In this era of widespread disruption, it is necessary for family businesses to have an awareness on disruption and bring in professionalism in the business, says Kavil Ramachandran, Professor and Executive Director, Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business, Hyderabad.
Speaking at the seventh edition of Business Today MindRush event on the subject 'How to fortify family business', Ramachandran says family businesses should do a PEST (political, economical, socio-cultural and technology) analysis and scenario building, find opportunities in disruption, balance portfolio of products, quick but balanced response, sustain owner passion and bring in a board for constant monitoring and advice.
"Single product companies and sectors such as services, where capital investment requirements are less, small and medium scale companies with limited resources and subcontractors and dealers are likely to be the most affected in this disruption," he said, adding that most listed companies in the top 4,000 are medium scale companies with less than Rs 1,000 crore turnover and out of the 7,000 listed companies, 91 per cent are family enterprises.
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Some of the barriers for family businesses to accept the changes are emotional ties with the existing business, resistance to organisational changes and fear of loss of power or position, resistance to move out of comfort zones unless badly hit, exit barriers and lack of capabilities.
Disruptive innovation is the need of the hour and family businesses should try to integrate new technologies to find fresh opportunities, as every disruption brings new opportunities, says Ramachandran.