Shaping Up The Family Legacy: How Do Family Firms Prosper?
Is the new generation joining family-led businesses, well equipped to take the helm?
#Hero's Sunil Kant Munjal, #CEAT's Anant Goenka, #BAGLAGroup's Rishikumar Bagla & #WalchandGroup's Pallavi Jha speak to Tamanna Inamdar. #BQLive
#Hero's Sunil Kant Munjal, #CEAT's Anant Goenka, #BAGLAGroup's Rishikumar Bagla & #WalchandGroup's Pallavi Jha speak to Tamanna Inamdar. #BQLive
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00:00 for this excellent turnout and thank you CII for the opportunity to moderate this panel with an
00:08 incredible group of people really. So this is great. The topic today is talking about family
00:14 legacy, family businesses and how the next generation can take it forward. Now in India,
00:21 at least 75% of businesses are family run, family led. This is something that we as Indians are
00:29 very very comfortable with. There may be some industries where the next generation taking over
00:36 is maybe frowned upon, they call it nepotism in Bollywood, but there is no such problem when it
00:42 comes to Indian industry. It's a rite of passage, it's well respected. The question is that what can
00:49 the next generation do to take forward those values, that legacy at a time when so many things
00:57 are changing. Now to speak on this, of course I have this excellent panel, all of them part of
01:03 family businesses, taking forward family businesses and I would say experts on the subject. So welcome
01:09 to all of you. Let me begin with Mr. Munjal who has literally written a bestseller on how family
01:18 businesses work, the makings of a hero. Mr. Munjal, would you say that the key source, the secret
01:28 source to a successful business is having family involved. Does that help? Is that what makes it a
01:37 success? No, the answer is no. So more and more family-owned businesses are realizing that if
01:50 they figure out or let me roll back a little bit. Mr. Bagla and I were talking about this a little
01:55 bit earlier that it's well known now that by the third generation 94% of the businesses will finish
02:03 or will destroy themselves, family-owned businesses, so which is a very significant number
02:08 and therefore there's now research being done is what is distinctive about those 6% which
02:15 continue generation after generation after generation. The first interesting distinction was
02:21 that these are businesses which were able to make a distinction between ownership and management.
02:29 So if I realize that my value and wealth lies in my business, if I'm smart I'll do what's the best
02:37 by the business to make it successful and which may or may not be somebody from my family running
02:42 the business. Now it may seem a bit extreme because traditionally the case has been exactly what you
02:49 said that if you're part of the family it is expected that you will go on and run the business
02:55 but around the world now some of the larger more successful family-owned businesses are putting
03:02 the smartest people to manage the family not necessarily the business because what they find
03:07 is that for the company, for the business you can find some of the smartest, best equipped managers,
03:15 executives, experts to come in and run the business for you. Can that ever happen in the Indian
03:22 context? Let's be honest, the best manager is the one who's grown up in your household.
03:28 So again, I'm not saying that's not a good idea. What I'm saying is you have to be careful
03:34 that it should not be an entitlement that because you're born in a certain family that you have the
03:40 best capability to run the business. That's the point I'm making. It's a slight distinction between
03:45 what you are saying and what I am saying. That's actually a great segue. Let me come to you
03:49 Anant on this. You started off with HUL one year, I think initially in HUL you've gone through the
03:58 grind, risen up the ranks. Mr. Munjal talked about that there shouldn't be a sense of
04:04 entitlement. Did you have to work your way of course to this wonderful position and all
04:09 the success that you have brought your company? I think it was a tough journey for me too.
04:15 So as you said, I worked outside the business for some time and I'd say my first 10 years in
04:21 the group was a lot about skill building and I started off as a territory leader in SEAT after
04:27 that moved to a regional manager role, moved to a supply chain function and so on. So it was a lot
04:33 about learning an all-rounded skill kind of a situation. However, I think there were a lot of
04:39 challenges as well. So every time I change roles, I would often get promoted and all those promotions
04:45 I knew were because of my family name. I would get promoted or kicked up a little bit every
04:51 year and a half, two years and to that extent the challenge that I faced was one of confidence that
04:57 am I moving up because of my family name which absolutely was the case. The second was how do
05:03 I earn the respect of my peers and reportees who may have 20-25 years, 30 years of experience
05:09 whereas I have seven-eight years of experience. So those were concerns that I had for quite some
05:16 time. When I then took over as managing director of SEAT about 10 years after having been in the
05:21 group, I would say that the only time I got confidence was after my initial years of success.
05:28 So when I did take over, there were a lot of challenges in the business, our debt equity was
05:32 two is to one, there were relationship issues with union and management, there were issues with
05:40 customers and over time we were able to resolve some of that and only with that change was I able
05:46 to get the confidence to run the business or to feel that yes I deserve or I'm okay to be here.
05:51 So it's not an easy journey. But that's an exception, I think Ananda and kudos to you for saying that
05:57 these were self-imposed questions where you wanted to prove yourself and question whether you were
06:04 going up the ranks just because of your last name. Was that in a sense also a restriction because of
06:11 higher expectations with seven or ten years of experience, you're expected to lead people with
06:17 20 years of experience, that's also a challenge. No, absolutely. I think it was tough
06:25 and there was a lot of doubt in my own mind but I think this process, I had great mentors, I'd say
06:30 my father helped chart out my career, think about how I can build the necessary skills and I had all
06:38 the necessary support as well. I had great mentors in my bosses who were there, all of them were
06:42 professionals. While I was even doing a sales role in SEAT, I would attend once in a while
06:49 key MNA meetings or key meetings at a group level which would again give me a lot of strategic
06:53 knowledge. So I think as a family member I did have a lot of support during this process of
06:59 grooming as well. So Tamanan, this is the point I was trying to make earlier, this is evolved thinking
07:04 and unfortunately it's not as common as one would like to imagine it ought to be or it should be.
07:13 I think this is very smart thinking actually. I think here the important thing is how to make a
07:21 family person the smartest and the best manager. That is what the family legacy would be all about.
07:28 It does not start in the company, it does not start anywhere but it starts at home.
07:34 The most important role is played by the mothers in forming a child to become a leader. So very
07:43 important I feel is the role of the women in making the family legacy continue because what
07:51 they tell the children is what stays with them for years in the childhood. What fathers say
07:57 comes much later but what mothers say is what stays with them right from their childhood and
08:05 that is what is called forming of a legacy. It is not about family legacy, about money,
08:11 the family legacy is about culture, family legacy is about values which all starts from the mother's
08:18 womb. It is very important to understand this in my opinion. I agree with you about role of
08:24 women, that's definitely a big point but this brings me to the question when we're
08:31 talking about family business, when we're talking about legacy, it has very patriarchal overtones in
08:37 the Indian context and we were talking about this before the session with Mr. Munjal. Indians
08:43 feel great trust for family business names. If there is a XYZ and sons, we know it's going to
08:51 be a trustworthy business and the question is shouldn't it also be XYZ and daughters.
08:56 Pallavi, I'm glad to have you on the panel as well and it's a different story sometimes if you're in
09:05 a family business but not the son, isn't it? I want to ask a question to everybody actually,
09:14 think about it. If you say here's a family scion, what comes to your mind, man or a woman?
09:22 That typically will tell you what the stereotype is and where the bias lies
09:29 and so in my case, as part of the Valchand group, I had to fight a battle to be the first
09:37 girl to get into the group and I had to tell you that I had advisors from other family businesses,
09:44 many uncles and many I mean my father was pretty aged and stuck to the bed so he wasn't so active
09:51 at that point in time but it was a battle to just say I want to stand up and get counted
09:58 and it only happened because we were three daughters and my first two elder sisters were
10:04 not interested and the irony was that I was the only one who was an MBA, everybody else,
10:12 all the sons were graduates. I was the only one who had studied in a foreign university,
10:18 I was at that point in time working with Procter and Gamble. So only one who was actually
10:24 professionally qualified in a sense to enter anything. So yeah, it is, let's agree that there
10:32 is a bias there and I think it's changing. We see a lot of women coming into the family business
10:39 but I also see that if there is a son, there is a little bit of a difference.
10:43 I'd just like to make a point here, this is a very good point Pallavi is making and this is not just
10:51 for industry, it's not just for small industry, it's actually for the world and especially for
10:56 countries like India. First is we need to realize women are the much smarter half of the population,
11:02 it's actually a fact and I've said this often, so I'm going to repeat this, they're
11:08 smart enough to let the men now and then feel they are smarter. So as Pallavi has just told us
11:15 in using different words of course, for the next phase of growth for countries like ours,
11:22 one is going to be use of technology and innovation. The second is getting women into
11:28 mainstream. I think that's going to be a massive game changer for us and the quicker we realize it,
11:34 the better and less painful this transition will be for us. Mr. Bagla, let me come to a point
11:41 that you made about third generation not really being able to take the business forward, it becomes
11:49 tricky by the time you get to generation number three. How do you overcome that challenge because
11:55 you have by that point issues of succession, issues of whether that generation is actually qualified,
12:03 interested, has the same value, do you need to re-look at the business, what do you think are the
12:09 big challenges there? See, I think making of a business is the first most important challenge.
12:18 On what values the business was made, whether they were documented. What we have lost in India
12:26 is history documented. We have the Vedas, we have the Shastras, we don't have it or we have
12:31 forgotten all about it. Let us start writing down everything, let us start scripting down everything,
12:37 typically like Mr. Munjal has written a book on the values of his family, about what his family
12:43 struggles were. When the children really come to know, the generations come to know that what was
12:51 the struggle that the families went through, what really happened in making of a family,
12:56 that is when the fire builds into the belly. Let me put it like this, the fire has to build in
13:04 the belly and it has to continue for generations. The discussion in the home households should not
13:12 be just about, let's have fun, let's go around here, let's do this, let's do that. The discussion
13:17 at home should be of some values, of some purpose, of some culture and that is what will keep the
13:25 legacy going. If that is not to happen, then it is very difficult because of course there is a lot
13:31 of money involved. So the generations will become very easy going and life will be… because
13:36 everything is available. When everything is available, why the hell should I have a fire in
13:41 my belly? Unless you know what is the history, unless you know what are the values, unless you
13:47 are told by your parents, unless you are right from the childhood, you are bred in such a way
13:53 that you are the… you have to understand the values and understand. That is the way how generations
14:00 after generations can continue to keep this legacy going. I think he's made a very critical point.
14:09 Our behavior inside our companies and outside should be the same, it should be consistent. As
14:16 human beings, we have to have the same behavior. So if you have a good culture and good value system
14:22 at home, it's much easier to build a good business by the way and this is proven in some research
14:28 that has been done a while ago in the US. And very often we do this without even realizing.
14:37 We bring up our kids saying, "No, don't do this, don't do this, don't…" rather than letting them
14:43 grow, letting them make mistakes, letting them learn. And also very often when you are telling
14:49 the kid not to do something, you yourself are doing this, kids are very smart. They are like
14:55 a sponge, they will absorb everything. So if you say something and do something else,
15:00 they will learn from what you do, not what you say. And the same goes for the business.
15:05 It cannot be different. You have to have consistent behavior. That's how good businesses
15:09 get built. That's how businesses actually build a legacy which carries on. So if future generations
15:17 are trained not only as good managers, but also good responsible business owners,
15:23 which unfortunately too few of us actually focus on.
15:26 For me, what I have kind of observed is there are two-fold issues
15:35 by the third generation struggles. One is the founder is an entrepreneur, the third generation
15:42 is just a business owner and there's a difference in mindset there. One has grown with building
15:48 something with their hard struggles, the second generation has probably seen it and has imbibed
15:54 some of it and respects it and gives it a different level of commitment. The third generation hasn't
16:00 seen it, they are one generation removed and therefore what they see is the entitlement,
16:05 the ownership and I agree with Sunil, unless there's a specific training to look at the
16:12 business in a particular way, the shift from a business owner to a business leader doesn't
16:19 really happen and that's where the cookie crumbles. Apart from the fact that population in families
16:25 grows geometrically and then the business doesn't grow geometrically enough and there are not enough
16:31 assets to distribute and then you have a conflict of power struggles and that's the other reason
16:39 why it crumbles. Absolutely, I mean as famous are family businesses, so are splits in family
16:46 businesses and succession is a true challenge but I'd like your view Anant on what is being spoken
16:52 about the third generation and this point of entitlement and inculcating that idea. I'd like
16:59 to hear your thoughts on that. Yeah, so I'd say it's a little subjective in my view. I think if
17:04 you look at our family business it traces back to the 1830s and I would say maybe I'm the sixth or
17:11 seventh generation in the family which may be that 0.001 percent kind of number but in a way the
17:16 business has undergone change. In the 1830s we were traders, then we became money lenders and
17:22 then we lent money to the British, when the British left they left some companies behind,
17:27 we inherited those companies, those companies many of them don't exist and they've become something
17:32 else and then someone or my grandfather then acquired various businesses so it's undergone
17:36 a lot of change. So has the business continued the way it was? No, it's undergone a lot of change.
17:41 Also between these generations there have been many splits and separations that you were just
17:45 touching upon and so would you say this is the lineage or is another family member? They're all
17:51 different parts of the lineage and separations have happened, most of them amicably but there
17:57 have been separations and there's nothing wrong in that. I can tell you in the case of my
18:03 father and uncle, they were working together in 2008-9, they were holidaying and one day at the
18:12 holiday they got a letter from my grandfather saying I'm seeing too many brothers fighting,
18:16 I'm going to split the business, this is it. They were both shocked, there was a lot of love between
18:22 them and it happened well because they didn't want to do it at that time but my grandfather
18:27 I'd say had the foresight to take that decision and I think the same happened with his father as
18:32 well. My grandfather had three brothers, so to that extent businesses have evolved a lot, family
18:37 members have evolved and changed and separated and to that extent what is the third, fourth,
18:43 fifth generation starts becoming a little fuzzy as well. No, it's not by the way, this is the six
18:47 percent I'm talking about, this is continuity, this is legacy. So you guys are a clear example of this
18:53 and I think this is fantastic, this is what we need more of. Businesses of course must evolve
18:58 by the way, the needs of the market have changed, consumers have changed, preferences have changed.
19:03 So if the business is not evolving, the business will collapse, it will not run. So the unique
19:08 thing about legacy and continuity of family and businesses is both families have to evolve
19:15 and the businesses have to evolve. Absolutely. And that is the best place to be.
19:19 And I completely agree on the point on values. I think everything in the end comes down to those
19:24 values that a mother or a father have put into their children and what you're doing at home and
19:30 what you're doing at work. I want to go a little more in depth on what the experience is like.
19:38 For someone who is born in a business family knows perhaps from a very young age that there is
19:45 a kind of a responsibility that comes with my last name. I may not join the business, if I do
19:51 then this is the benchmark. Many would say that's a great opportunity, you've been born right place,
19:59 right time, you have that opportunity. But are there also challenges, the weight of expectations
20:04 perhaps one. Does it also restrict your room to maneuver or do what you want, Anant first.
20:13 No, I think there is some amount of pressure that is there, more from you put on yourself because
20:21 of the great legacy that you've inherited and you feel very lucky and you want to continue a lot of
20:26 the good work that again your ancestors in a way have done. I'd say the journey as I said was is
20:33 not an easy journey. It is one where outside after every meeting when there is a disagreement
20:39 between you and your subordinates you kind of come back and say did I take the right decision,
20:43 this guy is so much more experienced than me and so on. So those were lots of doubts and challenges
20:48 I would say that one goes through. But I think you have to go through that
20:52 grind and that experience to eventually be worthy of taking over or being an inheritor in a way.
21:01 Mr. Munjal, I'm keen to know your view on that and not just from the perspective that Anant talked
21:06 about where maybe someone who reports into you has a different point of view.
21:09 What if the patriarch or the elder person in the family has a different point of view.
21:14 Is that also a challenge if you want to move in a different direction?
21:19 I can give an example first of what I did. I was given the responsibility actually of helping groom
21:26 the kids future in the family, in the larger family. This is before we did the restructuring.
21:32 We're a very large family by the way as some of you may know. So I spoke to all the next generation.
21:42 I first actually asked them what their aspiration is, what are they looking for and what are they
21:47 passionate about and I encouraged each of them to follow their passion because we have we were
21:53 uniquely blessed as are all the people in this room. We can say yes and no to different things.
21:59 Not a lot of people in the world can. We said if our kids because if you can turn your passion
22:04 into your profession there is nothing better than that. So we encourage them to get the best
22:09 education in their area of interest. First I discouraged all of them from joining the family
22:13 business by the way. Oh is it? Yeah by design. Now tell us about this conversation. So the idea was to see
22:19 who's actually deeply interested, not just falling into that position because they happen to have the
22:25 same last name. So the good thing was actually some of them then chose to do other things. So we have
22:31 a chocolatier in the family, she makes the best chocolate in the country. We have a fashion
22:35 designer, we have one who runs a university. So not all of them actually went into the business
22:39 but many did and we also encouraged the girls to join the business. My daughter
22:44 set up a unique insurance distribution which became the largest in the country
22:49 and some of them went and started doing philanthropy. So we said you pick the area of
22:55 interest and then pursue that and those who wanted to join the family business I said you go out and
23:02 get a job. First you get the best education that you can, go and get a job somewhere else. So one
23:07 of my nephews says, "Chacha can you call so and so he's got a nice job there." I said of course I can
23:12 call him but that's not what I meant when I'm telling you to go and get a job. You better go
23:15 and get it yourself, you're an educated kid. So and he did and I said don't use your last name because
23:21 it's not a very common name so it's easy to figure out which family you come from. So he just used his
23:27 first name but he's actually got a middle name as well and then those who joined the family
23:34 business we give them two options that you either start at the bottom of the company and then you
23:41 climb up. We will give you an accelerated method of climbing up but your appraiser will be tougher
23:46 than for a professional in a similar position and the second option is you take a senior position
23:53 in a troubled business especially if it's losing money or is losing market share or if you want to
23:59 start something independent of our businesses we will help and support you and so we got all three
24:06 cases in the family and again there's no perfect answer to this you have to also feel your way. You
24:13 will make mistakes by the way and that's something you have to allow yourself, allow yourself to learn
24:18 from your own mistakes and then each time to get up and then carry on despite that. So we've had
24:24 every kind of position today if you look at our generation you can almost immediately make out
24:30 who went through the training that some of us did in the shop floor and which ones did not. So it
24:35 reflects eventually exactly like Anant is saying if you've gone through the grind you earn the
24:41 respect, you cannot command respect from people you work with. They will look at you for who you are,
24:47 they will look at you for what you do. Excellent, just one quick round of applause for this
24:53 brilliant method that Mr. Munjal has described. I think it's amazing to first tell them please
24:59 don't join the business and then they have to fight their way back. I think that's very
25:03 inspirational. Pallavi, I just wanted to get your view on diversification in family businesses. Now
25:11 this can also be tricky where the next generation may want to start something new to establish
25:18 themselves but at the same time that may end up diluting the value of the business as well. Is
25:25 that also a tricky sort of path to negotiate? Well, I was just listening to Sunil and I discovered that
25:31 you can be in the business that you're in and also start a chocolate business as well as
25:36 insurance distribution business and it doesn't really come in the way. I think if as business
25:42 owners we look at where we want to create assets and where we want to invest like any other
25:47 business investor, I think that shouldn't matter. How well we run those operations is really the
25:55 focus I would think. I think it's a great idea to see scaling up or scaling down is a big decision
26:04 in family businesses. When you talked about downsizing or evolving into one from one
26:10 business to another, there is an element of letting go of the business you were actually in
26:15 and getting into another business and in a way I went through that experience myself.
26:22 I inherited an NBFC and I wasn't having fun with it, honestly. Slowly and steadily I moved that
26:30 NBFC into a dot-com which struggled because dot-com struggled in those days but it led me
26:36 into the business that I am in today and therefore it's a hundred-year-old company.
26:42 Today not doing anything that it was doing a hundred years ago and it's gone through many
26:47 avatars. So I think investing, diversifying is a strategic decision. It's also a function of what
26:55 you really want to invest in. If you think it's a great business idea, go ahead. Mr. Bagla, let me
27:02 come to the point of advantages of family businesses versus professionally run ones and let
27:08 me set some context for it. We're in the era of startups, unicorns, MNCs, venture capital is a big
27:17 part of how businesses are run or you have investors who are keeping a hawk eye on businesses
27:22 as well and a family business and the legacy which comes with it will after all just get you that far
27:29 when it comes to the numbers. Is it still an advantage to be in a family business versus a
27:35 completely professionally run one? It's a very interesting question because there's no one
27:44 answer to this. Everybody has had experiences and let me tell you in my company I had an investor
27:52 who had invested as an equity investor in my company.
27:56 We had a lot of tough discussions because we were going through tough times in business
28:02 but I can for sure say at that point of time I never realized the value that he brought into me,
28:10 my system and my organization. The corporate governance that they brought into the organization
28:17 was absolutely phenomenal and I suggest everyone to understand the value of corporate governance
28:24 and that can only come when there is a strong person holding equity in your company and he's
28:32 asking you tough questions. That's the first point I want to unless there are tough questions asked,
28:38 we by nature say this company is mine, everything is mine. We never consider that a company is a
28:45 separate legal entity and especially when you're running through an MSME, we never treat a company
28:51 as a separate legal entity which is what is the basic essence of any company. So first thing,
28:58 first let me put it like this, management and ownership are to be separated like what Sunil
29:03 first said is the most critical thing. Important for family legacy to continue is to make family
29:12 people capable of being the most efficient profession. That is the exercise that one must
29:18 go through and that is what is the role of the family patriarch. If there are many children in
29:25 the family, he should not have preferences over one with the other. It should be truly
29:33 dispassionate decision as to who's the best. Putra Prem hamesha takleef mein dalta hai. That's a
29:42 first rule of any business and usi mein aadmi apne business ko kya, apne desh ko kya, apne sab
29:51 cheez ko khatam karta hai. This is a story, this is very clearly defined everywhere in our scriptures.
29:56 So most important for us to understand is that there is a huge advantage of running a family
30:02 business provided we can understand the values, ethos, purpose, everything, objectives of doing
30:10 the family business. If not, it is very difficult to run a family business. Family owned,
30:17 professionally managed, family professional, this is the best situation I can think of.
30:23 May I make a comment on that? So two things, a very important point you made,
30:29 one is if we as owners understand or learn to treat ourselves as trustees, that actually makes a
30:40 serious difference to how you operate, how you look at the business. So all of these things
30:45 like integrity etc. then are a much easier given. Of course you have to work at this and it's
30:53 important. You also raised an important point about a patriarch. Let me say those families
31:01 in which the patriarch or the matriarch and it could be either one, is a giving individual.
31:09 It's much easier than to get things to fall into place. If that individual is trying to hold back
31:17 for herself or himself or for a few favorites, then you're definitely in trouble. You're in
31:23 trouble for sure and that's what usually sows the seed for trouble because the distribution of
31:32 businesses which are unpleasant, which start with the fight happen at two times. One is when
31:42 these kind of things happen in the family, two is when some businesses are going down the tube and
31:46 there's huge distinction or finger pointing that you were running this or I'm running this.
31:51 Where you do not look for accountability of performance of members of the family as much
31:57 as you would look for if it was a professional running the business. So what we said was,
32:02 in our case, we would be at an ideal situation when the family members behave professionally
32:09 and the professionals feel they're part of this family.
32:12 Let me take it a little future forward. Since the topic of discussion is also about
32:22 putting in your legacy, etching the family business in posterity etc. Do you see and Anant,
32:30 let me start with you on this. This tradition continuing in changing business dynamics as the
32:38 world is changing the tradition of family businesses, large businesses, family-owned
32:42 family run. Do you see that continuing and what can and should the next generation do
32:47 to take that legacy forward? No, I absolutely see the tradition continuing. It's been going on for
32:56 many years across different countries. You have Walmart in the US, which is a family business and
33:01 so many more. I'd say India has 70%. I don't think it's very different even for developed world,
33:08 whether it's Europe or US. So to that extent, I see it continuing, but it will evolve.
33:12 Some businesses will perish, new businesses will come up. We are now a startup nation. Many of
33:18 these founders may now start passing it on to their kids as they become older. So to that extent,
33:23 I see it continuing. I think it can evolve where now there is a separation to a certain extent
33:30 between professionals coming in, ownership and management to that extent. So there is that shift
33:36 that can happen over time. And I think it is again very subjective to that business, to that person,
33:42 to life decision that an individual may take as to what they want to do and so on. But I think
33:48 family businesses are clearly here to stay. By the way, when we're talking of the challenges
33:53 of family-owned businesses, please don't, none of us should be under the mistaken impression
33:57 that family businesses are declining in terms of number and their importance. Around the world,
34:03 and I'm echoing the point Anant made, the largest number of job creation, growth,
34:10 innovation, even tax payment in most countries in the world comes from family-owned businesses.
34:16 Absolutely. Their importance is not going away. No, when I say challenges, I mean from
34:22 the individual's perspective. From the individual's perspective where it seems like, you know,
34:28 there's an entitlement or that you have everything set out for you, your future set out for you. It
34:34 may not be as easy as it seems. No, but one thing is for sure, the changes taking place, especially
34:39 due to technology, are making all of us take a hard look at what we do and also the way we do
34:46 our business, the way we run our businesses. So, I think we have to adapt and we have to adopt
34:53 technology and the newer ways of thinking and working as quickly as we can. Otherwise,
35:01 the threat to business is real. It is a real threat. So, the smarter companies have now started
35:08 doing two things. One is ensuring that you have a strategic view of the future, try and fold it
35:15 into your business today. And second part, as I mentioned, to put the smart people in the family
35:21 also to manage the family. To manage the family. Yes, there are families now globally,
35:28 family-owned businesses, which have put the smartest people to manage the family rather
35:33 than the business. I'd like to just add a point absolutely on this. I think one thing we don't see
35:39 is the challenges that a family may face. And I met with Mr. Rao of GMR, Mr. GM Rao,
35:46 and he asked me a question that, do you do pipe cleaning at home? So, I said, what is pipe
35:51 cleaning? I didn't understand that. So, he said, no, there are pipes between you and your mother
35:56 and you and your father and our daughter-in-law and a father-in-law. And those are the relationships
36:00 that are there, which often don't get cleaned. And there can be disagreements where you may
36:06 not be talking to each other for some time. There'll be feelings of, you know, whatever past
36:12 hatred, which is always there in all families in some way. And they have a system where you
36:17 get a professional who cleans up this relationship every six months. So, a counselor kind of a person,
36:25 a professional comes in and says, okay, you all talk it out, figure it out, start clean. And those
36:30 are certain issues which plague the family and therefore the business. And those are things
36:36 that are unseen, but he's managed to find a beautiful solution to managing the family
36:42 and therefore the business. Wow, what an exciting and innovative way. I think you need that in
36:47 every family. Incidentally, his initiative started at a CII event we did in Agra for family-owned
36:54 businesses. So, that's when Mr. Rao started doing this work. Let me just take it further to the
37:01 question of what family businesses can now also give back, the larger role they play in society.
37:07 We've also, you know, talked about the businesses growing and it's been in that sense an insular
37:13 conversation about how businesses can grow, how these families can grow and the kids can get into
37:19 business. What are they doing for society as a large, apart from, of course, being massive tax
37:26 contributors. But is there a responsibility that goes even further, if anyone wants to take it first?
37:33 I'll take it. Okay, I'll tell you something very interesting. My father gave us a value
37:41 which we keep with us. He said that the only way to be happy in life
37:53 is while doing business, is to provide delight to five stakeholders.
37:58 And those five stakeholders, he said, was the customers, the vendors, employees, government
38:07 and society. I asked him this question, that why are you not considering delight to the shareholders?
38:14 He said, why do you need to delight the shareholders? If all these five are delighted,
38:19 you're automatically delighted. Why are you doing the business? Are you doing the business for the
38:24 society, welfare of the society? Or are you doing the business for yourself? Profit is the result of
38:31 the actions that you take while doing the duty of providing delight to all these five stakeholders.
38:38 This is how we define the values of our corporation, of our company. With this, we realized
38:46 one thing, which was very important, that all these people are society. And if you are delighting
38:53 the customer, you are doing a very simple thing, minimum input, maximum output, you are doing the
39:00 best cost, best quality. If you are delighting the vendor, you are delighting another group of people,
39:08 you are keeping them enlightened with what is your need, helping them make best cost products.
39:16 You can work with the vendors to reduce their cost, not get into cost cutting, but cost reduction.
39:24 And that is a service to the society. Imagine $1 saved in the vendor end, $1 saved in your
39:32 factory shop floor is $1 saved for the country. This is what we learned from him. And this is
39:40 what is called giving back to the society according to him. Of course, there is philanthropy, there is
39:44 all these things, but that everybody does. Profit is a part and parcel of the Indian mentality.
39:53 That is done. But what is most important to give back to the society is this cost reduction,
40:00 value increase. This is the kind of things that we must do. Providing delight to the employees is
40:06 to motivate them to work hard. And this is according to us has helped us in a very long way
40:13 in creating value. Please note one very important thing. My father started this group at the age of
40:20 60 with 5 lakh rupees only. That was the beginning of my group. That was the only money we had in
40:27 our family. With that we have come a long way with these values that he gave us. So what I'm
40:34 trying to say is that giving back to the society is not just giving back donations, charities,
40:40 but also efficiencies built in into the system. That is what we call as giving back to the society.
40:46 You know, we are talking about legacy actually of family businesses. And I think everybody needs
40:55 to really review why they're in the business they're in. What is their purpose? And I think
41:01 that's so well articulated by Rishi because you got to understand that you're not just,
41:07 you know, so producing tires or you're producing parts or components for making more money,
41:14 but it has a larger role to play in society. So I think understanding that purpose relates
41:21 to the value and the values that are going to see you through the generations. So I'll give you my
41:26 example. The Walton group has traditionally been in the space of infrastructure and services like
41:33 that. Building bridges, dams, you know, pipelines and heavy engineering, that kind of work.
41:41 I do a completely different story. I train people, I skill people, that's my business.
41:49 For me, the continuing factor has been building the national infrastructure. I said, you built the
41:54 hard infrastructure, I built the soft infrastructure. So that has given our organization the
41:59 purpose and I see a great alignment with what Walton group always did. It's a very radically
42:05 different business. And I think that's one part of redefining your purpose and looking at
42:11 your business in a larger way and the impact it has on society. The other way to look at it is
42:17 that traditionally family businesses, and you'll see all the original groups, always had a part of
42:23 their shares, company shares given to a trust. So the more you business, I mean, the more you
42:30 prospered, more dividends went in, you got the funding and you did all your philanthropy through
42:35 those trusts. So philanthropy, I agree with Srishti, is inbuilt in the Indian entrepreneurial
42:41 landscape. And I hope that in today's day and age, where everybody's talking about the triple
42:46 bottom line and ESG and sustainability, that's even got to even more important. And I think the
42:55 vehicle with ensuring 2% of your net profit goes into it, we can do a lot more with it and give
43:01 shape to that spend. I want to take on from what both of them have said. The habit of the culture
43:11 of giving in India is not new. But large organized giving of recent times is very new.
43:18 We have been giving but in an organized fashion to have a high impact, I think
43:27 needs more attention than it's getting even today. What we started doing was we said our non-profits
43:34 will run exactly the same way as our companies run. We're involved with education, actually I
43:40 personally spend a fair bit of time on some of these now in education and healthcare, clean
43:47 drinking water, gender issues, arts and culture and a few other things of skilling, the
43:54 point that Pallavi is making. It's important to build the nation and to build the future of the
44:00 nation. Each of these has a role to play. If you just give money, there's a chance some of this
44:08 will get done well and some may not. But because we've learned by running large enterprises, small,
44:14 mid-sized and large enterprises, there is a certain amount of management technique to doing things
44:21 efficiently and productively and well. I think it's important to deploy those resources also
44:26 in these areas. So we've actually now tried to turn these, so we have a foundation
44:33 which focuses and works in the arts for example. It runs probably the largest interdisciplinary
44:40 arts festival in the world now and incidentally the team of the foundation team is 35, 32 of the
44:47 35 are women and young, smart, very passionate and they do an amazing job. We are now building
44:55 a permanent establishment to focus on every art form on one campus, on every aspect of the entire
45:04 ecosystem of every art form at one place through 20 institutions co-located and also co-dependent
45:10 by design. That's the other thing we work on is interdisciplinarity and everything that we do now
45:16 we focus on, we try and avoid a singular focus. So including teaching in our university
45:22 is multidisciplinarity, this is the underlying theme in all of these and I think it's important
45:27 because that builds your society and that builds your future. Do you want to come in on what is
45:36 the legacy beyond being very profitable and good at what you do? Do you think that there is a larger
45:42 responsibility? No, absolutely. I think we're very lucky where we are and where we've come from and
45:48 it's an important part of our duty to give back and it's not only the social work but I think
45:52 the whole element of purpose comes in. For us our purpose is to make mobility safer and smarter
45:58 every day. So we do think about are we spreading the message of safety, there's so many deaths that
46:03 happen. So as a tyre company it is our responsibility to make sure tyres are safer and that is what we
46:08 found that is the biggest need of our customers as well. So one is the social part of it but I think
46:15 on top of that having every company having a strong purpose becomes very important. On the
46:21 social part of it I just add that so my wife runs that division and very much like Mr. Munjal,
46:27 I think they're doing a much better job than even the corporate is doing. All right, on that note
46:34 I'm going to wrap up this excellent conversation and thank all of you for very frankly sharing your
46:39 own stories, challenges, experiences which I think will be inspirational for anyone watching or
46:46 listening to this. Whether you're part of a family business or aspire to start one or even a
46:53 professional, these are some values that are truly universal. Thank you so much. Thank you.
46:58 Thank you very much.
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