the next generation can’t gain skills necessary in such large, complex and professionalised organisations.”

Then there is, of course, the question of what is best for the business. Kavil Ramachandran, professor at Indian School of Business, says India has two types of business families today —

the institution-building type for which business

decisions are not i n f l u e n c e d

only by fam-i ly mem-

b e r s h i p ( G o d r e j ,

Murugappa, Wipro, Dabur); and the second

type, for which business is for the family and family employment is critical.

IT’S BUSINESS, NOT PERSONALForbes of Forbes Marshall

lays it out clearly. “It is critical for all family members that the business does well. So families have to put the best available person in control — be it a professional or a family member.” Forbes explains that sometimes, a family member with all the early con-ditioning and exposure turns out to be the better choice to take over as CEO.

Almost as if to prove that scions can manage businesses too, Harvard’s Davis has actually compiled a global list of those ready to take over from their parents and make an impact.

There is a flip side too, as Rama-chandran points out, about families who see employment in the business as critical. “Such family businesses tend to split up in every one or two generations. You will find the next generation of such families occupy-ing leadership positions at an early age.”

In India, there are examples of all kinds — families grappling with succession, almost bringing in a di-rect handover of CEO roles between generations and also letting the next generation do their thing.

Arihant Patni, a second generation Patni, now heads the Patni family of-fice, apart from managing a couple of funds, after the core family-owned business was sold to iGate in 2011.

SK Munjal, youngest son of Brij Mohan Munjal, who quit his joint managing director position at Hero MotoCorp at age 56, now heads the family office, apart from looking at acquisition opportunities and driv-ing corporate social responsibility.

Pharma company Lupin has seen founder Desh Bandhu Gupta’s son

and daughter Nilesh and Vinita take over the reins after a professional manager, Kamal Sharma, led the company for some time. Sharma is still vice-chairman.

At Ceat, Anant Goenka took over as MD at the young age of 30, after serv-ing as deputy to Paras Chowdhury.

In May, Adi Godrej’s daughter, Nisaba, 39, took over as executive chairman of Godrej Consumer Products. It is never easy to explain such transitions or keep it smooth. In an interview a day after the transition was announced, Adi Godrej said, “As a family, we have decided not to com-ment on this subject.”

Like Wodehouse, many others are finding this an opportunity to ad-

vise traditional business families. Vishesh Chandiok, managing part-ner at audit and advisory firm Grant Thornton India, says family business services is a focus area for the entire firm. Chandiok points out that his fa-ther remains chairman of the audit firm affiliated to GT in India and in that sense, he himself is a product of a family business succession.

For a smaller company — less than `100 crore — Chandiok feels it is im-perative the owner remains CEO as there is need for entrepreneurial zeal. Various models can exist for opera-tions between ̀ 100 crore and ̀ 10,000 crore. For a larger group that has grown beyond `10,000 crore, the owner is more like a mentor. “If you take the Ambanis, Anil or Mukesh, they are less CEOs and more business mentors for people who are running the vari-ous businesses,” Chandiok notes.

Amit Burman knows that, for a pilot, the toughest thing is to cede control. The fifth generation of the family

that is the promoter of consumer products major Dabur has private pilot licence.

It was in June 1996 that Burman decided to fly solo, when he launched fruit juice brand Real under Dabur Foods. The idea was to do something on his own, outside the family stable but without cutting the umbilical cord. With Dabur Foods being a wholly-owned subsidiary of Dabur, the young Burman got what he wanted — complete control. “I didn’t report to the CEO but to the directors who were family members,” recalls Burman, who is vice-chairman of Dabur India.

In a decade, Dabur Foods crossed `250 crore in revenue, the brand cornered over half of the market for juices and talks of a demerger of the foods business and a stock market listing gained momentum.

In 2007, Burman’s flight hit an air pock-et. Dabur, which was a family-run busi-ness till 1998, decided to merge the food business with the parent company. Consequently, Burman stepped down as CEO, ceded control of the Real brand and was appointed vice-chairman of Dabur. The pilot was out of cockpit.

“It was very difficult to move out,” re-counts Burman, who is now chairman of Lite Bite Foods, which runs a chain of casual dining and quick service restau-rants like Punjab Grill, Zambar and Asia Seven. “The pilot must get the timing right,” says Burman.

TEETHING TROUBLEFor Dabur, though, the timing to profes-sionalise the family business way back in 1998 was bang on, some initial teething troubles notwithstanding. In early 2002, its first professional CEO quit, reportedly over differences with family members.

It was also during the same period—fis-cal 2002—that Dabur reported a dip in profit after tax (PAT) as virtually stagnant sales of ̀ 1,200 crore.

Outsiders felt the audacious gambit of bringing in professionals had backfired. The Burmans, though, persisted. “There were hiccups initially,” recalls Anand C Burman, chairman, Dabur India. The family, however, went for a course correc-tion and things have been smooth since then. Dabur, he lets on, was among the first families in India to separate owner-ship from management. Though it was a difficult decision, rapid growth over past

two decades under a professional man-agement validates it, he adds.

From ̀ 1,200 crore turnover in 2001-02 to `7,680 crore five years later, Dabur has reaped rich dividends by the transforma-tion. “It is very important to know when to bite the bullet and take a back seat,” says the chairman.

The family’s role, by now, had changed from hands-on intervention to being con-fined to ideation. “Today, we provide stra-tegic direction and long-term vision to the company,” says chairman Burman.

While the family does give suggestions to the professional team, the final decision on implementation rests with the man-agement. “Our relationship with the pro-fessional management has also evolved.”

Sunil Duggal, who joined Dabur in 1995 as a general manager, vouches for success of the experiment, but only after over-coming initial jitters. The new team, all outsiders, didn’t measure up to expecta-tions of the promoters, performance dipped during initial years and triggered intense introspection in the family.

“The period between 1999 and 2002 was perhaps the most turbulent in the com-pany’s history,” says Duggal, who took over as CEO in April 2002. After resigna-tion of the first professional chief execu-tive, the family took control for over six months or so. Then it was up to Duggal to bring the situation back to normal. What helped the new CEO the most in winning the trust of the family was his familiarity with the culture of the company.

Duggal shares an anecdote. One fine Sunday morning, when he was getting his house painted, he got a call from GC Burman, former chairman of Dabur, who died in 2001, asking him to meet him im-mediately. “Come in your pyjamas,” was what he said when Duggal told him that he will take some time to change.

Once Duggal reached office, a bigger surprise awaited him as he was asked to take over as CEO.

CARVING OUT A NICHEIt’s harder, reckons Duggal, for an out-sider to come into a family-run company. For one, the outsider’s understanding of the family is low. For another, promoters’ confidence in the CEO’s capabilities is low. And cultural issues crop up during the initial phases of transition.

Experts reckon that the willingness of the family to embrace change and yet keep the family at the core is what stands out in the Dabur transition. Rajiv Agarwal, associate professor of family business and strategy at SP Jain Institute of Management and Research, explains that they accepted that despite having qualified family members at senior posi-tions, they needed to induct professionals to grow. That the family worked together to carve out a structure, which defined each member’s role and yet created an en-vironment that respected all the mem-bers’ aspirations, is admirable, he adds.

PD Narang, group director of corporate affairs at Dabur India, maintains that the family showed a lot of maturity. “They continue to maintain that delicate bal-ance between being strategically involved and not interfering with running the busi-ness,” says Narang, who joined Dabur in 1983 as a management consultant.

Duggal, for his part, points to another important ingredient for a successful transition to a professional-run company. While promoters need to have a big heart and courage to yield power, the profes-sionals coming from outside too need to be sensitive to the cultural norms of the company. “It’s a two-way process. Both need to be accommodative and sensitive.”

Business successions can be come messy — both in family-controlled busi-nesses such as Raymond, where there are multiple court battles being fought

between generations of the Singhania family and in a more professional setup such as Infosys, where profes-sional CEO Vishal Sikka quit late last week, unable to manage the constant criticism by company founders, led by NR Narayana Murthy.

In business families, there’s ad-ditional pressure to manage profes-sional expectations of family mem-bers who will also become substantial shareholders some day. The saving grace in the Infosys saga is that the children of the Infy founders mostly do not look at the company as their career — they have too many other things to choose from.

Farhad Forbes, co-chairman of Pune-based engineering company

Forbes Marshall, who used to head India’s Family Business Network set up under the CII, feels liberalisation of the 80s-90s and lower taxes were key to change in attitude, where fami-lies do not any longer see the need to have their children run the business.

Forbes, who is now vice-chair of the global parent body Family Business Network International, Switzerland, says, “Up to the 1980s, due to high taxes, it was imperative for an Indian business owner to be employed in the business and draw a salary and get other facilities as perks to be able to make a living. That has changed after liberalisation and lower taxes made it possible for business owners to generate enough wealth and also earn dividends to support a decent lifestyle without drawing a salary.”

Today, a lot of family businesses are seeing this choice being exercised.

OF GREEN SHOOTS AND SUITABILITYIn mid-June, as Mumbai awaited full on-set of the monsoon, members of around 50 high networth business families got

together at the iconic Taj Mahal Palace & Towers hotel to witness presentations by four promising startups seeking capital. While mostly in their 40s and 50s, there were some older businessmen too. Some had sold their businesses and were sitting on a pile of cash, others were young scions in their 30s attend-ing along with their spouses. Some families were represented by a CEO or a family-office manager.

The opportunities — one each in peer-to-peer lending, artificial i n t e l l i - gence, fintech and

parking solutions — were lapped up and friends and fam-ily pooled in to make

up the cash pile required to buy decent-sized stakes.

Manmohan Tiwana, event organiser and founder of Wodehouse Capital, feels many of the younger generation of business fami-lies would rather not be involved in the empire but be an investor. “If they have to manage, it would rather be a new idea starting from scratch that they can scale up quickly.” Wodehouse offers family office services, advises business fami-lies on managing wealth, helps break up businesses and create succession plans. Tiwana often sees family busi-ness owners exploring a larger set of options when deciding on the next gen-eration (see Planning for the Scion).

While choice is a luxury, inexperi-ence is often the bane. With rapid growth in the last decade and a half, Indian business families find their companies have scaled up much be-fore their next generation can mature.

Says John A Davis, professor at Harvard Business School and found-er of Cambridge Family Enterprise

Group, “Typically, com-panies would grow and change less in a generation,

allowing the next to get adequate ex-perience moving up through the organisation and prepare for leader-ship. Today, with companies growing and morphing so much in a short pe-riod of time, the assumption is that

If a clutch of scions is keen to do its own thing, there is a bunch of elders, too, that sees alternatives to the progeny as suitable successors. The succession algorithm in India’s family-owned businesses has changed

Till last year, Ronit Khadilkar, 23, thought an MBA was meant only for those seeking a job. “I didn’t know how an MBA would add value to my life,” says Khadilkar, who joined his Mumbai-based family business of tiles manufac-turing after completing college in 2014.

It didn’t take long for Khadilkar to real-ise that the respect he got from his em-ployees was because he was the promot-er’s son. Gradually, it also dawned on him that though the lack of an MBA wasn’t crippling, it could help him in managing the family business more ef-ficiently. “It’s an asset to be armed with MBA,” says Khadilkar, executive direc-tor at Mirage Ceramics, who has just joined the Indian School of Business, (ISB), Hyderabad. Founded in 2005, Mirage posted revenues of `72 crore in 2016-17. In June, UAE-based diversified conglomerate Mulk Holdings invested `100 crore for a 50% stake in Mirage.

DEGREES OF SEPARATIONThere are plenty of next-gen business-men like Khadilkar who are going back to school to arm themselves with de-grees and knowledge for expansion.

Businesses can be wiped out overnight due to technology, regulation or com-petitive threats, and one needs to be aware, point out professors.

“Education helps one realise and pre-pare for this,” says Rajiv Agarwal, asso-ciate professor of family business and strategy at SP Jain Institute of Management and Research. Educating families is imperative. Just because businesses are successful now doesn’t mean that they will continue to be in the future, adds Agarwal. “The sooner the business families realise this the faster they will reap the benefits,” he says, add-

ing that it’s not just employing profes-sionals that’s going to help. Having a professional mindset is equally crucial and that comes from education, he says.

It was two years ago that Nupur Kejriwal, director at Mumbai-based brand and design consultancy company Kyoorius, decided that the time may have come to pursue a management de-gree. The occasion that nudged her in this direction was the flagship event of her company: Designyatra, an interna-tional design conference. The theme of the event was ‘What pumps your heart.’ While Kejriwal had a passion for the family business, what was missing was

formal training to better understanding it, says the second-generation entrepre-neur. Kerjiwal, who joined the family business in 2014, has just begun a course in family business management at ISB, Hyderabad.

The 24-year-old didn’t have to try hard to get her father on board. “Thank God! For once, a sensible decision,” was the reaction when she informed her father about the move to join ISB.

“My parents are more of a sounding board, mentors and friends to me rather than decision-makers,” she says.

There’s a growing trend, says Agarwal of SP Jain, of promoting daughters in the family businesses. “The change of mindset is a positive trend.”

In India, families are grappling with succession, almost bringing in a direct handover of CEO roles between generations and also letting the next generation do their thingManmohan

Tiwana, founder of Wodehouse Capital, feels many of the younger generation of business families would prefer to be investors rather than involved in the empire

Many scions are relying on further education to keep their family businesses safe from technological, regulation or competitive threats

At times, it’s better to stick to people within the company for smooth successionSUNIL DUGGAL CEO, DABUR INDIA

How loosening reins of control has helped consumer products major Dabur build a unique relationship with an ‘outsider’ management and emerge as a professionally-run company in the truest sense of the word over the past two decades

Back to the ClassroomRajiv Singh

Why business scions are going to B-school

The Journey so Far1997 Dabur hires McKinsey to devise a growth plan; the consulting firm suggests hiring professionals from outside the familyNov 1998: Ninu Khanna joins Dabur as its first professional CEOJan 2002: Khanna quits as CEO; Burmans back in saddle for the next few monthsApr 2002: Sunil Duggal joins as CEOJuly 2017 Hunt on for Duggal’s successor

What Worked for DaburWillingness to hand over control of the company to professionalsStaying out of the daily affairs of the companyCreating a Family Council for family members to discuss their own ventures, and sticking to a Family ConstitutionHiring a CEO from within the company well versed with the culture of the organisation

Home Away from Home

Rajiv Singh

Suman Layak

It’s very difficult to move out but one has to do it at the right timeAMIT BURMAN VICE-CHAIRMAN, DABUR INDIA

There were some hiccups in the initial phase. But the family went in for a course correction, and things have been smooth since thenANAND C BURMAN CHAIRMAN, DABUR INDIA

Family Business

Planning for the Scion: How to do itSet aside ̀ 100 crore and mandate bankers to find two fast growing businesses for the two next-gen members to take over as they come of ageInduct children into the family business for five years for experience and then hive off an arm for them to own and manageCreate a family office and let the children be occupied full-time managing the family’s investments

SOURCE: Wodehouse Capital

Size MattersHOW SIZE OF BUSINESS TENDS TO DETERMINE SUCCESSIONSub ̀ 1,000 crore companiesStill entrepreneurial and likely to introduce children into business with a direct line of successionBetween ̀ 1,000 crore & ̀ 10,000 croreNext-gen members more likely to be keen to move out or be on boardsAbove ̀ 10,000 croreOlder generation tend to play the role of mentors and strategic advisors even if they have executive roles

SOURCE: Grant Thornton India

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A Family That Deleted the ‘Ctrl’ Button

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