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Presentation made BY Prof Ramacharan from ISB hydrabad, on how to perpetuate family Businesses through generations.

Presentation made BY Prof Ramacharan from ISB hydrabad, on how to perpetuate family Businesses through generations.

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  • 1. How to Build Long Lasting Family Businesses
    Presentation to the Indian Heritage Hotels Association
    Professor K Ramachandran
    Thomas Schmidheiny Chair Professor of
    Family Business & Wealth Management
    Indian School of Business, Hyderabad
  • 2. Classic Amoebic Model
    FB
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    FB
  • 3.
    • Beyond amoeba, institutions
    • 4. Institutions crumbling as amoeba
    • 5. Opportunity knocking; decide: “to be or not to be”
  • Why Amoeba?
  • 6. Key to Business & Family Prosperity
    Extent of influence
    Economic
    Emotional
    Time
    III gen
    I gen
    II gen
  • 7. War signals
  • 8. Flow Chart to solve Family/Company Problems
    THINGS ARE
    WORKING WELL?
    NO
    YES
    DON’T TOUCH IT
    HAVE TOUCHED IT?
    YES
    IDIOT
    NO
    SOMEONE
    KNOWS?
    IS IT GOING
    TO EXPLODE IN
    YOUR HANDS?
    YOU ARE LOST
    YES
    YES
    CAN YOU BLAME
    SOMEBODY ELSE ?
    NO
    NO
    NO
    PRETEND YOU HAVEN”T
    SEEN IT
    HIDE IT
    YES
    SO, THERE IS NO PROBLEM
  • 9. Road to Hell
    Dilemmas
    Deviation
    Disputes
    Destruction
  • 10. Adding to complexity…
    • Generation gap in thinking/aspirations (goal, ownership, process…) especially with fewer children
    • 11. Changing emotional priorities of growing family unit / aging - deadlock
    • 12. Assume needs, views……!
    • 13. Opportunity will not wait; act on compulsions of scale of operation, brand….
  • In Nutshell………
    • Dream : Prosperity and Peace at home and work
    • 14. Reality : Very few survive
    • 15. Challenge : How to address?
  • Common solutions
    • Blind leads the blind
    • 16. Community / friends advice split
    • 17. Proven amoebic model of sub optimization if business and assets are somewhat equally divisible
    • 18. Sell off at whatever possible valuation
    • 19. Hide under carpet until……
  • Ray of Hope
    Interest growing, many listen, some act
  • 20. Unique Challenges – Managing Different DNAs
  • 21. Unique Challenges - What roles do you play? Over time?
    F
    B
    Firm Life Cycle
    Size
    O
    F
    B
    F
    B
    Age
  • 22. Where are you?
    Family
    F
    B
    O
    Business
    Owner
  • 23.
    • Never look for business solutions for family problems
    • 24. Create goals, policies and codes of conduct for both business and family
  • Way Forward
    • Go for ‘Satsang’
    • 25. Reflect over and talk among peers and family members to keep ‘family’ and ‘business’ separate
    • 26. Educate family on benefits of togetherness and preparedness required
    • 27. Industry association to create Non Amoeba Club – meet regularly
    • 28. Start early
  • Preventive strategies
    • Professionalise business
    • 29. Family governance
    • 30. Business governance
  • Professionalise Business
    • Beyond Strategy, structure, systems and processes
    • 31. Detached passion
    • 32. ‘let go’ difficult but essential
    • 33. Religions say : “Do your duty!”
    • 34. Master the ASK of professionalisation
  • Manage No Man’s land
  • 35. Family Governance
    • Family as a single entity – happiness and sorrows always shared
    • 36. Cultivate stewardship value
    • 37. Talk …listen… Talk…listen… through all forums on all (key) areas to ensure transparency
  • Develop Family Constitution
    Constitution outlines vision, values, goals, roles, rights, duties of family members towards family and business
  • 38. Make Succession and Retirement plans early
  • 39. Baton change not easy
  • Retire ; never to retire !
  • 44. Support in Transition
    FLC
    Crisis of
    Transition / transformation
    Size
    Socio – psychological support for transition
    Time
  • 45. Business
    Family
    Trust
    (Intentions, capabilities)
    Owner
  • 46.
    • Emperors who acted as the sole owners of their empire paved the way for the demise of the empire that they built
    • 47. Emperor is also a trustee, like a business leader
    • 48. Control ego!
  • We are the sculptors of our own destiny
  • 49. Arise, awake and stop not till the goal is reached!
  • 50. Thank You
  • 51.
  • 52. Family Business Transformation: Cushioning model
    Ownership
    Corporate governance
    (Board of Directors)
    Family governance
    (Family Council)
    Management
    Family
    Management systems and processes
    Mentor Pool
  • 53. Suggested Chapters of Family Constitution
    • Preface
    • 54. Introduction and Definitions
    • 55. Family Vision and Values
    • 56. Family Council (All members)
    • 57. Building Cohesiveness
    • 58. Code of Conduct
    • 59. Enhancing Capabilities of family members (including children and ladies of the family)
    • 60. Overview of Company and Family Structure
    • 61. Family Business Board
    • 62. Non Business Family Forum (weddings, education, charity)
  • Suggested Chapters of Family Constitution
    • Foundation (charity)
    • 63. Family Office
    • 64. Wealth management
    • 65. Personal financial security
    • 66. Family Fund
    • 67. Share Ownership and Dividend
    • 68. Investment in Business
    • 69. Family Jobs
    • 70. Retirement
    • 71. Succession
    • 72. Induction
    • 73. Compensation/ remuneration
    • 74. Role of women and non-working family members
  • Suggested Chapters of Family Constitution
    • Family Social Responsibility
    • 75. Conduct of family members in society
    • 76. Commercial Ventures by Family Members (for those who do not want to join business)
    • 77. Managing Differences – will be part of each major chapter
    • 78. Other Matters