Family businesses have fared much better than the widely held businesses during covid and it is time for the family seniors to hand over the organization to the next generation without delay, says Mr CK Ranganathan, Chairman & Managing Director, CavinKare Pvt Ltd and Senior Vice President, AIMA.
"The next generation is far more equipped to take the family business to the next level," he said at the 6th National Leadership Conclave of All India Management Association (AIMA). However, he warned that the next-gen leaders of family businesses faced new challenges from the churn in technology, business models, policies and global trade.
Mr Alok S Kirloskar, Managing Director, SPP Pumps Limited, a company belonging to the Kirloskar Brothers group, shared that the changes and the challenges of now have been in the making for the last decade. The definition of a product has been changing, especially in manufacturing, he said, giving the example of Rolls Royce which has been offering its aircraft engines by the hour instead of selling those outright. "There is a transition to the next generation of products based on a subscription model," he said.
The next generation of family business also has to contend with loss of knowledge and knowhow as the senior employees of the legacy organizations exit, according to Mr Kirloskar. "People have knowledge of the business in their head which is not owned by the company. That needs to be documented," he said. Also, the next generation leaders need to hire people who drive the company by themselves and tell the promoters what to do.
Mr Shashwat Goenka, Vice Chairman, CESC Ltd and Sector-Head Retail and FMCG of the RP-Sanjiv Goenka Group, said that the last 12 months have been a roller coaster ride. None of the business education and the mentoring by senior family members had prepared one for this situation, he said.
Ms Shefali Munjal, Executive Director, Hero Enterprise said that covid has given a lot of time to reflect. The new generation has to look at disruption as just another phase where markets are changing and go on adapting, she said, adding that one has to either become a part of the disruption, contain it, get ahead of it or exit the business altogether.
Ms Munjal insisted that family businesses have to digitalize and get everybody online very fast. "That is the value that the next generation can bring to the family business," she said.
Talking about induction into the family business and learning to run it, Mr Kirloskar said that he joined the business at the bottom of the organization, which allowed him to feel the pain of the employees who see everything from their department's point of view and not the company's point of view. "Feeling that pain is important. That makes you run faster," he said. Later, he was given the charge of the overseas acquisitions related to the oil & gas industry just when the oil prices crashed, and he had to turn those around by learning cash conservation and recruiting new leaders from competition when the business was losing money. "Keeping people motivated when the numbers are bad is the key," he said.
Mr Goenka said that he was thrown at the deep end by the family at an age of only 22 years. He had to run Spencers' Retail without knowing about the retail business and managing seniors who knew it well. "Dealing with the people was a greater challenge than the business itself," he said, adding that he learned to get his point across without throwing rank and make others feel that he was a part of the team.
Ms Munjal shared that she started Hero Soft, a software company focused on automotive business, but had to exit it after 5-6 years because the company could not go global and lost talent. She saw the subsequent ventures from the market's perspective and worked on talent retention and disruption prevention. "That prepared one to deal with what is happening today," she said.
Mr Pranjal Sharma, Economic Analyst, Advisor and Writer & Author-India Automated, moderated the session.
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