Beating the third-generation odds

Michael Macfarlane opens this part of the conversation with figures he attributes to a Harvard Business Review study. Some 85% of companies have family members in control, yet only 12% survive beyond the third generation. In his reading, capital is rarely what fails these families. Flexibility, trust and values are more often the cause of decline. William Louey's family, which created Hong Kong's Kowloon Motor Bus Company, is now in its fourth generation, with a fifth already active in the world. Louey's own choices offer one account of how a family gets there.

Responsibility passed to Louey at 19. He did not take the chief executive's chair. He describes himself as an artistic person who loves art, beauty, sculpting, painting and music, and who had no natural interest in business. He was accepted on the spot by St Martin's, but his family would not have approved, and as the only son he went into the business. Having done so, he committed to it wholeheartedly and with a sense of responsibility. He also concluded that he was not good at business, and employed a chief executive.

The discipline of knowing yourself

What Louey offers the company is presence. He says he is very good at socialising and talking, and he attends the company's round of some 30 annual dinners for around 15,000 staff, speaking at each. He describes enjoying time with bus captains and mechanics, and believes leaders must show they genuinely care about the people they work with.

Because I don't have an ego. You know, I know what I'm good at.

— William Louey, Wealth Office

Macfarlane frames this as a lesson about trust, growth and ego. Many heirs, he suggests, would struggle to accept that protecting the family business can mean bringing in outside leadership. Louey treats it as straightforward. The same attitude runs through his public life. He says he tells people what he is bad at, including finance, and sees honesty about shortcomings as a sign of confidence. The skill that matters, in his view, is the ability to find the best person for the job.

Ownership as contribution

Louey extends the same reasoning to ownership. The bus company is part of Transport International, which is listed on the Hong Kong Stock Exchange, and the family shares ownership with other investors. Louey does not regard this as a loss of control in any meaningful sense.

So you don't really need to think of ownership as the numbers.

— William Louey, Wealth Office

His example is Jack Ma, who he says owns only around 5% of Alibaba. What matters, in his view, is ability. Louey sits on the board as one of its directors, and sees his contribution as communication with frontline staff, which he says he is uniquely placed to provide. Other directors bring strength in finance, relationships with government or links with bus systems around the world. A board, on this account, is a collection of complementary abilities, and a family member's influence rests on what he or she contributes.

Macfarlane suggests that letting go of day-to-day management and sole ownership is precisely what freed Louey to define his own legacy. Without the weight of running the company or governing it alone, Louey has built a reputation through his scholarships, his role as the public face of a well-known brand and, more recently, a YouTube channel about health and living well.

Freedom for the next generation

The most distinctive part of Louey's thinking concerns succession. Asked whether families should steer heirs into finance and into the business, he says they should give them freedom. His own children know they can do whatever they want. He encouraged them to do something different, listened to their proposals over the years, gave his view on which were good, and says they have now found their passion.

That freedom is easier, he implies, because the family's legacy no longer depends on a single line of succession. He describes his more than 60 scholars as successors who can take over. Macfarlane calls this building legacy outside the family identity, and it gives the next generation room to pursue their own interests without the business being left unsupported.

Louey's account of values is similarly grounded. His family was always low-key, and his grandparents ate simple food at family gatherings. As a teenager at school in Britain in the 1970s he wore designer suits to show off. Years later, when he offered his son an old Prada bag for school, his son refused, saying classmates would laugh at him for using brand names. Louey took the lesson, began wearing high-street clothing to Hong Kong balls, and found it earned more attention than the most expensive outfits. Today he would rather give the money to a scholar than spend thousands of pounds on a pair of shoes.

The pattern across these choices is consistent. Louey separated stewardship from control, accepted outside management and outside shareholders, and allowed his children to define themselves. For families facing the third-generation test, his experience suggests that continuity can rest on values, relationships and self-knowledge as much as on holding the reins.