‘Every family business is unique’
Through centuries, Indian family business enterprises have been running on the basis of values and traditions. In their recent book, Indian Family Business Mantras, authors Peter Leach and Tatwamasi Dixit shared their experiences with Indian family businesses while they advised them on best business practices. They tell Biswadip Mitra why it is important for such an enterprise to identify the challenges even before they occur and how the organisations can become more professional. Excerpts:
Why did you think of writing this book? Why India?
Dixit: Over 75 per cent of the businesses in India are controlled by families. They are the backbone of the economy. Also, India is known for the great cultural values that often govern in family businesses here.
Leach: So, we thought that it will be a good idea to let the world know about how the Indian family businesses operate. For both us, it has been a great opportunity to work together for this book. Dixit is a renowned Vedic scholar and helped the family enterprises to implement the eastern management principles. It’s been a privilege working with him .The idea was to show how East meets West.
In your book, you have referred to the Vedas and scriptures. Tell us about the research work that went behind writing this book…
Dixit: I have been a student of Vedas, scriptures and Vedanta. For this project, I studied how the Indian values and traditions were incorporated in the business enterprises. Both of us have been working in the field of advising family business enterprises for decades. So we have that experience. Over the years, we have dealt with about 500 family-run businesses. That certainly helped us. Leach: I am a chartered accountant by training. My first book was published in 1991 and since then, I have worked with several Indian family businesses, helping them to cope with challenges.
How different are Indian family business establishments from those in the West?
Dixit: Indian family businesses carry on from one generation to another. But unlike in the West, there have been less documentation about such enterprises here. They move ahead on the basis of Indian cultural practices and family values.
Leach: Indian family businesses run on value systems that are different from those in the West. Both in India and in the West family businesses are run by family councils. But while in the West, they have governance practices, here these practices are different. Every family business is unique.
How open were the Indian businessmen about sharing their experiences?
Dixit: They have been very cooperative. Leach: They were extremely open about sharing their experiences. They are always keen to share their bad experiences so that it doesn’t happen to another in the business community.
What are the challenges faced by Indian family businesses?
Dixit: Some of the challenges that Indian family businesses face are how to attract the next generation and how to keep the entrepreneurial energy going. It also involves how to ensure that the previous generation gives way to the next generation, how to let professionals function freely in the enterprise, how to deal with family wealth and not let it get into their heads.
How do you think these families can tackle the challenges?
Dixit: The problems must be identified and addressed before they arrive. The best way is to look at the family tree and solve the problems that may crop up in the future.
Leach: For example, a family should sell the business before they need to when there is no pressure at all. Moreover, in any family business there will be difference of opinions, between members. The families must have protocols to address these differences.
What’s your take on generational transformation in Indian family businesses?
Dixit: Well, it is no longer straightforward as it used to be. Today’s generation is growing up in a social and commercial culture which is different from the one in which earlier family members took responsibility. The next generation is well educated, cosmopolitan and independent. Many of them are moving away from their family culture. They are less willing to be viewed as heir apparent. There is always this hesitation whether to join or not in the family enterprise.
How can family businesses in India become more professional?
Dixit: Professionalisation involves decentralising some processes and empowering management at different levels. Decision-making should not be left only in the hand of owners and family members but also on other non-family managers who have expertise.
Leach: In every family business, the owners can reach a saturation point after which they cannot do everything themselves. If growth is to be sustained then business owners must recognise their primary role, which is to establish a competent organisation. Keeping that in mind they must let others tackle the mundane, day-to-day activities. A family business must operate with a strong, balanced board of directors that will include talented, non-family members.
(Peter Leach is a partner in Deloitte LLP in the UK and heads the firm’s Family Enterprise Consulting practice for families globally. Tatwamasi Dixit is the founder of consulting firm Family Business Research International Centre)
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