Some people only exist to help companies fail slowly
The three-generation pattern behind how companies hire their way into decline
“Some people only exist to help companies fail slowly.”
My colleague Carl developed this theory at Forward with founder Neil Hutchinson. Forward was the 2000s startup culture distilled. People who’d built companies from nothing, who understood what creation cost. Neil had the rare instinct to see through the facade and back people on potential, not polish.
The opposite infuriated Carl, sitting across Forward’s portfolio, watching struggling companies hire for polish over potential.
Businesses would default to hiring senior, impressive, articulate leaders who looked the part. They’d pass over the people who’d driven change. The result was always the same: frustrating, gradual, managed decline when these polished leaders were installed. The opposite when teams had the experience and desire to lean into change.
Carl’s insight stuck with me, but I didn’t have a framework for it until I heard the proverb: ‘Shirtsleeves to shirtsleeves in three generations.’
The Three-Generation Problem
The proverb describes a cycle. The first generation builds wealth through grit and sacrifice. The second generation manages and maintains it. The third generation squanders it as they never experienced the cost of creation.
Studies suggest 70% of wealthy families lose their wealth by the second generation, 90% by the third. The exact numbers are contested but the pattern is universal. Every culture has its version of the saying. In the north of England, where I’m from, it’s the appropriately archaic “clogs to clogs.”
The same pattern plays out in business. Not with wealth, but with the ability to change.
First-generation people take real risks. They enter chaos willingly: startups, transformations, building from nothing. They’re comfortable with ambiguity, full of energy, and biased towards action.
Second-generation people witnessed the sacrifice firsthand. They understand what it takes to make something work. They may not have started the system, but they understand its fragility. They can evolve and scale what exists without breaking it.
Third-generation people inherit systems, structures, and status when things are already successful. They’ve never experienced the cost of creation or change. They’re polished and confident, exceptional at operating within systems. But they can’t change systems.
This is what Carl saw. Companies hire third-generation people because they look the part: senior, impressive, articulate. But when markets shift, these people can’t adapt. You start seeing the signs everywhere.
What Third-Generation Leadership Looks Like
Sit in one of our business reviews and you’ll hear our CEO complain about teams’ “navel gazing.” It’s third-generation thinking in action: staring at internal metrics whilst markets shift around you. A pattern that appears in every role.
At a previous company, rapid growth was crushing us with complexity. We needed to sell data, build a B2B2C business, and handle more complexity with the same systems. I promoted one of the most brilliant engineers to lead it. When I came back weeks later, he’d rewritten the same systems in a new language. Faster, cleaner code. Same architecture. Same business model mismatch.
It’s substitution: replacing a complex question with an easier one you can answer. Something product and project managers aren’t immune to. They obsess over the latest fad or framework (don’t get me started on SAFe) instead of understanding the systems well enough to actually solve the business problem. “Where can we take this business?” becomes “The framework will tell us what to do.”
But other times it’s just pure avoidance. Data had changed what was possible and how we could work with partners. Commercial teams preferred boozy afternoon lunches and the same conversations they’d had for years. The world around them had shifted. They weren’t solving the wrong problem. They were ignoring the hard one entirely.
They maintain the status quo by polishing process and tactics, whilst strategy crumbles. It’s a slow death.
Why Choose the Hard Path
Third-generation thinking kills businesses slowly.
Marginal gains aren’t wrong. They’re vital. But they have a ceiling. You can optimise a process by 10%, maybe 20%. You can’t optimise your way to a fundamentally different business.
For loveholidays, the step change was reactivity. We shifted from a single product to a global platform, giving commercial teams the tools to make changes directly rather than waiting for developer deployments. Optimising our deploy process would have improved things incrementally. Instead, commercial teams now make changes at 2x the rate we can. With AI, that’s jumped to 1.6 million changes a year.
Then came scale. The tech foundations let us expand into more countries: 20+ trillion packages processed to meet the demand. Growth of 186% in a single year on a business that was already massive. And we did it with just a 5% cost increase. None of that is incremental. Each one is a step change.
Our competition optimised. They refined what they had, improved their existing processes, squeezed more from the same model. We grew to 3x their size and are on track to become one of Europe’s biggest travel brands.
But the real shift goes beyond scale. We broke free of the category altogether. We’re not a better travel company. We’re a technology platform business. Third-generation thinkers optimise within the existing frame. First-generation thinkers change the frame entirely.
What You Get From Walking the Path
This kind of transformation doesn’t just change the business. It changes you. That’s why my mentor drilled into me that it doesn’t count unless you’ve scaled two businesses.
The first time I was responsible for transformation, it was bumpy. Even though I’d witnessed change at consultancies and startups, being responsible for leading it is different entirely.
The second time, at loveholidays, was “twice as good, twice as fast”. Prior first-hand responsibility helped me understand what was needed from the start. Including surrounding myself with people who’d done it before.
Five years later, when AI emerged, we were ready. We’d already experienced its impact, but there was no playbook for implementation. We built our own framework: structured enough to direct effort without limiting experimentation, whilst measuring cost, utilisation, and impact.
The progression: experiencing change, leading change, adapting to change. The meta-skill is a playbook for creating playbooks. It gives you the willingness to tear apart what you’ve built when something better comes along, and the ability to navigate without a map.
Walk enough paths and this becomes second nature. You develop the confidence to move before the path exists.
Third-generation people lack this entirely. They started at the destination. They never walked the path. They can follow a playbook, but they can’t create one. When the playbook doesn’t exist yet, they freeze.
What the Pattern Taught Me
The pattern gave me a name for something I’d already been living, and a lens to sharpen it.
I learned to seek out change, not comfort. Early in my career, the tempting roles were the ones with status and stability. The ones that taught me the most were chaotic, uncertain, and often thankless. You learn to build through building. Arriving at the destination gives you something, but not what you need to grow.
I learned to hire differently. Neil at Forward backed me on potential, not polish, giving me my first CTO role. That shaped how I build teams now. First and second-generation thinkers need more support, more mentoring, more backing. But their impact compounds. If you only hire people who look the part, you’ll build a team that can only look the part.
I also learned not to dismiss what third-generation people do well. If you can build and present with their polish, you become far more potent. That combination gives you access to bigger problems, broader scope, and greater impact. Substance without polish limits your reach.
Carl’s insight was brutal because it’s everywhere. Once you see the pattern, you can’t unsee it. You start recognising which leaders will adapt and which will optimise themselves into irrelevance.
The pace of change isn’t slowing down. AI is accelerating it. And it’s the clearest test of the pattern yet. Most of our people apply AI to existing processes. A few explore new possibilities that change our business.
Third-generation thinking was always terminal. Now it’s just faster.