Q. What are the key challenges that Indian family businesses now face and what advice will you offer to overcome them?
First, family governance. Companies lack clear policies and processes governing ownership and management of the business in the second generation and beyond and is a big challenge particularly with the disappearance of joint families and weakening traditions. Second, professionalism as a value is often not understood, nor practiced by family members who wear both ownership and management hats. Third, families are struggling to decide on ownership and management of individually initiated new ventures often financed by the family.
Q. It is largely recognised that family businesses the world over do not last beyond three generations. Why is this so and how can we create lasting Indian businesses?
Some of the key reasons are vanishing qualities of stewardship and entrepreneurship of founders in the successive generations; poor quality family governance especially after the departure of the founder from the scene; lack of skills, knowledge and willingness to scale and transform business and, arrogance and lethargy of subsequent generations that are born into prosperity.
Lasting family businesses should have awareness, willingness and adherence of family policies on matters in the interface of family and business. In a turbulent world, entrepreneurship is critical for continued success. Families need policies and practices for managing entrepreneurship from within including their own venture capital fund.
Q. A major contribution to India’s GDP comes from family businesses. Is this a good trend or should we broadbase it?
There is nothing wrong with this trend. Most entrepreneurial ventures started in the 1980s and 1990s have passed over their ownership and or management to their family inheritors who thrive with the involvement of non-family professionals. Family businesses come in different shades across sectors and cannot be treated as identical. Also, their nomenclature might change. However, it is dangerous to have a lot of the wealth concentrated in the hands of a few families, creating monopolistic tendencies.
Q. In the age of AI and deep tech, what can Indian businesses do to adapt?
Companies and their leaders must accept AI as a welcome facilitator and not as a dictator. It is important to watch the evolution of AI and make sure that the best possibilities of AI are made use of. This is also an opportunity to reconfigure our space in the global competitive landscape.
