Mapping out new horizons for the next gen
Ketan Dalal, Sr. Client Relationship Partner, PwC India
The world over, family businesses are extremely critical, and constitute 30% of companies with sales of over 1 billion USD. PwC’s 2016 Family Business Survey, which was recently released, involved the participation of over 2,800 family leaders across 50 countries and more than 100 family business leaders in India. It was heartening to note that 75% of Indian family businesses have grown in the last 12 months and 84% expect to grow steadily, quickly and aggressively over the next 5 years.
Clearly, family businesses face very different challenges. Many of these have to do with softer issues, governance, family members with different skill sets, dynamics of large families, etc. Very often, family businesses collapse after the second generation, and while there are a variety of reasons for this, an important one is the unstructured and unsystematic manner in which these businesses are sometimes run. For example, only 15% of Indian family businesses have a robust documented and communicated succession plan in place, and this has been one of the major challenges over the last several years. Some of the factors related to this challenge are the lack of a family charter, lack of a governance framework and absence of exit provisions. The broader issue is that we are living in a highly uncertain world, where change is the only constant. Resistance to change is very often a key issue in family businesses—more so when business models are being disrupted overnight.
At the same time, family businesses enjoy various advantages, including the ability to cut out levels of bureaucracy, quick decision making and more agility in addressing various issues. The forthcoming PwC NextGen Symposium in Mumbai is a great platform for discussing some of these issues.
In our recent publication, Great Expectations: The next generation of family business leaders, we listed down 10 golden rules for the ambitious next gen:
- Get outside experience first
- ‘Try before you buy’
- Only take a role you are suited for
- Be aware of your own behaviour
- Don’t put pressure on yourself
- Insist on proper appraisal
- Handle change with care
- Communicate, communicate, communicate
- Make sure succession is a process, not an event
- Enjoy it!
Overall, while the next gen today is more confident and ambitious, many old challenges remain, especially the need to develop skills, understand digital disruptions and, most importantly, manage the family dynamics.
Hope you enjoyed reading this! You can connect with me on Twitter @Ketan_Dalal.