Indian family businesses: Power of legacy and driving it forward

Depending on the research or analysis you stumble upon, you’re as likely to read pieces on the ‘three-generation rule’ as you are about the ‘three-generation myth’. The three-gen rule postulates that most businesses degenerate by the time the third generation of the family gets into the frame.

In the current Indian environment, this theory—which may have been founded in a localised study in the West—does not hold much water. Sure, there have been storied family empires that have crumbled over the past few decades, but that may have a lot to do with poor governance and increasing competition, both local and global, in a better regulated and liberalised post-Licence Raj era.

There are some other pretty universal reasons why family businesses could fail beyond the second-gen, perhaps the biggest one being that the scions lack the hunger and passion of the founders. Succession battles and resistance to change are a few other reasons for businesses faltering.

From the Tatas, Birlas and Godrejs to a bunch of contemporary Indian business families, there is enough evidence to suggest that private Indian industry has more than survived beyond the second generation. To be sure, a clutch of next-gen descendants is breathing fresh life into traditional businesses, by injecting technology and/or starting sunrise activities.

The Forbes India special package captures the phenomenon of how the next gen is bringing in fresh energy and ideas into businesses that have evolved over decades, even centuries. On the cover are two young women leading their respective conglomerates, both whose origins go back to the late 19th century, on a fresh course.

Ananya Birla is from the fifth generation of a family business whose founding father was Ghanshyam Das Birla and the eldest daughter of Aditya Birla Group Chairperson Kumar Mangalam Birla. The former pop singer is at the helm of a transition that will see a commodities-heavy conglomerate now sporting a more consumer-facing profile. 

Ananya, who founded Svatantra Microfin more than a decade ago, will count on her entrepreneurial instincts as she plays a deeper role in businesses like the recently started Birla Opus in the paints sector. As she tells Salil Panchal, “This is a fantastic time to enter into consumer businesses and we have the right to win there, with the trust factor that we have.” For more on her game plan, don’t miss Panchal’s ‘One Of Her Kind’.

The other woman leading the way is Nyrika Holkar, from the fourth generation of a group founded by brothers Ardeshir and Pirojsha Burjorji Godrej in 1897. Nyrika is the niece of Jamshyd Godrej, chairperson & managing director of Godrej & Boyce, the flagship of the newly-created Godrej Enterprises Group (GEG). GEG, which includes companies in sectors like aerospace and precision engineering, is one of two arms of the Godrej conglomerate that announced an amicable division of its businesses in end-April.

Nyrika, executive director of Godrej & Boyce, has a mentor in Jamshyd Godrej, who may be grooming her to pick up the baton. So what does leadership mean to Nyrika? “It’s about being able to steward the assets of the company, the brand, and leave it in a better place than we found it,” she tells Jasodhara Banerjee. For more on how Nyrika is bringing her collaborative approach to a 127-year-old enterprise, Banerjee’s ‘Next-Gen Nation-Builders’ is a must read.

India is a land of family businesses, and also a must read are those handpicked up by Rajiv Singh, from Pune to Ahmedabad, where the next-gen is driving the family legacy forward.