Making family businesses last

Through 12 case studies and plenty of anecdotes and nuggets of wisdom strewn throughout, Beyond Three Generations is a book that every founder seeking longevity for their business must read

Beyond Three Generations: The Definitive Guide to Building Enduring Indian Family Businesses

Author: Navas Meeran, MSA Kumar, Firoz Meeran, George Skaria

Publisher: Harper Business

Pages: 215

Price: Rs 599

Few family-owned firms anywhere in the world last beyond three generations. The late Andrew Carnegie, who built up US Steel and became the richest man in the world for some time, had coined a phrase for it:  It takes three generations to go from shirtsleeves to shirtsleeves. Other countries have similar proverbs. The assumption is that the first generation starts the business, the second builds it up, while the third generation of the family squanders away the legacy.

What goes wrong and how can a family-owned enterprise thrive beyond three generations? Like several books had attempted earlier, Beyond Three Generations seeks to answer those questions and give tips on how to ensure longevity, especially for family-owned and -run small and medium-sized businesses in India. It also looks at how they can scale up from a medium-sized enterprise to a big business.

It is not a big book — a mere 215 pages — but is unusual in that it gives equal billing to four co-authors. Two are brothers — Navas Meeran and Firoz Meeran — the chairman and vice-chairman of Kerala-headquartered Group Meeran, respectively. They represent the second generation — their father, the late M E Meeran founded the enterprise called The Eastern Condiments Group, which has evolved into Group Meeran now.

The third co-author is M S A Kumar, a family business adviser and CEO coach, who has helped many family-run businesses to scale up beyond Rs 100-150 crore revenues, where these often get stuck.

The fourth co-author is veteran business journalist George Skaria who held senior editorial roles in multiple business publications, including Businessworld and Business Today.

Though Professor Kavil Ramachandran of ISB is not one of the co-authors, he provided the co-authors with valuable advice from time to time.

While the book looks at family businesses in general for lessons, the focus is particularly on how small and medium family-run businesses in India manage after a couple of generations and also once they have reached a certain size.

They examine in particular 12 case studies —  Group Meeran being one of them. The others are a mix of well-known names as well as those that do not attract much attention from mainstream business newspapers, though they have all built up significant organisations and businesses. The case studies include Aravind Eye Care System, OmniActive Health Technologies, Evolve Back Resorts, Popular Automobiles, Sandu Pharmaceuticals and others.

The businesses profiled are in very different sectors and geographies, and have little in common except for founders who believed in hard work, ethics and in the way their descendants have kept true to the founder’s principles. Some entrepreneurs started from scratch with little capital or resources while others were somewhat luckier to have got some share during the partition of an older family business group.

In some cases, the second and third generation of the family have grown by building up the core business started by the founder and also building adjacencies while in others there has been a sharp pivot.

The co-authors bring out a lot of issues that crop up — from problems when family members have ambition but not the capability, to the issues that might become evident when a professional is given charge of the group.

Sometimes, despite having an impeccable resume, a professional may not work out. It may be the fault of the entrepreneur or the family members who could not let go fully. Or it could be simply that the professional was used to working in a very different environment and despite all his ability and qualifications, made little effort to understand the ethos of the new company.

There are plenty of interesting anecdotes and nuggets strewn throughout the book. There are cases where family dynamics have resulted in havoc. Sometimes, a family member is given charge but proves to be inept but no one knows how to move him out or reduce his role. In other cases, there is a clash between the ideas and management styles of generations within the family.

Beyond Three Generations offers plenty of strategies and ideas to deal with different situations, including a list of things not to do. They are good and the book is quite easy to read. Some solutions appear to be little beyond common sense advice but are difficult to follow. Others offer insights that are often missed.

One of the co-authors, M S A Kumar, gives his Expert Takes in chapters, breaking down the issues involved, making it easier to understand and decide on the solutions.

The book will be a useful read for all the family businesses that are grappling with the issues highlighted. Eventually though, how helpful the book is will depend on how willing the founder or family members are to learn the lessons and set their egos aside to find a proper solution. It is, after all, egos, personalities, ambitions, and capabilities that often destroy the business by the time the third generation takes over.

The reviewer is former editor of Business Today and Businessworld and founder of Prosaic View, an editorial consultancy