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Resilience rooted in culture
Indian family businesses, accounting for 60% of India’s top 500 firms and contributing 25% of the country’s GDP, have demonstrated remarkable resilience, particularly during the COVID-19 pandemic. “Resilience and agility, combined with leadership connections, allowed these businesses to weather the storm,” noted KR Sekar, highlighting how family culture fosters quick decision-making and shared responsibility.
This resilience manifested in concrete actions. Welspun’s response exemplified this approach, with CEO and MD Dipali Goenka sharing how the company established employee healthcare facilities during the pandemic. “Ownership, accountability, and pride define our approach,” she emphasized, illustrating how family businesses leverage their values for operational strength.
Navigating generational transitions
The challenge of succession presents a critical hurdle for family enterprises. “Only one in three family businesses transitions successfully to the next generation,” revealed Parthiv Kamdar, underscoring the urgency of addressing this issue. Deloitte’s findings show that 70% of family businesses fail before reaching the second generation, with 90% not surviving to the third.
To counter these, progressive family businesses are implementing structured approaches. Family constitutions and governance councils have emerged as essential tools for delineating roles and ensuring smoother transitions. These frameworks enable early planning, allowing the next generation to integrate new visions while preserving founding principles.
Digital transformation and strategic partnerships
Modernisation has become non-negotiable for family enterprises. Rishabh Mariwala emphasised the importance of cultural alignment in partnerships, stating, “A win-win with founders ensuring legacy preservation and forward-looking innovation.” This approach has proven particularly vital as businesses embrace Industry 4.0 initiativesAI, and automation.
Welspun’s experience demonstrates the tangible benefits of digital adoption. The company’s implementation of digital tools has enhanced both governance and sustainability efforts, setting a benchmark for other family enterprises. Integrating advanced analytics and cloud computing has strengthened decision-making processes and operational efficiency.
Innovative business models and market adaptation
Family businesses are increasingly adopting innovative business models to stay competitive. The pandemic accelerated this trend, with many enterprises diversifying into new sectors and exploring direct-to-consumer channels. “The ability to pivot quickly while maintaining core values sets family businesses apart,” noted KR Sekar. This adaptability has led to successful ventures in emerging sectors like health tech, edtech, and sustainable products.
Women as drivers of progress
A significant shift is occurring in leadership demographics, with women emerging as key change agents. Legal reforms, including the Hindu Succession Act, have strengthened women’s position with equal property rights. While progress is evident, Deloitte’s data reveals growth opportunities, with relatively few women CEOs in Indian family businesses between 2005 and 2020. However, it’s still lower than the global average of 23.3%which has increased by 3.6 percent since 2022, reducing the timeline toward achieving parity by seven years – from 2045 to 2038.
The Companies Act mandate for women directors in public companies has accelerated this transformation. “Women bring diverse perspectives essential for progressive strategies,” observed KR Sekar, noting their contribution to enhanced governance and decision-making processes.
Sustainable growth and external capital
Family enterprises are increasingly integrating sustainability and ESG practices into their operations. Dipali Goenka describes Welspun’s approach, which demonstrates how technology-enhanced governance creates sustainable business ecosystems. The focus on environmental responsibility has become a key differentiator, with many family businesses leading initiatives in renewable energy adoption and waste reduction.
The funding landscape is also evolving. While traditionally reliant on internal capital, family businesses strategically explore external funding. “The best time to raise capital is when you don’t need it,” advised Parthiv Kamdar.
Building global competitiveness
Indian family enterprises increasingly focus on building global competitiveness through innovation and quality standards. Many invest in research and development, establish international partnerships, and acquire global certifications. This global outlook is particularly evident in sectors like pharmaceuticals, automotive components, and textiles, where family businesses have successfully established an international presence.
A vision for the future
As Indian family enterprises stand at the intersection of tradition and transformation, their path forward requires immediate action. Success depends on embracing innovation while preserving core values. The insights from the Pulse of Indian Family Businesses and Deloitte’s report emphasise that with robust governance, strategic collaborations, and diverse leadership, family enterprises can navigate challenges and emerge stronger, contributing significantly to India’s economic future.
