13 February 2022 05:54:15 IST

MBA for family business scions takes wing

SPJIMR’s post-graduate programme in family-managed business.

Students set foot in a B-school with dreams of bagging coveted job offers and fancy pay packages at top consulting firms and IT companies. Large corporates and MNCs, naturally, are a staple for placements. Better the placements, more coveted the B-school. But, a number of B-schools are now turning the standard MBA approach on its head, by offering specialised MBAs. A recent development on the MBA scene is the growing trend of introducing management programmes for the scions of family businesses. 

Applications are on an upswing for this programme, first launched by Bharatiya Vidya Bhavan’s SPJIMR, and later followed by the Indian School of Business (ISB) and SP Jain Global as well, because of the rising reputation and increased demand. B-schools such as IIM Bangalore, IIM Calcutta, NMIMS Mumbai, Nirma University, KS Hegde Institute of Management and many others have jumped onto the bandwagon. 

Raashmi Raju (23), who is currently enrolled in the MBA in family business management programme at SPJIMR Mumbai, is a third-generation entrepreneur and a new entrant to her family-managed business, Arihanth Forgings, in Ambattur Industrial Estate, Chennai. For Raju, choosing to do the MBA was a wilful commitment to expand the business her grandfather had set up, and her father and his brother, have continued to successfully run for over 60 years. “The family-managed business programme gives me the opportunity to network and rub shoulders with people from all across the country involved in family businesses and facing similar challenges,” Raju said. “Doing the MBA has given me a good opportunity to broaden my own experience but also to experience other business opportunities.”

Raju is doing a 18-month modular programme at SPJIMR, where she spends the first week on campus learning new skills and connecting with peers, and the remaining month is spent applying those learnings in her business. Sharing some of what she has already put to use, she says: “I have been able to set up a family charter, or a rulebook for the family, to underscore the importance of making distinctions between what is for the family, what is for the boardroom, and what is for business, as it can get meshed together when you work with your family. I have also learned some effective costing methods and implemented a new enterprise resource planning software to replace paper records and excel sheets for large datasets.”

Steady growth

There is a yearly intake of 250 students at SPJIMR for this programme now, but it started off with only 25 students in 1997. How is it different from a conventional MBA? Prof Tulsi Jayakumar, Executive Director, Centre for Family Business and Entrepreneurship, SPJIMR answers: “This programme is carefully curated for business owners, and not managers. Students have joined in the sheer pursuit of knowledge. The cost-benefit of going through this programme is not a job like it is for most MBAs. So, the classroom experience teaches them how to translate key management concepts into actual strategies that can be put to use, and the faculty needs to be able the address the peculiar challenges family businesses, mostly MSMEs, face.” 

At ISB, since 2008, the interest in the programme has grown multi-fold with participation steadily rising from smaller towns across the country, besides the metro cities, says Kavil Ramachandran, Professor of Entrepreneurship (Practice) and Senior Advisor, Thomas Schmidheiny Centre for Family Enterprise, ISB. “Growing organisations require structure, systems and processes, and capable people to formulate and successfully implement strategies. A good MBA programme equips the students to be professionally capable owner-managers.”, at ISB, adds Ramachandran. All students come from SMEs, both manufacturing and service, standalone and diversified, joint and nuclear families, two- to four-generations old, from across the country.

SP Jain’s Global Family Managed Business (GFMB) programme is a 12-month course, with a yearly intake of 200 students. Parimal Merchant, Director, Global Family Managed Business Programme, SP Jain Global, believes family-managed businesses do not need an intervention for innovation. Staying agile and innovating constantly is key to their survival. He said the impetus to acquiring the right knowledge, enthusiasm to scale up, and negotiating with compliances is lacking. A programme for family-managed businesses needs to provide help to tackle these challenges.

So, pedagogy-wise, it differs in four ways from a conventional MBA – scale, scope, stake, and situation – says SP Jain’s Merchant. “The scale of a family business cannot be compared to a large-scale MNC a conventional MBA graduate might join. The stakes of doing such a course are also high because there is more skin in the game. Every lesson implemented or decision made can make or break the business. Moreover, the scope is huge and there is a lot of ground to cover. Business owners cannot afford to restrict themselves to one aspect of business, say marketing, finance, or HR, like managers. All aspects of business need equal attention. The situation or context of taking up a course like this is entirely different. Most family businesses have a legacy. The new generation has to adapt to the existing system and bring about peaceful changes. A properly designed system needs to help them do that.”

A large part of the family business management course is focussed on bridging the generation gap and navigating the complex web of family dynamics, as sometimes, family interests take precedence over business interests in an ownership structure like this. The subjects need to be communicated in a language that is jargon-free and easy to understand for students coming from various backgrounds. “Keeping the family in the business, and bringing about peaceful changes, slowly and steadily, and working side by side is crucial,” says SPJIMR’s Jayakumar. 

Focus areas

Considering family businesses are armed with the right resources and proven entrepreneurial abilities, unlike start-ups that begin from scratch, the next-gen entrepreneurs wish to get management training with a clear vision of scaling up and enhancing scope. “B-schools help them make that quantum jump. The generation gap needs to dissipate. The previous generation needs to step up with the wisdom, and the next-gen with the dynamism. An intergeneration collaboration can infuse a renewed sense of excitement to do things differently,” says Merchant.

A large part of the success of these programmes lies in the willingness of families to reform. To tackle that, B-schools are offering workshops for the current business owners and mentors to reach a middle ground and chalk out a doable business plan, so as to not alienate them from the process. 

To many, family business connotes small, mom-and-pop firms, but some sprawling corporations in India like Tata group and Marico are family-controlled enterprises. Close to 70 per cent of publicly listed Indian businesses are family-owned. The percentage is even higher among unlisted companies. They are the “bellwether of the Indian economy,” says Prof Dalhia Mani of IIM Bangalore. “Such courses create learning spaces for them to sit back, reflect, and develop long-term strategic goals for the business, and do it in a flexible manner while continuing to be involved in the day-to-day management of the business,” he adds. “Even big corporates, non-family controlled, are sitting on the shoulders of many family businesses, as they rely on them as vendors and distributors,” says SP Jain’s Merchant. 

Though applications are up, B-schools are reporting consistent stagnation in gender diversity. Only 10 per cent or less women take to such courses. The low numbers are attributed to the nature of the programme, where sons are usually entrusted with the responsibility of furthering the family business. “It is definitely a focus area. We are conducting campaigns and workshops to sensitise family businesses,” says Jayakumar. Endorsing that viewpoint, Merchant says: “Whether or not women continue to take on their father’s family business, the business acumen, skills, and knowledge, acquired at a B-school, can never go waste.”

While B-schools campaign for more women in classrooms, “I have been handed the good end of the bargain, I think. Thanks to my family I never had to fight for this opportunity,” says Raju.