How next-gen scions can steward family businesses amid global uncertainties

This article was first published in Forbes India magazine, May 29, 2025. Co-author: Kavil Ramachandran; https://www.forbesindia.com/article/leadership/how-nextgen-scions-can-steward-family-businesses-amid-global-uncertainties/96070/1

Family enterprises—which underpin economies worldwide by contributing over 70 per cent of global GDP and employing nearly 60 per cent of the workforce—now find themselves at the epicentre of a transformation unlike any before. The convergence of rapid technological advances, mounting climate imperatives, shifting consumer values and geopolitical realignments have all created what strategists term a BANI environment—Brittle, Anxious, Non-linear and Incomprehensible. For family firms long defined by multi-decade horizons and incremental evolution, the imperative falls on the incoming cohort of heirs to merge institutional memory with digital fluency, entrepreneurial daring and a restless drive to convert disruption into renewal.

The Shrinking Horizon

At the heart of the disruption challenge lies the brutal acceleration of product and corporate lifecycles. A report by Innosight showed that in 1965, the average tenure of a company in the S&P 500 exceeded thirty years; by 2016 it had fallen to twenty-four and is forecast to contract further to twelve years by 2027. For successor generations accustomed to inheriting legacies built over lifetimes, this shrinkage demands a marathon-sprinter’s mindset: heirs must deploy rapid experimentation, continuous skill-building and lean decision loops to stay ahead of digital-native rivals, even as they preserve the family’s enduring values.

Bruce Lee used to say, “Empty your mind, be formless, shapeless, like water,”—advocating a state of perpetual readiness, adaptability and strength. And he was not talking only about martial art! 

Future-Focused Strategy in Action

Consider two of India’s most venerable family business groups. The Tata Group, founded over 150 years ago, has become as much a technology and services conglomerate as it is a steel manufacturer. Its digital arm, Tata Consultancy Services, invests billions in cloud computing and artificial intelligence to offset the gradual commoditisation of legacy offerings. Mahindra & Mahindra, similarly, has pivoted from tractors and utility vehicles to become a global player in electric mobility, forging partnerships with tech firms in Silicon Valley to accelerate R&D. Heirs at Tata and Mahindra did precisely what the moment demanded. Those were essential moves to catch up with rapid technology shifts and establish footholds in adjacent markets.

Today’s successors confront an entirely new mandate: they must trust their own capabilities and provide steward leadership to drive transformation within their families. By leading from behind, they shape outcomes across multiple fronts. Family governance, business strategy, entrepreneurship and wealth management are among the areas that demand fresh perspectives.

 

Each circle in the chart ‘Nextgen Leadership’ represents a core dimension of successor stewardship:

• Strategist - As a custodian of the future growth of the business, a successor has to envision the emerging environment and chart the family firm’s horizon by scanning technological trends and market shifts to align capital allocation with emerging value pools.

• Professional Manager - They must facilitate practice of professionalism as a value by benchmarking and introducing best practices such as clear KPIs and process rigour alongside family executives, and elevate operational performance.

• Serve Society- Business families have all along been connected closely with the society they live. Nextgen must help shape philanthropy, ESG and community partnerships to reinforce the family’s and enterprise’s social  relevance and long-term reputation.

• Value / Heritage Custodian - As family stewards, younger generation must lead by translating founding values and principles into actionable norms, ensuring that legacy values guide strategic and cultural choices.

• Groom Nextgen - They should not wait for the seniors to groom them; rather the initiative must come from them since they are the change makers.

• Family Governance Custodian - Nextgen must take upon themselves the responsibility to enforce transparent governance in the family. They will thus be living by example the principles and policies of high quality family governance. 

• Wealth Creator / Protector- Younger generation understands the significance of structured wealth management more than the seniors. They must help balance bold investment in growth areas with prudent risk buffers and diversification strategies to preserve intergenerational capital.

In sum, whereas the previous cohort sprinted to catch the wave of disruption, today’s successors must surf the entire storm.

Governing with Agility

Amid relentless disruption and ever-accelerating change, robust governance becomes the linchpin of resilience. Effective governance now demands far more than static rules—it requires a learning culture that reconceives the family’s role in business. Central to this is comprehensive family education: each member must grasp how the family’s identity and purpose interact with a swiftly shifting environment. Traditional models built on extended-family norms no longer suffice; in nuclear or geographically dispersed families, notions of fairness and togetherness must be re-negotiated. Accordingly, family policies, processes and practices should be revisited collaboratively, with formal forums to debate and codify new charters that foster harmony and mutual accountability.

Equally important is the recalibration of governance vehicles. The Family Business Board remains the enterprise’s guardian of strategy and risk, while the Family Council safeguards cohesion by enforcing the charter and resolving disputes. The Owners Council, however, assumes an expanded remit: it must incubate entrepreneurial initiatives through transparent venture-financing guidelines, clear ownership stakes and performance-linked rewards—effectively treating new ventures as corporate-venturing projects. In all bodies, respected independent directors are essential to uphold rigour, test values of trust and transparency, and temper the inevitable interplay of logic and emotion. In practice, many group structures will evolve into holding-company frameworks, with each subsidiary managed as a strategic business unit under its own performance matrix. This architecture recognises that heirs often seek both individual agency and collective purpose—and it ensures that “I-Me-Mine” ambitions remain anchored within a unified family vision.

Generational Duality

Interwoven with strategy and governance is the delicate balance between senior-generation stewardship and next-generation dynamism. The former brings deep institutional memory, extensive networks and a long-term orientation that has underpinned stability for decades. The latter embodies fluency in digital ecosystems, comfort with ambiguity and a restless pursuit of new value pools. When harnessed constructively, this generational duality can become a formidable competitive advantage. The story of Lavanya Nalli, who transformed and expanded her family’s ninety-year-old silk business into a thriving e-commerce platform within five years, exemplifies how next-generation initiative can amplify a legacy brand’s reach and relevance.

However, generational tensions can turn unpleasant and acrimonious if roles and expectations are not clearly defined, underlining again the need for next-generation heirs to act as steward leaders. They cannot afford a narrow, self-righteous stance in such a dynamic world. They must recognise that their future is at stake and that it is their responsibility to ensure continuity and change simultaneously. Leadership and ownership succession remain among the trickiest challenges in the life of any family business. Cyient, a multi-technology company, has successfully undergone major changes in its business portfolio during and after the transition of leadership from Mohan Reddy to his son Krishna. Cyient has been adapting proactively to disruption.

Impact and Purpose

If governance forms the backbone of resilience, then a compelling social and environmental purpose defines the family firm’s licence to operate. As regulatory regimes tighten carbon-emissions norms and stakeholders demand rigorous ESG performance, heirs can no longer defer sustainability to a later date. Too often, family enterprises underinvest in low-carbon strategies even as climate-related liabilities mount. 

Successors must therefore educate the wider family on the business case for embedded sustainability—aligning priorities, capital allocation and executive incentives with long-term ecological stewardship. Moreover, a unifying purpose binds the family together; without it, cohesion frays and the risk of fragmentation rises.

Heightened scrutiny of corporate conduct and social impact are reshaping brand narratives. Younger consumers prize purpose-driven enterprises, and family firms enjoy an inherent credibility if they can demonstrate consistent community support and ethical probity. Next-generation leaders must therefore embed social and environmental impact at the strategic core—transforming purpose from a peripheral concern into a driver of resilience, reputation and sustained growth.

The FAMILY Framework for Resilience

Underpinning all these practices is a holistic FAMILY framework, integrating six mutually reinforcing pillars (see chart ‘Family Framework’). This framework operates not as a static checklist but as a living operating system—one that demands rigorous discipline, continual upskilling in new domains and regular recalibration. At its heart lies the proactive agency of the next-generation, ensuring a genuinely future-focussed orientation (see chart ‘Dynamic Family Framework’). 

Dynamic Family Framework

 Disclaimer: Generated using AI

In conclusion, the nextgen in family enterprises has the responsibility to take on the role of the nerve centre of renewal. Externally, they need to reconceive their business models through the lenses of digitalisation, sustainability and global agility. Internally, they must drive an agile governance and talent ecosystem that unites generational wisdom with new-economy dynamism. The FAMILY framework—with its emphasis on future orientation, governance agility, meritocratic culture, purpose fidelity, financial prudence and generational inclusivity—offers a practical roadmap.

Stewardship in today’s turbulent seas means more than preserving tradition: it requires embracing change as a source of renewal. As Bruce Lee taught, true mastery demands speed, fitness and an unencumbered mind ready to flow like water. Only by dancing on a globe in rough seas—ever ready to pivot, learn and hold fast to enduring values—can family businesses convert the pressures of disruption into engines of sustained growth. In this new era, those who master the art of agile resilience will not merely survive; they will redefine what it means to endure.

Tricks to ensure the next generation becomes capable to take over the family business

This article was first published by the Economic Times, on November 15, 2022, Co-Authors: Sougata Ray, Navneet Bhatnagar

https://economictimes.indiatimes.com/news/company/corporate-trends/the-tricks-to-ensure-the-next-generation-become-capable-to-take-over-the-family-business/articleshow/95529582.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Leadership succession is a critical transition for family-controlled businesses. Successor selection is a crucial decision that determines the future strategic direction of both the business and promoter family. In practice, family businesses often do not realize the need and importance to plan for succession. Some that do recognize it, continue to postpone that decision. This happens primarily due to three reasons. First, often the incumbent leaders are engrossed in operational aspects of the business and do not feel an urgent need to plan for succession. Another reason, especially with large promoter families, is that the complexity of family dynamics and tangled interface with the business, render succession, a tough decision to make. Third, and most critical, is the lack of preparedness of the next generation leadership, which makes the incumbent leader hesitant to pass on the baton. This is often reflected in our interactions with senior generation participants of our executive education programmes for family business leaders. Senior family business leaders express their reluctance to transfer leadership charge as they lack confidence in the capabilities of their next generation members.

It is important to note that succession is not an event but a process which needs to be planned for years in advance. Promoters of a few large family businesses in India have experimented with non-family successors. However, successor choice for most family firms is often restricted to the family talent pool, which is limited to the family size. While non-family businesses can quickly replace a non-performing leader, for a family business this is not so easy because of kinship ties and lack of alternatives. For a next-generation family business successor, failure costs the survival of both the business and family. Hence, given the high cost of a failure, an incumbent family business leader must not only plan early for succession but also take effective measures to groom the next generation members. This is the biggest succession challenge family businesses face today.

Next generation leadership building takes time and careful planning. It requires diligent cultivation of mentee-mentor relationship between the senior and younger generation leaders. Our research studied 19 successful cases of inter-generational leadership transitions since 2004 in large Indian family businesses. We traced these transformational journeys to identify crucial leadership building measures adopted by these family businesses. The study found that these next generation members followed a systematic development pathway, which equipped them for the leadership role. These leaders were exposed to the family business and its operational challenges at an early age. After their graduation, they joined the family business at middle management level. They gained experience in business operations and developed an understanding of ground-level challenges. They also learnt manpower management and interpersonal skills. In the subsequent phase, they went to world-class institutions to obtain a business management degree, which equipped them with knowledge of strategic frameworks and leadership capabilities.

A critical part of this journey was the work experience they gained in large international organisations after obtaining their business degrees. Working outside the comfort-zone of their family business made these next-gen members independent business decision-makers. It built their leadership strength as they had to prove their capabilities and bear the consequences of their decisions. After 2-3 years of working outside, they joined the family business at senior leadership level. During this phase, they worked closely with family and non-family mentors. They understood the strategic and leadership challenges of the business. They became effective change agents, improved legacy systems and practices, and led their business to the next level of growth. Proving their leadership mantle within and outside the family business, with diverse work experience in India and abroad, these next-gen members earned respect and acceptance from internal and external stakeholders. In a span of 5-8 years, they took complete leadership charge. The senior generation leader stepped out of the executive role and continued to provide strategic guidance.

For succession to be effective the next-gen members must have the ability and willingness to take on leadership responsibility. This can only happen when they are equipped with a wide range of knowledge, experiences and capabilities. Structured training and outside work experience play a very important role in leadership development. Business families that plan early and take timely measures to groom their next-gen members, can implement effective intergenerational leadership succession. 

Directors’ competencies: A tall order for India Inc

This article was first published in the Economic Times on August 08, 2021. Co-author: Kavil Ramachandran; https://economictimes.indiatimes.com/news/company/corporate-trends/directors-competencies-a-tall-order-for-india-inc/articleshow/85202226.cms

Recent discussions on the failure of corporate governance and how independent directors (IDs) can be effective have raised concerns about the qualifications and competencies of independent directors (IDs). The implicit message is that IDs with “lower” competencies may be failing in their responsibilities as the custodians of the overall interests of stakeholders. Do the directors of India Inc possess such competencies? Are these competencies enough? Further to the recent order of SEBI related to IDs, in this article, we examine the competencies of the Board of Directors (BoDs) of firms listed on the NSE, as measured by educational qualifications of the directors. We recommend the need to have other criteria for determining competencies of IDs.

Qualifications

As per data from Primeinfobase, 93.75 per cent of directors of firms listed on NSE are at least graduates. Majority of the directors (69.08 per cent) have post graduate technical qualifications. MBA is the single most popular degree at 26.56 per cent directors being management graduates- 16.27 per cent of them from the IIMs. CA, CS, ICWA or LLB come a close second at 24.38 per cent while 21.21 per cent of the directors are engineers. A few of them even have an MBBS degree (1.17 per cent). However, instances of corporate governance failures even at large corporations in India have highlighted that despite the highly qualified pool, corporate governance is wanting. Therefore, qualification does not necessarily mean a good fit. 

Diversity

More effort needs to go into identifying the right people who are a) at least in sync with the latest developments in their own areas of expertise, if not ahead of them, b) are not rubber stamps and not afraid of voicing their opinion, and c) bring diversity to the board discussions. Composition of the board is very important. A board that comprises all engineers or all MBAs or all CAs, while highly qualified, will have no diversity. Similarly, it should also evaluate the requirements of the firm depending on the life cycle that it is at. 

Values

Infosys co-founder Narayana Murthy once openly spoke about his spat with the first non-promoter CEO of Infosys, Vishal Sikka. “If the core values of Infosys such as “leadership by example, fairness, transparency, accountability” were “thrown to the dust, then you have to stand up and voice your anguish and disappointment”, he said. The BoDs need to possess similar attitude or value systems and the skills to be independent, so that they can voice their opinion when needed. Values of a person is not easy to assess and for the regulator to implement. But, SEBI can put some guidelines or conditions for the large corporations to start with, say companies with Rs 10,000 crore plus in revenue, where at least the IDs must have a dossier compiled to confirm that they have demonstrated their independence in thinking and acting, before being inducted into the board. 

Commitment

Often, IDs hold multiple board positions, advise various organizations, and are even associated full time with their own businesses or are employed somewhere. With so many other activities claiming their time and mind space, they may not devote enough time to fulfil their board duties in spirit. It is in the interest of the firm to demand time and guidance from the directors. Hilti Corporation, known for its values, culture, innovation and governance, demands that the board members devote a minimum of 20 days every year to Hilti affairs. In Hilti, a board member’s time commitment could extend up to 40 days if he or she is involved with the executive board, employee activities or any special projects. The remuneration flexibility that SEBI has mentioned in their regulation should make it easier for the firms to pay adequately to the BoDs. 

Conclusion

In essence, there has to be a change in mindset while companies are determining who their IDs should be. SEBI’s order included a more elaborate and transparent process to be followed by nomination and remuneration committee while selecting candidates for appointment as IDs. The amendments also enhanced disclosures regarding the skills required for appointment as an ID and how the proposed candidate fits into that skillset. Determining the “skills required” is tough yet doable. Detailed background check including demonstrated commitment to the practice of values will help create a pool of IDs with the right compentencies. Corporate governance and society’s wealth will be the losers if this challenge is not addressed soon. Industry champions must work with SEBI to set a new threshold for anybody to qualify to be an ID. As Ludmya "Mia" Love, American political commentator and the first black person elected to Congress from Utah and the first black woman elected as a Republican, says, “Difficult things aren’t easy, but they’re worth it."