Sunday, September 13, 2009

Growing curiosity in the strengths of family business

I was a speaker at the Family Business Conference organised by the Jain International Trade Organisation yesterday in Mumbai. The one-day event was meant to sensitise its members but quite a few non-Jains also attended it. The conference that had all essential aspects for building a sustainable family business had a sell out crowd at the ball room of Hotel Leela. I thought Jains with their values of harmoney, non-violence and sacrifice were naturally inclined to breathe the essence of family business. We need a large number of such initiatives to sensitise business families about the wonderful things a united family business can do. I initiated a new network recently under my Chair at the the ISB (Thomas Schmidheiny Chair of Family Business and Wealth Management) primarily with this objective. This is only a beginning.

I have seen three categories of FB members: one, those not at all aware of the possibilities of having a unified and wealthy family business; two, those aware of the benefits of having good overnance principles etc but do not know how to go about practising them; and three, who do not start doing anything though they are aware of what to do. Hence there is a social need to "sell the concept" of healthy family business.

I asked the audience to start the practice of good governance at home immediately without a lengthy agenda. I suggested that they identify a list of key areas of concern that they are bothered about and start discuing the reasons. This way they will be able to find solutions to major challenges soon. If this exercise is continued on a regular basis for about six motnhs, they would have identified the major building blocks of a constitution. Never start writing a constitution first; what you need is to identify solutions to pressing problems and execute them effectively.


Shai Vyakarnam said...

Should family business governance also include how to protect the basic assets for the family if the business has to take risks in building the business? Maybe this lack of separation of business from family is the most critical question? Welcome reflections.

My angle is to do with education - hence see

Kavil Ramachandran said...

Thanks for the comment, Shai.I am glad that you raised it. I agree with you; in fact, as you know, that is one of the fundamental premises on which family businesses are built. A family member is a trustee of the assets of the family and so has no right to destroy the wealth. Many family offices that manage the welth of families consider protecting the investor wealth as the core philosophy to follow.

There is a lot of interest emerging in the area of family education that is primarily attempting to educate the family on not only on family governance but also on entrepreneursip (your area!). While encouraging families to pursue entrepreneurship, good families keep in mind the overall implications for the family wealth.

Incidentally, I had recently written a column for the Family Business ( wherein I have discussed the implications of too aggressive growth ambitions of family businesses. Look forward to your insights particularly on family entrepreneurship. Ram