Harshvardhan Pasari started attending his factory all day after he enrolled for a course at SP Jain Institute of Management and Research
Image: Rajesh Bansod for Forbes India
Previously passed on from generation-to-generation and taught by fathers and forefathers, family business has come a long way. Learnings at the dinner table from dyed-in-the-wool patriarchs and matriarchs are making way for—or in some cases being complemented with —classroom education. Say hello to a post-graduation in family business.
A Master of Business Administration (MBA) in Family Business can help in the logical progression of taking the family legacy forward. But, within that overarching objective, it can serve several value-adding purposes, from expanding a current line of business, to spotting the next sunrise area, to even starting from scratch.
A family business masters is different from other MBAs in that it is a bigger-picture education than, say, one in finance or marketing or human resources. “Everything is taught from a business point of view, not a job point of view. That’s the major difference between a normal MBA and an MBA in Family Business,” explains Urvashi Bihani, who did a two-year MBA in Family Business from Narsee Monjee Institute of Management Studies (NMIMS). Urvashi is the fourth generation of a family that runs the Bihani Education Trust in Rajasthan.
For many next-gen students, the course goes hand-in-hand with a stint on the shop floor, as Harshvardhan Pasari, a student of SP Jain Institute of Management and Research, points out. “I used to be at the factory for not more than four hours a day. Thanks to the course, I now attend it full time, eight hours every day. So I am full-time into the business along with the course.” The Pasaris own Ramacoirs & Felts Ltd, a closely owned company that sells mattresses branded ‘Dream On’. Harshvardhan is the second generation member of the family.
For many next-gen students, the course goes hand-in-hand with a stint on the shop floor
SP Jain’s 18-month Post Graduate Programme in Family Managed Business (PGP-FMB) is designed in a way where students need to attend college for seven days a month for 13 months, as well as create a project report. The reports are submitted online in the 15th month and students are marked based on that. The final report at the end of 18 months is put in front of a panel of judges. The course allows students to spend the rest of the month in the family business. Students can choose electives to specialise in—retail, real estate, manufacturing and services—based on their business. The college also facilitates internal hiring, where post-graduates from the FMB course can hire counterparts from other courses.
Family Business MBAs are more about how to manage than how to make.
For example, a businessman would not need to create a balance sheet, but has to understand it, check the ratios and make decisions. It is for an accountant to create the balance sheet.
A major takeaway from the course is the connections made with other next-gen of other families—and the business transacted with them. “I already have connected with five students who are ready to supply my mattresses. If the deals work out, I’ll recover the course fees in one transaction,” grins Pasari. At the 15-months modular programme at the Indian School of Business (ISB), Hyderabad, students attend college once a week every six weeks. For the other five weeks, they are meant to help the family in the business.
But it’s not only about transacting and networking. It’s also about getting a chance to learn about other businesses. As Bihani puts it: “Even if group projects were not from our own business, they helped us to study the businesses of others and gain knowledge of such operations.”
The faculty at most institutes offering such MBAs boasts of industry experts, many with decades of experience at multinationals. They don’t just help students analyse the business but also guide them on how to overcome challenges. Pasari, for instance, got a chance to reflect on the turbulence and disruption in his business. “Coir got a substitute of foam. Foam was cheaper so coir went out. The fluctuation in coir rates resulted in our factory shutting down for a year. It not only led to huge losses, but turnover also plunged.”
The current generation relies heavily on technology and electronics, something most previous generations are not as comfortable with. Consumer preferences, too, have changed: They want superior quality at lower prices As the customer base is changing faster, so are the consumer preferences to rely upon cheaper goods with superior quality. This further requires the next-gen entrepreneurs to rethink accordingly for a new-age customer base.
“Thanks to the course, I have been able to make a lot of good changes in the past nine months since I joined the business,” says Bihani, who manages one of the seven educational institutions under the Bihani Education Trust.
The next-gen may be brimming with ideas but convincing the elders isn’t a walk in the park. Their ideas are scrutinised and questioned, and often rejected. “It’s difficult to convince my father. I try to convince him for a lot of things, but for a few of them, he just says no,” shrugs Bihani.
Institutes like ISB Hyderabad provide a specialised training programme that is complimentary for one member of the family along with the nex-gen MBA. The aim is to bridge the gap within generations to make the family more adaptive, covering topics like family governance, succession and ownership. “The future is in the hands of the children. You are in the last lap of your innings. Prepare your children for the future, your responsibility is to support them now,” is the advice of Kavil Ramachandran, executive director, Thomas Schmidheiny Centre for Family Enterprise, to the senior generation.
(This story appears in the 01 March, 2019 issue of Forbes India. To visit our Archives, click here.)