June 12, 2012

Business Innovations & Family run Enterprises

Business life cycle, like product life cycle, is getting shorter with changes in attention span of the consumers.  This actually means that a business organization must not take itself grated to last several generations as it used to be in the past.  Average life of a business organization in the twentieth century were around twenty five years that has considerably been contracted due to factors like technological obsolescence, decreasing attention span & higher consumption propensity and proliferation of competition.  The age of Life time jobs & near immortal organizations have long been gone.

Indian businesses have to innovate to survive & succeed. The scenario in emerging economies looks little deceptive as overwhelming family ownership and government protection perpetuates the notion of continuous successful presence of the family empires.  Look round and see in how many Indian business families two consecutive generations have remained in the same business? As every generation seeks to blaze its own new trail therefore it is imperative for the family to create & nurture the innovation structure & process within.

Major Indian business houses have undergone transformation in terms of their core sectors of activity. Besides new players continue to challenge the established the existing ones. The telecom revolution in Indian markets, that succeeded the information technology boom, saw the leadership baton passed to new players despite the presence of the established giants in those sectors. Similarly when the organized retail sector was opened in the last decade for domestic players to enable them build competencies to take on global players it did not yield expected results.

Majority of established domestic corporate giants could not achieve major goals that they set out for themselves in the unfolding saga of organized retail. Most have still not been able to discover a suitable model fit for Indian consumer. The answer lies in intensive study of Indian consumer profile & habits rather than force fitting the alien business models of supple chain in India. Let us wait for the approval to multibrand FDI get nod of the Indian parliament and watch how the competition plays out depending upon the strategic stance of these existing organizations. There are several indicators that point out that subsequent to multibrand FDI comes into force most existing players would take an exit option or go for strategic joint venture.

Family owned enterprises have to learn to allow innovation to walk into their enterprises from the front door rather depend upon a small carefully controlled window. Business Model Innovation should get a strategic priority for companies to last an average lifetime.  There is need for giving strategic priority to BMI on the lines of product life cycle. 

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