Millennials look to revamp old family businesses
- To take their existing companies to greater heights, the younger generation is trying out new ideas
- Being in business with family as a second or third generation has its pros and cons
When Bengaluru-based Chaitanya V. Cotha, the scion of the 150-year-old C. Krishniah Chetty (CKC) Group of Jewellers, joined his family business in 2010, he identified an important market that his family hadn’t given much thought to. “For my father, business to business (B2B) wing of the business was never a focus area," says the 31-year-old.
Owning it up, Cotha got on the road for 20 days a month, meeting potential small jewellers who could sell the CKC products. Within 18 months, the CKC Group started to supply their products to over 200 stores across four states with a team of just nine people.
A lot of change in family businesses stems from the aspirations, outlook and thinking of the next generation of family, according to Ganesh Raju K., partner and leader, entrepreneurial and private business, PwC India. “Young blood is crucial for a family business to keep abreast with changing times, dynamics, business environment, customer outlook, and digital changes," he says, adding that it’s important to encourage this as family businesses account for nearly 85-90% of gross domestic production contribution in India. The PwC India Next Gen Study 2018 on family businesses, that interviewed more than 137 next generation leaders, 45 of them from India, found that even though more than 81 % of millennials have a clear idea on how to take the business forward and more than 89% of them challenge their seniors’ decisions when they feel it would benefit the business. A key component of success for the new generation is a culture that supports their efforts, gives them room to make mistakes and provides for independent decision making.
It’s all in the family
Family support and her father’s open mind was one of the major reasons Suzannah Muthoot, zonal strategic consultant with Muthoot Fincorp Ltd (MFL), was able to implement changes at the regional levels of her company.
Fresh out of college, when the 24-year-old joined her father’s company in 2017, she was told to travel extensively across small towns and villages where the company’s branches had set shop, to gain real on-ground experience. The travel was useful as she found inefficiencies at the zonal and regional levels across functions. “I came back with a proposal to redefine the role of a regional manager, who is responsible for profitability and performance of nearly 70 branches," she explains.
Before 2017, the role of a regional manager in MFL was more of an operational supervisor. Starting with the west zone, Muthoot trained the managers in Gujarat to be leaders—use data analysis to strategically find weak areas, challenges and deploy corrective measures, for each and every branch—and share their learning, real-time, up the management chain. “Once I showed quantifiable results, it did not need much of convincing to implement this nationwide," she says.
Younger generations of a family usually get good quality education from reputed schools abroad and come back with new ideas and ambition, says Kavil Ramachandran, professor and executive director, Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business, Hyderabad. “At home, they are expected to continue to manage existing businesses that are not cool or new enough. On the other hand, their contemporary views or ideas don’t get support or attention. They feel restricted because they are initially treated as ‘children’ in the business," he says. That’s until the “children" prove their capability to the elders.
Proof in the pudding
When 24-year-old Keshav Kalra, the third generation of Dayal Opticals, an optician business in National Capital Region, approached his father with a new venture, he knew he had to bring statistics with him to convince the family that this wasn’t a spur-of-the-moment decision. “I sat with them and outlined my long-term business plan, as if I was pitching for a Shark Tank show," he laughs.
It wasn’t easy. However, he was given the funds as Kalra had spent six years in the regular business and proven his capabilities by working at the offline shops, managing inventory and spearheading fashion procurement and marketing since 2011. He started a new brand, The Monk, in 2017, which specialized in custom-made spectacles for Indian noses.
Being in business with family as a second or third generation has its pros and cons. “When it comes to implementing any new system in the supply chain process or digitizing it, there’s often a pushback from the older generation," says Gurumukh Uttamchandani, executive director of Syska Group, LED lighting business.
Uttamchandani moved from Los Angeles to Pune to join his father’s business in January 2017 and wanted to initiate a vertical for the lighting company—personal care products. “It was quite difficult to convince my father to invest in this sector, as this was a market that was unfamiliar to him," says the 25-year-old.
He negotiated and launched the product initially, exclusively on Amazon. “This tested out the market and proved to my dad that there’s an untapped offline potential for it," he says. Within two years, the vertical, Syska personal care, had spread to over 10,000 retailers. “Once I quantified changes and showed improvement in processes, they were always ready to listen and help me in implementation," he says.
There are several changes that are taking place in these family-run businesses, according to Ramachandran. “Joint families have been replaced by nuclear families, affecting employment, leadership, ownership, new venture creation, education levels and the nature and extent of involvement of women in the business," he says, adding that this very innovation and entrepreneurship spirit is necessary to keep the business successful. “In today’s turbulent business environment, there’s no choice but to adapt, innovate and hit the ground running," he adds. However, the younger generation needs to admit that they’re fortunate to be born into a business family and have a trusteeship responsibility to build it and hand it over to someone to take it forward. Humility and family values can go a long way, Ramachandran says.