My comments on the Visionary Cipla One vote

Ok I must confess that this piece in BusinessLine was somewhat not quite recent, but highly overdue.

This took some time to get the research, but I consider this as a fascinating story of how one family patriarch, Y Hamied of Cipla has shown vision in ensuring the longevity of his firm.

This is not new, and the Japanese have been doing this already for centuries, resulting in perhaps some of the oldest firms in the world still being Japanese. But the fact that this has been done in India within the purview of the law, to secure the single largest shareholder is a first.

 

When the next generation does not want to join,,

Two related articles in the FT, “Tears in Tokyo” and “Dealmakers salivate over succession survey” caught my eye. The articles deal with the lack of succession planning, and the first article speaks about how small and mid sized organisations are being sold to other buyers.  The second article describes how the M&A firms are awaiting the results of a survey, which the listed companies have been asked to fill in, by the Govt. of Japan seeking responses for their succession plans. the lack of which, indicates suitable M&A targets.

In a traditional economy like in Japan, large number of businesses are still family owned and family run. The lack of successors and/or succession plans have led to the existing generation seeking to sell these off, with the co-operation of the next gen who would prefer the sale proceeds to start their own new business with, rather than take over the headaches of the family business.

This is a sign of things to come, and if the current trends are any indication, then it is a matter of time before we start seeing similar scenarios playing out in india too. Families will have to overcome their long held beliefs that the family firm is a long term family wealth, and maybe, this would also influence successor traits in the long term as each successor would be expected to operate like an investor rather than as a family business owner. This would have repercussions on the training and expectations of the next gen. This would also need a separate skill sets for these next generation family members are expected to continue in the longer term.

this would mean that families would have to consider including these skills in the training of the next get. are we ready?

Done Deal! Few thoughts…

Todays TOI states that Nimesh Kampani has chosen to step down in favour of his son Vishal Kampani as the head of JM Financial.

This is at a time, the report states, when the firm has demonstrated, that it maintained its ability to make deals successfully.  This is a good move at an opportune moment. I have met many patriarchs who refuse to pass the baton on, under the excuse that the next generation will not be accepted by the customers who would prefer to deal with the patriarch, and the younger generation, feel inadequate at the lack of exposure in being prevented from engaging with customers or other stake holders.

It is very difficult in family businesses, especially those, which are successful, for the head to step down. Because this would mean sacrificing the positions of power, status, and sometimes even meaning to one’s life, as the family business may be everything around which his life may have revolved.

there is also the argument, that a business is a relationship business, and that the firm will lose a lot, if the relationships are not maintained, or if the existing customers reject the next gen.

In both cases, the arguments are superficial. Globally, there have been cases of relationship businesses being successfully transitioned, with the next generation still maintaining the traditions and customer service that was provided earlier, so as giving a seamless transition. Secondly, if the choice of the successor is based on merit, then the transition should not pose any issues, for the customers, who will be eventually looking for solutions, more than relationships.  (Controversial, i know, but think about it, would the customers stay with a supplier, if they were not getting “acceptable” solutions to their problems?  “Acceptable” is to allow for the leeway that they may give, for working with slightly different operational styles of organisations)

The last concern, that I have, and I may be completely wrong on this, is to point out that most transitions are successful based on what the retiring patriarch does post retirement. Does he stay out of the business or does he still carry on, as if nothing has changed? Does he have something to keep him occupied, outside work ?

These questions will, in the long term determine the success of any succession which family businesses have to keep in mind. Coming back to JM Financial, this is a good move and let us wish that this leads to more future success!

Da Da Ding: The new anthem for the next gen!

I don’t know if you have heard the new Nike Ad, (heres the link to youtube ) but this is extremely catchy.

I am quite impressed by Nike, who stays relevant to the next generation and reinvents itself every few years, right from just do it and  Mike Jordan, to Da Da Ding and Deepika. (yeah, she’s in the video too…)

It kind of reaches to the inner desire of the next gen to achieve, to win, and I think that they have caught on to something. (3 million hits on youtube and counting…)

This could be a valuable lesson for us in family businesses to reinvent ourselves when the customer demographic changes and with that the hopes and aspirations. This would help businesses compete better than those who choose not to, and remain fossilised in their old traditional ways.

Think about it… which one are you?

I got to sign off, want to hear da da ding for the 1000th time!

 

Cool or Swag? The dilemma of abbreviations…

Last week, I was talking to a student who just happened to mention that “swag” was an important attribute amongst students today. I made a mental note to look it up, too scared to ask what it meant and appear ignorant. But rushed to look this up on the ultimate Guru of all times, Google. I did not want to lose the opportunity to learn. (FOMO as my teenage daughter would say..Fear Of Missing Out)

Anyway, after a quick Google search which gave many options, (I know for sure it was not “Secretly We Are Gay” or “free promotional stuff given to attendees”) found Merriam-Webster dictionary defined it as  “stylish confidence” as made popular by a Jay-Z song.

This got me thinking about the peer pressure and the definition of “swag”. It was “cool” during my times in college, (ok, so this may have been some time ago) but this was always there. There were the nerds, focussed on topping the class, the sincere  (who were always copying every word the professor said) , the perpetual absentees who would meet during exams  the lost few, wondering what they were doing in college, and then the “cool” ones, who had their own circle of friends, inviting for parties, events, etc. and who used to hang out together in college and outside. People would do anything to belong to this group. Exclusion was rampant and huge insecurities of being excluded made some people insane.

And according to the Financial Times, this is a pretty big thing in the UK too! ( Link to FT article)

Which brings me to the basic fact being mentioned here, that wealth is used as a tool to establish membership to this elite club of swag. It is disturbing, that times have changed, from earlier times where wealth was hidden and understated. I remember that most wealthy expected their next-gen to underplay their wealth and live simple lives. Some where along the line, things have changed.

And this had implications for our next-gen kids. Firstly, as the FT article above mentions, that this does become an ostentatious display of wealth, with the possibility of each one trying to outdo the other.

Secondly in families of wealth, one often finds that the next generation kids display wealth, while the others are playing a very understated role. Why does this happen? what causes the difference in behaviour? Any thoughts?

I have a couple of thoughts on this based on the interviews that I have been doing for a research project, but would invite your comments on this. What do you think?

On a parting note, I asked a group of students for their possible explanations for the swag ?The answer?

YOLO !

I rushed to Google this again!!!

PS:  You Live Only Once….

 

 

Getting the next generation interested in the family business…

The FT talks about the need for inviting the nextgen into family businesses. It has some interesting feedback on how to invite the nextgen in, the need for not having competition and egos, and the need for getting these next generation on your side.

Faced with the great opportunities that this new generation has, and the fact that the legacy businesses may not offer the same level of opportunities, it makes it even more important to consider this very very carefully.

EY has shown in its report last year, in a global study that less than 7% want to join the family business. This is an alarming figure and the founder generations need to pay attention to this if they want to see perpetuity of the family business, or make alternate plans, like sell off or hand it over to professionals to run. But having the next generation on your side, becomes imperative.

Raymond’s mature step….

In the ET dated 9th June, 2016, the story of Raymond turning around is an insightful article. It talks about how a family business having a well known brand which was declining in profits. The family stepped aside and brought in a professional manager to run the company. What is interesting is, that the family also empowered him to take decisions which included selling off some divisions, and even reducing staff! Not the easiest decisions to agree on. The company has turned around successfully in two years time, the article goes on to state.

This brings out a very important aspect in family businesses, which the inheriting generations can pay attention to. It is important to realize, that just because there is a family business, does not mean that a family member has to run it. Families and businesses are two different systems and each has its own rules. Families are sometimes bound by the notion that the family membership entitles a family member to be a part of the business, and the next generation should and must join, regardless of qualification or capabilities. This is a very dangerous precedent and could lead to disastrous consequences, and could put the business at risk. Additionally, there should be maturity in the family to realize that if the business can be run by some else, then it is best to step down in favor of this person. A business should be run as a business. this is the only way, a business can thrive and subsequently support the family.