By Mr. Sunil Sood, Business Manager, Executive Education, Times Professional Learning
Family businesses account for 79% of India’s GDP. Even in times of volatility and uncertainty, family businesses have shown conviction and resilience. However, adopting new era techniques and skills is essential for them to grow in today’s fast-paced world.
Family businesses play a central role in the Indian economy by contributing to the growth and stability of businesses in the country. Family businesses in India represent 79% of the national GDP. With 111 publicly listed family businesses valued at $839 billion, India is home to the third highest number of family businesses in the world. It may be difficult to fully understand why family businesses should be treated any differently than any other business, but it is essential to understand that family businesses are most often founded on unwavering values and principles. Arguably, these values and principles are what allow family businesses to navigate troubled waters through meaningful internal and external collaborations.
Family businesses are rooted in trust, integrity, kinship and brotherhood, which also extend to their employees. Data shows that 78% of family businesses have done everything possible to retain their existing staff in the face of adversity. Family businesses tend to be resilient in volatile conditions as they are not solely dependent on external entities for their capital.
Another factor behind their resilience is the goodwill they establish among their customer base or consumer base. In a country like India, where the family is the unit of society, consumers tend to trust family businesses more. In fact, 67% of respondents in the 2020 Edelman Report said they trust family businesses more than others. This resilience and goodwill have become essential to thrive in the uncertain circumstances brought about by the COVID-19 pandemic. Data shows that despite the temporary setbacks imposed by the pandemic, family businesses are ready to resume normal operations by early 2022.
Challenges Facing Family Businesses
Despite their rock-solid foundations, family businesses have often been unable to grow beyond a certain point. The main reason behind this is the hands-on leadership style followed by most family business leaders, which proves extremely effective in the early stages of growing a business. But beyond a certain point, leaders must let go of the reins and delegate responsibility accordingly, which is not possible without a solid strategy in place. Family businesses have also not been able to adapt to changing market conditions. With only 38% believing they are digitally capable, digital transformation has been slow among family businesses. The pandemic and Industry 4.0 have necessitated a rapid transition to hybrid working, virtual operations and automated processes. To ensure long-term resilience and unlock tremendous growth potential, it is no longer enough for family businesses to rely solely on their core values and traditional management styles.
Channeling the benefits of the new era into growth
Results from PwC’s 10th Global Family Business Survey show that 71% of family businesses with strong digital capabilities were able to change the course of their organization in the short term and adapt to new developments. Digital transformation and diversification ranked at the top of organizational priorities, according to a survey of family businesses in 2019. The data highlights the importance of digitalization for family businesses. The figure above gives a comprehensive overview of the top priorities of Indian family businesses. While there is a strong will among family business leaders to use modern tools and techniques to grow their organizations, there is also a strong resistance to change. To be successful in their change initiatives, family business leaders must be equipped with knowledge of today’s management best practices and state-of-the-art tools for effective application.
Unfortunately, there are few family business courses that meet the requirements of a leader. A certificate or regular course in business management would not adequately equip leaders with the specific skills needed to run family businesses. Continuing education is proving to be an effective solution to meet these needs. Times Professional Learning has partnered with IIM Calcutta to offer a Postgraduate Certificate in Family Business Management aimed at enabling leaders of family businesses to understand and learn to meet the challenges they face in the dynamic environment of today. The IIM Calcutta Family Business Program is one of a kind and aims to equip leaders with the necessary skills to help them achieve their organizational goals and objectives.
Family businesses are rooted in cultural values and community principles that give them a solid foundation. This foundation helps family businesses stay strong even in the midst of market volatility. However, the COVID-19 pandemic is proof that traditional values alone are not enough for organizations to survive and thrive in the rapidly changing world we find ourselves in today. Augmenting preexisting advantages with new era tools and skills can help leaders usher their family businesses into the new era of endless possibilities.