This is very interesting article and author must be congratulated for a very good work. However, I have a few question marks over the conclusions drawn by the author. Let me at the outset be honest in admitting that critiquing an article is always easier than writing(or proposing) a fresh one. My views should be treated both supplementary as well as contradictory to the views expressed by author. I state following objections and extensions to the article:
1. It is difficult to generalise the conclusions to national level from just one example of Ranbaxy. One company does not make nation and hence to equate problem of company to problem of nation (or indian entrepreneurs) can be unfair, unless author claims that Ranbaxy’s problems are symptomatic of all companies in the country. A counter argument could be if Ranbaxy’s can be equated to nation why can’t Reliance, TATAs, UB and others that have shown global aspirations not be taken as symptomatic of indian aspiration and sustenance.
2. There is a feeling especially among B scool Professors and students (Which is also shared by many others) that professionalization of organization would solve all prolems of family run busineses. Experts around the world have not been able to appreciate to role played by family in bringing up the organization. If professionalization could solve all the problems, none of the professionally run companies would face agency problems. We have to realise that most of organizations come into existence because of family and not instead of family and hence role of family have to be appreciated and admired. Family has played great role in providing resources, motivation and moral support to so many great entrepreneurs, in India and abroad alike. However, it does not mean that family run business do not need to transition or change. Probably after a point in time, professional managers can run the business better than family members. There are numerous examples of organizations which have accompalished that. However, counter arguments can be produced even in these cases. Reliance is predominantly family owned and successfully transforming itself. Samsung, one of the biggest organization in the world, has been family owned. The list is endless, espcieally in Asia. I feel the real issue is not family vs. professional run businesses but the real issue is how to manage change. How to make sure that old ways of thinking are quickly replaced by the new, in an ever changing environment. All organizations have to manage change and change from family run to professional run organization may not be change for better. It is quite posiible for company to change hands from family to professionals and still not do well. Similarly, it is quite possible for family run organization to be continually run by family members and be transformed (Samsung under Lee Kun Hee was a prime example). Similarly, there are professionally run organizations which cannot transition from one period to another. To attribute issue of change management to “family vs professional” may not always be right.
3. The third proposition that I have is family run and profession run should not be treated as two ends, which cannot meet. Family run is not an “antonym” for profession run organization. It is possible for organizations to be both family run and profession run. This is especially true in the light of the fact that it has become a fashion for second generation of family members to pursue some or other program in business management from some of the best schools in the world.There is no lack of examples of organizations which are run professionally as well as by family, atleast in the spirit if not in form. It is high time that business school students, professors and other experts focus their energies on “well run organizations( one can think of better name)” instead of talking about “professionally run” or “family run” organizations.
4. To restate in slightly different words, author claims that Indian entreprneurs not mentally strong may not be entire true as selling of Ranbaxy might have been forced because of a. because of structure of pharmaceutical industry b. structural position of Ranbaxy in the Global pharmaceutical industry, it was weak c.because family issues may not be the reasons for other companies not doing well d. a lot many other companies can do well at global level as economy moves ahead. There can be many others reasons on these line. Ones listed above are just illustrative and not exhaustive.
To sum up, I have two subtantive arguments: First being wrong generalization made by author and second that professional run organizations are always better than family run, I think there is place for both.
Thanks and Regards.
Munish Thakur
XLRI, Jamshedpur
1. It is difficult to generalise the conclusions to national level from just one example of Ranbaxy. One company does not make nation and hence to equate problem of company to problem of nation (or indian entrepreneurs) can be unfair, unless author claims that Ranbaxy’s problems are symptomatic of all companies in the country. A counter argument could be if Ranbaxy’s can be equated to nation why can’t Reliance, TATAs, UB and others that have shown global aspirations not be taken as symptomatic of indian aspiration and sustenance.
2. There is a feeling especially among B scool Professors and students (Which is also shared by many others) that professionalization of organization would solve all prolems of family run busineses. Experts around the world have not been able to appreciate to role played by family in bringing up the organization. If professionalization could solve all the problems, none of the professionally run companies would face agency problems. We have to realise that most of organizations come into existence because of family and not instead of family and hence role of family have to be appreciated and admired. Family has played great role in providing resources, motivation and moral support to so many great entrepreneurs, in India and abroad alike. However, it does not mean that family run business do not need to transition or change. Probably after a point in time, professional managers can run the business better than family members. There are numerous examples of organizations which have accompalished that. However, counter arguments can be produced even in these cases. Reliance is predominantly family owned and successfully transforming itself. Samsung, one of the biggest organization in the world, has been family owned. The list is endless, espcieally in Asia. I feel the real issue is not family vs. professional run businesses but the real issue is how to manage change. How to make sure that old ways of thinking are quickly replaced by the new, in an ever changing environment. All organizations have to manage change and change from family run to professional run organization may not be change for better. It is quite posiible for company to change hands from family to professionals and still not do well. Similarly, it is quite possible for family run organization to be continually run by family members and be transformed (Samsung under Lee Kun Hee was a prime example). Similarly, there are professionally run organizations which cannot transition from one period to another. To attribute issue of change management to “family vs professional” may not always be right.
3. The third proposition that I have is family run and profession run should not be treated as two ends, which cannot meet. Family run is not an “antonym” for profession run organization. It is possible for organizations to be both family run and profession run. This is especially true in the light of the fact that it has become a fashion for second generation of family members to pursue some or other program in business management from some of the best schools in the world.There is no lack of examples of organizations which are run professionally as well as by family, atleast in the spirit if not in form. It is high time that business school students, professors and other experts focus their energies on “well run organizations( one can think of better name)” instead of talking about “professionally run” or “family run” organizations.
4. To restate in slightly different words, author claims that Indian entreprneurs not mentally strong may not be entire true as selling of Ranbaxy might have been forced because of a. because of structure of pharmaceutical industry b. structural position of Ranbaxy in the Global pharmaceutical industry, it was weak c.because family issues may not be the reasons for other companies not doing well d. a lot many other companies can do well at global level as economy moves ahead. There can be many others reasons on these line. Ones listed above are just illustrative and not exhaustive.
To sum up, I have two subtantive arguments: First being wrong generalization made by author and second that professional run organizations are always better than family run, I think there is place for both.
Thanks and Regards.
Munish Thakur
XLRI, Jamshedpur