The Business of Family Business - Leaving a legacy of enduring leadership

2. Mirza Yawar Baig
Opening the world, one mind at a time©
Work Experience:
 International Speaker, Trainer, Author, Coach, Leadership Consultant
with 16 years in Corporate General Management, 28 years in Training
& Organizational Development, specializing in Family Business
Consulting & Entrepreneurship, 24 books
Director / Professional Member:
 Center for Conflict Resolution & Human Security
 Indian Society for Applied Behavioural Science
Entrepreneur:
 1994: Founded
Education:
 IIM-A , P-CMM®, MBTI©, WSA©, ISABS
Books include:
 Hiring Winners
 Present Your Way to the Top
 20.10.2010-55
 The Business of Family Business
 An Entrepreneur’s Diary
 Leadership is a Personal Choice
Member Consultant Panel:
USA
 GE Corporate University, Crotonville, NY
 AMA International, New York, NY
 Andersen Corporate University, MN
India
 SVP National Police Academy, Hyderabad
 SSB Academy, Gwaldam, Uttar Akhand
 LBS Academy of Administration, Mussoorie
Clients Include:
GE, Oracle, Motorola, Microsoft, IBM, Digital-Compaq, National
Semiconductor, Unilever, BSNL, Tata Indicom, Colgate, Asian Paints,
Siemens, Wartsila, MphasiS, CavinKare, EXL Service, World Bank,
ICRISAT, World Fish, Tata Corporate, J & J, Accenture, Zeneca Seeds,
Shanta Biotech, Advanta, Reuters, Air India, Yusuf Bin Ahmed Kanoo,
Olam, Regal Beloit, Reliance World, NIS Sparta, AMKA, Emami
Group, Suzlon, JP Morgan, SEW Infrastructure, LANCO, KAR Group,
Expolanka, Brandix, Utah Group, Rahim Afrooz
www.yawarbaig.com

3. Our Clients include
India India International
CavinKare
Aditi - Talisma
Emami Group
KAR Group
Cranes Software
Bangalore Labs
Suzlon
Lanco
Equations
Reuters
Wild India Camps
NIS-Sparta
Reliance India
Career Launchers
SEW Infrastructure
Seapol
AMKA Group
Dawsons
Checkout
Expolanka
Vidullanka
YBA Kanoo
Rahimafrooz
Olam

4. Oldest family businesses
 Kongo Gumi Construction/Japan: Founded: 578 (Takamatsu
2006), last President Masakazu Kongō the 50th Kongō
 Hoshi Innkeeping/Japan: Founded: 718, 46th generation
 Barovier & Toso: Glass making/Italy: Founded: 1295, 20th gen.
 Château de Goulaine Vineyard, France, Founded: 1000
 Barone Ricasoli Wine and olive oil/Italy, Founded: 1141
 Hotel Pilgrim Haus Innkeeping/Germany, Founded: 1304
It can be done, if there is the will to do it

5. How do they do it?
1. Organization before self
2. Contribution before consumption
3. Conflict: Me + You versus the problem
4. Make good rules collaboratively
5. Never break your own rules
6. Clear headed thinking – not emotional soup
Results come from execution alone

6. The Challenge
Making the critical transition
from ‘Person-Led’ to
‘Process-Driven’

7. 6 – CTS requirements
1. Maintain the spirit of entrepreneurship
2. Create systems to perpetuate what worked for you
3. Open doors for continuous innovation
4. Provide support for new ideas
5. Create a boundaryless work culture
6. Kill bureaucracy
Create a culture of compassionate meritocracy

8. The Family Dynasty – John Ward
Founder
Sibling
Partners
Consortium
of Cousins
Beware the 3 – Generation Syndrome

9. The Negative Spiral
Stage 1
• Compliance > Innovation
• Disagreement = Opposition
Stage 2
• Insiders = Family
• Outsiders = Professionals
Stage 3
• Seeking safety > Risk taking
• Protection > Growth
Influence comes from who you know,
Not from what you can do…!!

10. The Critical Transition
 Move from Person led to Process led
 This is the most critical stage in organization
development
 Your organization’s life & growth depends on how
successfully and quickly you can make this change
Most powerful sign of this transition is how you reward

11. Critical Mindset Change
11
•What can I get out of it?Entitlement
•What can I do for it?Contribution

12. In your family,
which is more
prevalent?

13. Shareholder
Manager
Shareholder
Manager
Shareholder-Manager is the most critical
3 – Critical
Stakeholders

14. CTS parameters
What must families ensure?

15. Survival Matrix
Shared Values
Aspirations
Dead
Break up
Stagnation
Winners

16. Growth Matrix
Support Structures
Entrepreneurship
Dead
Break up
Stagnation
Winners

17. Reflections
∴CTS parameters are:
 Right shared values
 Aspirations based on the shared values
 Entrepreneurial spirit
 Structures to support the above
What’s the situation in your case?

18. 3 – Key Issues
The rules determine the winners

19. 3 – Key Issues
1. Entry and exit rules for family members
2. Succession planning, formal mentoring
3. Conflict resolution – systems and processes
Prevention is better than cure

20. Entry & Exit Rules
Must apply to the family first

21. Entry and Exit rules
 Competence, not lineage
 Contribution, not consumption
 Uniform rules for everyone
NOT
• Entry: If he is born, he will enter
• Exit: If he enters, he will not exit

22. Because owning a plane and flying it are not the same

23. Entry Criteria
 Business success is not a hereditary trait; comes from skill
 High entry conditions that are a credit to those who
surmount them to enter
 People hire like themselves, so who is in will determine
who will be taken in
Make your business an aspirational place

24. Exit Criteria
 What do you do if your son is driving, with you in
the passenger seat and you realize that he can’t
drive properly?
 Just because you own a plane does not mean that
you can automatically fly it
A clearly marked ‘EXIT’ is a safety requirement

25. To take care of
family members
you don’t have to
employ them

26. Succession Planning
Preparing successors consciously

27. 4 – Models
 Moguls and other Muslim rulers in India
 Kill the incumbent and all opposition and cease the throne
 Primogeniture: Eldest rules
 Eldest takes all
 Baniya – Traditional business communities
 Divide between multiple heirs
 Merit
 One who is best for the business: Objective metrics

28. Successor Development
Is a process – not an event

29. Successors must be nurtured
 Succession planning is the name of consciously developing
successors continuously for all leadership levels across the
organization so that not one but several potential candidates are
available for each position
 Successor development will happen only when incumbents can
see a clear timeline and development plan
 Successor development will happen only when it is part of the
KPI of the position holder
Robust successor development is a sign of a healthy culture

30. 6 – Common Myths
1. External candidates are more exciting and promising
2. The successor has to be ready now
3. CEO succession planning is a single-person event
4. What worked in the past will work in the future
5. The successor must be like the incumbent
6. “We have a great internal candidate – we don’t need to look
outside”
How many of these are working in your minds?

31. Successor development
 Will be happen only when
 It’s need is felt in the entire organization
 Career progress depends on it
 You are evaluated for it
 You invest time and resources to enable it
 People can see proof and aspire for it
Serious will from the top is essential

32. Capable Successors
 Must have independent market value
 Leadership track record
 Record of handling crisis – business turn around
 High acceptability among family and employees
 Record of personal commitment and contribution
Being a family member is not sufficient

33. Entry problems
 Old people leaving
 New methods create ripples
 You fear looking bad in comparison
 Systems free you but you don’t know what to do with
your free time
You become your son/daughter’s rival

34. Solutions
 Bring in the successor consciously
 Be prepared for change and that all change is painful
 Welcome all development because you benefit from it
 Find new things for yourself to do and don’t become a
pain for everyone because you feel useless
Beware of your successor’s dua for your Jannah

35. Succession = Survival
 The one who is best for the business must be the
one who leads
 Eligibility criteria:
 Consistent contribution, Future orientation, Track
record, Leadership ability, Dealing wisely with conflict
 What’s the data to support each of the above?
From Person-led to Process-driven

36. Acid test
 Name your successor
 Will he/she pass an audit by an independent
body?
 What happens to you if you can’t name one or if
he fails the test?
GE airplane interview

37. ‘Jeans, not Genes’
 Founders/family members must have retirement dates
and be accountable for training successors.
 Promising youngsters must be identified early and put on
a formal training track.
 All career progress must be based on results alone
Family members must be seen as benchmarks

38. Succession planning
 Raymond Ackerman – “I always pick the best person I can find to be CEO
and the best family member that I can find to be chairperson, and I think
that’s a very good combination. Otherwise you go and perpetuate family
and maybe we don’t have the strength in the family to run those
positions. So we made an absolute conscious decision to look for the
best experienced person we could find – be it from within or from
without – and the best family member, and to make sure the family
member has as broad experience as possible.”
From 4 stores in 1967
To 1076 stores and 50,000 people in 2015

39. Aditya Birla Group (1857)
 Kumar Mangalam Birla (4th generation) took over as Chairman of
the Aditya Birla Group in 1995, aged 28
 Group turnover was $US2 billion and overseas operations
accounted for a very small part of the overall business with
Egypt, Thailand and Indonesia being major centres.
 Under his leadership the group's turnover increased to $40 billion
and it has expanded operations to more than 40 countries. 60
percent of the group's revenues now come from abroad, and
employ more than 130,000 people

40. Succession Planning Strategy
 Deputy Managing Directors for group companies
 Dilip Gaur, DMD, of UltraTech
 Satish Pai, DMD of Hindalco
 Pankaj Razdan, CEO Financial Services business.
 Ambrish Jain, DMD of Idea
 Lalit Naik, MD Nuvo

41. 4 – CEO Selection Questions
1. What can kill our business in the next five years and what’s
your combat plan?
2. What are the opportunities that can transform our business
in the next five years and what’s your plan to access them?
3. Who’s ready to take your position?
4. What’s your Strategic Plan with timelines for the next five
years?
Objective criteria based on demonstrated competence

42. Key Criteria
 All these questions must have ready answers. If he/she
starts to think, when asked, they’ve failed to make the
grade.
 If he/she has not been thinking and writing about these
questions for several years they’re not CEO material.
Same standard for an outside CEO

43. If you can’t take
hard decisions
you can’t win

44. Objective decisions
 The business is not you, your ego, your honor
 A business that makes loss is a charity
 Don’t throw good money after bad
 Shed your tears, but kill the bad decision before it kills you
 Process: Objective assessment parameters
A good businessman is one who can
recognize his own bad decision

45. It is better to cry in a Rolls than to cry in a Hyundai

46. The challenge of dichotomy
Why the transformation is difficult and will
happen only if there is enough sincere will
from the Top

47. Family Business Process Driven Business
1. Family comes first
2. Guaranteed employment to family; automatic
entry
3. Family members can’t be sacked
4. Loyalty to the family comes first and foremost
5. Power comes by birth or by being ‘close’ to the
family
6. Low transparency especially in financial
matters
7. Some people are beyond being questioned on
anything
8. ‘Who’ is usually more important than ‘What’
9. ‘Respect’ is for ‘Who’, not ‘What’
10. Questioning and disagreement is seen as
opposition especially if it is to family members
11. Owners manage whether they are
professionally qualified or not
12. Family members lose their ‘homes’ for a bad
decision
1. Company comes first
2. Employment only to those most suitable to the
position
3. Anybody can be sacked
4. Loyalty is primarily to self and own career, then
to the company
5. Power comes from performance and delivery
beyond expectations
6. High transparency especially in financial
matters
7. Anyone can ask questions to anyone else about
anything
8. ‘What’ is always more important than ‘Who’
9. ‘Respect’ is for ‘What’, not ‘Who’
10. Questioning and disagreement are seen as
essential leadership qualities and appreciated
11. Only those who are professionally qualified,
manage
12. Professionals lose their jobs and call it a
‘learning experience’

48. Please reflect
 How many of the factors on the previous screen apply to
your business?
 If we asked your constituents – customers, employees,
suppliers – would they agree with your assessment?
Because their perception is their reality

49. When a caterpillar looks
in the mirror, it does not
see a butterfly.

50. Transforming by
chance or by choice?
Choosing not to transform
is choosing to die

51. Always from
the top

52. Structure
 What needs to change?
 Why – Why not?
 What is the new proposal?
 Why is it better than the present?
 What do you need and what’s your plan to get it?
 People – support? Resources?
Structure influences behavior – Behavior drives results

53. Division of estate
 Divide shares, not the business
 Don’t disrupt structures
 Change of ownership pattern need not mean change of
operating procedures
 The Family Constitution facilitates smooth transitions
If you rock the boat too much, it will sink

54. Bibliography
 Built to Last Collins & Porras
 Good to Great Jim Collins
 Leadership is a Personal Choice Mirza Yawar Baig
 The Business of Family Business Mirza Yawar Baig
 Hiring Winners Mirza Yawar Baig
 An Entrepreneur’s Diary Mirza Yawar Baig
 Governing Family Businesses John L Ward
 How to Choose & Use Advisors: Getting the Best Professional Family Business; Craig E.
Aronoff, John L. Ward
 Generation to Generation: Life Cycles of the Family Business; Kelin E. Gersick and others.

55. www.yawarbaig.com
Twitter: myawarbaig
Books:
www.amazon.com/author/yawarbaig