Three of the most visible members of the "lucky sperm club" are media moguls, Arthur Sulzberger of The New York Times, James Dolan of Cablevision and Madison Square Garden (the Knicks and Rangers, etc.), and Mark Mays of Clear Channel Communications (the largest owner of radio stations is the U.S). None of them would have or be able to keep his job if their families didn't own a controlling interest in the companies they run.
In 2006, when America's second-richest person, Warren Buffett, turned the majority of his fast fortune over to the charitable foundation of America's richest person, Bill Gates, he famously reiterated his strong opposition to handing over wealth to one's offspring who haven't earned it -- to members of what he refers to as the "lucky sperm club." The always quotable Buffett has said that letting sons or daughters run a family-owned company is akin to "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics."
A new book titled Management Practice & Productivity: Why They Matter, is based on a study by Nick Bloom of Stanford University, Stephen Dorgan of McKinsey & Company, John Dowdy of McKinsey & Company, and John Van Reenen of the Centre for Economic Performance, London School of Economics. Their research reinforces the complete folly of having an eldest son run a family business simply because he's a member of the lucky sperm club.
The group studied 4,000 manufacturing businesses worldwide and with painfully dull and complicated academic research (which means it's probably pretty good) showed, like most academic research does, what we already know to be true -- that oldest sons who run family-owned and controlled companies stink as managers, with no better examples than Sulzberger, Dolan, and May.
The authors of Management Practice & Productivity: Why They Matter write, "When the firms in our survey were grouped according to ownership type, we found pronounced differences in both management practice score and performance. Companies with dispersed ownership performed best, while organizations owned and run by their founders or members of the founder's family performed relatively poorly. Worst performing of all were family-owned firms run by the founder's eldest son..."
The book was reviewed favorably by BusinessWeek and the Economist, but, strangely enough, not by The New York Times. And the week after the reviews hit, this item appeared in Jim Carnegie's MBR Report: "On February 11, "Harbinger names its NYT Co. nominees, The Harbinger hedge fund and its partner in putting pressure on the New York Times Company management, Firebrand Partners, have named the four people they've nominated to the company board to challenge sitting directors. They've also nearly doubled their stock holding in the company."
Marc Andreessen, on his blog.pmarca.com writes, "The hiring of Bill Kristol was the last straw. I can't take it anymore. I hereby inaugurate my New York Times Deathwatch, which will continue until the last Sulzberger has left the building."
The only thing that is lower than the top management scores of The New York Times Company, Cablevision/Madison Square Garden, and Clear Channel Communication is the morale at these companies, because employees know nothing is going to change as long as daddy lets sonny play at management, a game in which all the really good players have to slow down, grudgingly, and let the prince win.