Smart and bountiful

It is not often that one comes across a management expert who has a keen sense of business history. Gita Piramal is a well-known Indian writer who chronicles and showcases Indias timeless business treasures.

She spoke to Domain-b.com at length about her passion: her work. This passion has recently taken shape of a magazine The Smart Manager which is refreshingly different in focus from other management magazines. It focuses more on managers as individuals than management as in corporate collectives. Excerpts from the interview:

How did all this start?
I wrote my first article in 1979 when I began writing for The Economic Times. I began serious writing in 1988 when I became the Mumbai correspondent of Financial Times. Then Business Maharajas happened, where I profiled eight top businessmen of India.

My next book was Business Legends, where I narrowed it to four top businessmen. This was a really interesting work as it is completely based on letters exchanged between pioneers of Indian business between the years 1930 and 1960, which was the most fascinating period in Indian business history. Most of the book is based on letters written by Lalbhai to G D Birla and from J R D Tata to Walchand Hirachand. The book is an attempt to capture business history through letters. The letters dealt with national issues and their personal views, which are different from speeches they made in public.

Was access to these letters a problem?
Not really. I got them from Teen Murti House archives. Also, it was around the same time that the Lalbhais were going through the process of sifting through their family letters.

Tell us more about your other works.
In 1995 I wrote Managing Radical Change with Sumantra Ghoshal and Christopher A Bartlett. In 2000 another work was published World Class in India which I wrote with Sumantra Ghoshal and Sudeep Budhiraja. This is a collection of case studies of 20 Indian companies.

What makes you feel that family-run businesses are not doing as well as in the past?
Competition for family-run businesses now comes in from learning organisations that are capable of growing into any market. Family-run businesses will have to be very SMART (Strategy, Marketing, Analysis, Resources, Technology).

How are family-run businesses in India different from those abroad?
In the US, 97 per cent of the family-run businesses are not publicly listed and hence do not show up in the Fortune 500 list. The biggest example is of Mars Chocolates. In India the case is very similar to Germany, where most of the family-run businesses are publicly listed.

What do you have to say about the future of family-run businesses in India?
I am very bullish about the future of family-run businesses in India, provided they shed their traditional shortcomings. Today you need a network of like-minded people as there is need for specialists, more than having trusted people around.

Would it be correct to say that the age of family-run businesses is over?
No, not really. Family, as an engine of growth, is flourishing and statistics have shown that the number of family-run companies is increasing. Private, closely-held companies are doing well and is actually expanding. More than 70 per cent of Indian players are family firms, of which as much as 40 per cent wither in the first five years. Sixty-six per cent survive till first generation, while just 17 per cent that survive make it to the third generation and beyond. But given the practice of SMART management, this mortality rate is bound to decrease.

What do you have to say about the state of Marwari businesses in particular?
Only 13 of the top Marwari families are creating value. Rahul Bajajs company tops the value-creation list. The rest are all cases of value-destruction. Incidentally, most business families have had their highs in Kolkata.