In this instance, the Work in Progress is a book by Michael Eisner published by Random House, NY, 1998. Michael Eisner was the Chairman and CEO of Disney. In the book, Mr. Eisner discusses his early years – his grandfather eventually founded a clothing company which specialized in making uniforms for the US Army. He became very successful and also won the contract for the uniforms of the Boy Scouts. You would think with contracts such as the above – it was a licence to print money and the next generation did. The trouble was they never wanted to change anything; they eventually lost the contracts as well as when the zipper was introduced, the company did not embrace the technology of the day, but they believed people would always want to button up their pants. The company eventually went bankrupt, although it had enough assets for the previous owners to live a comfortable life.

Linking to dividend paying companies, looking at the company it had two great institutional buyers – US government and Boy Scouts, as long as the two were happy the company could have gone on to many things. The second generation of owners thinking it was a continual cash cow and not embracing technology quickly lead to its downfall. In today’s world, that downfall would have been very quick. The lesson to learn is to run a successful company the owners need to be passionate about it and rise to the challenges the markets put on it. The best thing the second generation could have done is sell, for if you are not passionate about your industry and be willing to embrace the tremendous challenges it faces, find another avenue for your investments.

There are more questions than answers, till the next time – to raising questions