Two of my Cases in Ivey’s top 20 Best sellers for 2015!

Was just realised that two of my co-authored cases, mentioned below, were 17 and 18th ranked best sellers for Ivey Publishing for 2015.

  1.  The Cinnamon Case: Sales Negotiation (Role Play) – (B) The Buyer.
  2. AGV: Crisis at the Top.

That means, that these two cases were the 17 and 18th  highest selling cases by Ivey Publishing, worldwide, for the entire year in 2015.

As the readers may be aware, Richard Ivey Publishing is the largest independent case distribution house, which publishes the cases used in B-Schools globally and has a library of over 35,000 cases. As readers may be aware, 9 of the top 10 selling cases globally were also cases authored/co-authored by me,   by Ivey Publishing in July 2015.

I thank my well wishers for your good wishes and support which has enabled this.

 

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.

 

Oswal family imbroglio rakes up an old issue again…

The Business Standard in an article has covered the Oswal family story.  It states that after the untimely death of Abhey Oswal in Moscow, his wife Aruna Oswal took over the reins of the two family companies, Oswal Agro Mills and Oswal Greentech, as she was the nominee. This has been disputed by the eldest son, Pankaj who claims that he had been appointed as the family heir, in a family function where he was made to wear the traditional pagdi of the family. This has raised a difference of opinion between the mother and son.

While not going into the specifics of the case, let us examine one fact in this case, which brings forth an issue which is pretty common with business families. It is stated in another article on rediff.com where Pankaj states that his father did not leave behind a will.

This brings forth a subject which is very touchy but is also responsible for wrecking family relationships, that of not having a will. The article states that the “spin doctors, advisors and lawyers have been hired and consulted” and it appears that both sides are readying their respective sides for a battle.

Which brings us to the following facts, which family patriarchs have to consider, in the absence of wills.

Battles do not help families:  If these are long drawn, (and they usually are), they extract a great price from each one, in terms of mental bandwidth and financial losses.  The results may come out eventually, but this could be at a cost of wounded relationships. Any success if at all, could prove to be just a pyrrhic victory.

They don’t help businesses either: The businesses are also the victims of this fight as they are forced to hold and wait, until clarity is apparent. On the other hand, professionally run businesses may be forced into the battle, which may be purely a family matter, and this could soak up funds from the business. The management could be distracted from running the business and more involved in what is happening to the family dispute.

 

Relationships get affected: As most of the family and business is forced to take sides, sometimes with incomplete information thus affecting the social environment. Given the fact, that most families operate in very socially connected environments, this could become tricky.

We plan our lives but hold back, when it comes to planning our businesses and family relationships: Let us understand this, a family will actually gives clarity to the family members on the intentions of the patriarch (or matriarch) and helps resolve situations. Sure, there are disputes on the wills also, but this is in some cases, but most times, the wishes are taken and executed. This ensures that the family relationships are maintained.

 

JSW-JSPL deal is more than just about the family charter.

Todays Hindustan times talks about the JSW-JSPL deal getting stuck because of the terms of the family charter and valuation and the terms of the buyout.

While not specifically commenting on the deal in particular, there is a very interesting issue that this raises, that is, what if the family charter states something which may run into legal road blocks? Or even not permitted by law? Furthermore, how does one comply with an agreement to take care of each other and come to each others help, in case of need?

This becomes particularly acute, when the family or personal wealth is tied up in the companies, usually listed. Any help or funds transfer would be subject to various compliances and legal approvals.

The regulators, investors, or institutional shareholders, who form the largest group of shareholders today, may not agree that such assistance may be in the best interests of the company, even though it may be a moral obligation or a requirement under the family charter, for the promoter to do so.

This also raises the concept of fairness and trust, since these roadblocks could have the potential for blowing up into a much bigger mess, as the weaker side may think of these as excuses to avoid helping out.

The additional risk for governance since this could affect the long term reputation of the helping company, as it may risk its credibility in the financial markets. There is always the doubt, on the extent, duration of the assistance in the future and implications on the health and long term viability of the helping company, if this assistance were to continue in the future.

There is also the probability that the stronger company may have to divert its investment plans to help out and thus jeopardise the operations of the healthier company.

All these will have long term implications on both the family and the business. What can be done to prevent this?

While it is not possible to prevent or forecast all eventualities, families could consider some of the following to safeguard themselves:

Separate out business assets from family assets:

Most family wealth historically, has been in the form of shareholdings in the company and all expenses are borne by the company. There is very little in individual names except what was perhaps required for tax planning purposes. A financial separation of the wealth becomes extremely important as it creates a financial security for the individual family members outside the business.

Build a portfolio of assets in an individual capacity:

This leads to the next issue wherein the individuals have joint shares in various projects, properties, assets without much clarity of the exact shares of each member. It would be a good exercise to clarify amongst family members, as an annual spring cleaning exercise to revisit these so that the family has a fairly good idea of the assets and the individual shares.

Having a pool of liquid assets outside the family business:

I cannot over emphasise the importance of this point. There have been cases where all the assets are highly illiquid and may not be available, should a contingency arise. Any wealth advisor can plan this out for you depending on your lifestyle.

Consider a family pool of liquidity for funds:

Some families have started doing this, each one deploying a small sum which can be collectively used for the family in case needed. This reduces the need for each one to maintain a liquidity for each family division.

Have an informal family meeting with internal family members periodically, once a quarter, if not monthly.

Communication builds up trust and strengthens the relationship between all the members. Regular communication would also reduce any conflict, if the relationships have been strong. You cannot build a relationship in a day, and this would help in times of stress and duress. This has the additional benefit of knowing the people and hence even if there is a delay due to legal compliances, the family is still together.

 Compliance in Spirit or the Letter of the family agreement.

There has been a lot of heartburn on this issue, that is, whether an agreement has to be followed strictly or to understand the intention behind the agreement and to honour that. Most family agreements have a fairly large amount of emotion behind having them, in the first place, and this needs to be considered while executing these. While legal compliances may make one approach difficult, if not impossible, if the family is together, they can work out another alternatives, which may not have been under consideration when the agreement was drawn up, but it meets the spirit of the agreement. Of course, this needs a lot of trust and confidence to be successful and the purposes of the family achieved.

The question is, how many families will have the foresight and patience to do this? The Jindals have shown that they can, but there are very few others…

FFI Certificate in Family Business and Wealth Advising

I am happy to announce that I have just received my FFI Certificate in Family Business and Wealth Advising by the Family Firm Institute, USA. The press release is here( CFBA.CFWA Press Release.). 

The certificates are presented to individuals who have achieved comprehensive professional knowledge and gained significant expertise that can be used as value to family business owners and family wealth clients.

“Through completion of the certificate programs, Rajiv Agarwal has gained a deeper understanding of the needs of family-owned enterprises and the many roles family business and non-family members play, “ said Judy Green, President of the Family Firm Institute. The Family Firm Institute (www.ffi.org), an international professional membership organization of over 1800 individuals and organizations across 88 countries, is dedicated to providing interdisciplinary education and networking opportunities for family business and family wealth advisors, consultants, educators and researchers.

It is particularly a proud moment as I become the first Indian to get this dual certificate. Thank you all, for your support and good wishes which helped me reach this milestone.

FFI-Certificate-Seals-Business-RGB GEN-CFWA-Seal-RGB

Succession at the House of Godrej – Best practices to be learnt

The house of Godrej was always one of india’s most respected families. True to its reputation, they have put in a succession plan which can be the example for the other business families to follow.

In a recent ET article, a few key points stand out:

Adi Godrej removing himself from the daily operations of the companies, choosing to let the next-gen manage the show. This is a show of confidence in the next-gen sending a clear message to the rest of the organisation of who is really in charge, and that the baton of power has moved on. Additionally, the fact that Adi Godrej did not interfere in the decisions but was available for the next-gen as an advisor, ensured that the hand holding, mentorship was available, whenever needed. This also proved to be an encouraging trend to build up the confidence of the next-gen without any possible costly mistakes.

Working along with professionals builds the team spirit and at the same time, encourages collaborative efforts to drive the business growth.

Further, the encouraging of newer ideas to change the businesses as they saw fit, helped to rejuvenate businesses and help these face the challenges in the new economy.

These are valuable lessons which most other families could do well to learn from!

 

Gaekwad vs Gaekwad – Lessons in Conflict Resolution – Value of Time.

ET has an article covering the Gaekwads of Baroda settling their long pending conflict. it is instructive to read about the foresight demonstrated by the cousins Samarjitsinh and Pratapsinh to settle a Rs. 20,000 crore battle.

Key learnings were: the family became at peace and looked forward to a brighter, more constructive future for all the family members. And that they first decided that the settlement had to be made at any cost, and then the compromises made, were easy to implement.

I think that this insight is key, for settling conflicts  in families. Often, I have seen cases originating from  issues which may not seem relevant over time, but are the root of conflict, (like ill treatment, unjust or depriving of rights, actions regarded as unfair, etc.)

While this may be held as precious by the family members who may have been subject to this, the subsequent generations may not see this with the same degree of emotion. This could be used as a stepping stone to resolve a family conflict. I remember working with two families at conflict, where the reason for the conflict was not clear but everyone vaguely remembered that it was something that their great grandfathers had been involved in !

But i think that the point that most families miss, in all this highly charged up emotional states, is the amount of time and energies that they spend in keeping the conflict alive. additionally, they seem to forget that this same energy and effort if channelled into something more productive, would yield results which would enhance the status of the family more than winning any brownie points in any conflict.

Furthermore, this also becomes a part of the family legacy which perpetuates down the generations, and this adds negativity to the family lore. Think about it.  Why add a negative thought to the family stories? ( eg. your granduncle deprived your grandfather from all the right wealth and hence we are not speaking to them since then…)

Thus, if we were to summarise the key points to think about….

  1. Is continuing the conflict worth the effort, time and resources ?
  2. What is the key issue? are we addressing that or is it something more personal to an individual?
  3. Is this something which would be relevant for the future generations?