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When actor Arvind Swami cut his teeth in the family’s steel business as a sprightly youngster, sure of having a cosy time as the “boss’s kid,” he was directed to a plant in Tiruchi to learn welding. After getting the nuts and bolts right in steel manufacturing in three months, he was asked to travel across the country to conduct business negotiations with suppliers.
Nevertheless, the rigour shaped him, and he is thankful for that even though he branched off from family business into human resources management.
He now runs talent Maximus, which offers HR staffing and payroll services.
Speaking at a conference on family businesses organised by Madras Esplanade Round Table 30 and Chennai Business School, he said a bloodline business will do well if it gets passed on to a next generation that knows its stuff.
However, there are structural challenges: “Debate is seen as dissent, and dissent is seen as disloyalty. Without debate there can be no ideation, which is stifling.”
Having a constitution aimed at making the enterprise competitive, breaking new ground in business, promoting performance, and being one that is higher than the most powerful member of the family, can steer a business in the right direction, he said.
Brand value
Another structural challenge in the family business is keeping the brand intact, which could be shaken when the vision of new leaders differs from that of their predecessors, said K. Pandiarajan, Chairman and Managing Director, Ma Foi.
National Crackers, he said, held about a third of the market share but was split into four by the subsequent generation; the company’s assets were distributed and the brand is no more.
Four brands have taken its place, and are all emerging now.
He pointed to a shift in how business owners applied themselves, even in those run by families. “Earlier, companies invested in buying physical assets. Now, intellectual property is sought after.”
Ramco Systems, the software arm of the Ramco Group, is investing a lot into its software.
Serial entrepreneur Ranghunandan said setting up a non-family board of advisors would be the first step in removing slack in a family-run system. “Family members hate reporting to one another. This is where a hub-and-spoke system where the hub is a non-family executive will work,” he said.
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