Family Business Network

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

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Family Business Network

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

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