office and entrepreneurship which means a change but not shirtsleeves to shirtsleeves per se. We, as an industry, focus too much on the failures and not the successes which is a problem in itself.”
Natalie McVeigh
Managing Director, Eisner Amper
These results were part of the 2024 Global Family Business Think Tank Report that was published in Autumn 2024.
A copy of the final report is available to download below and is free to Family Business United members and digital subscribers (simply log in to access). If you are not yet a member or digital subscriber and wish to obtain access to the report, you can find out more about becoming a member of Family Business United here or take out a digital subscription to access all areas and content available on the platform including this report here
Download the Global Family Business Think Tank Report, Autumn 2024 here
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