Hello,my heirs

And many such family-led business groups across the country are waking up to this realisation that in a fast globalising world of business,there is huge economic value embedded in the brand. It is the repository of all stakeholders’ relationships,nurtured by their fathers and grandfathers,which in the absence of common glue can be easily frittered away by future generations. It doesn’t matter whether you need to fight multinationals in your home market,buy companies or raise capital abroad,one thing that comes in handy in all these is group-wide synergy. And this has its roots in commonality and a shared vision about the family business brand.

So even as a clear succession plan is in place for the next generation,which has already been inducted into the business of the aforementioned western India-based family business,till recently there was no plan to institutionalise the brand DNA. What happens,for instance,if tomorrow the progeny pull the brand in different and conflicting directions,even when they steer clear of each other’s turf as laid down in the succession plan? Who is to be the custodian of the biggest value creator in the business—the brand? It is a given that as the business moves down to younger generations,there would be a need to provide operational and tactical autonomy to individual family members to run their respective businesses. And yet,there has to be a common axis around which all group businesses move in order to sustain the process of wealth creation.

If you think the scenario is a stretch,you need not look further than what happened couple of weeks ago at Bajaj Auto. Rajiv Bajaj’s,the company CEO’s,plan to drop the Bajaj name from the company’s motorcycles and three-wheelers was hotly and publicly contested by the patriarch,Rahul Bajaj. Rajiv says that the Bajaj brand is too diffused,being used for anything from ‘heaters,hair oil to insurance and financial services’. Hence the need to get real and instead go in for a product-specific branding in Discover et al. The senior Bajaj maintains that dropping the Bajaj brand is a big decision that cannot be made without involving him. The point is not the relative merits of the two positions,but that such a conflict can occur amongst family members (father and son in this case) with a big downside for the brand.

What this particular western India-based businessman is doing together with one big group south of Vindhyas and another northern India-based family business is institutionalising the common vision of the brand and crystallising it in a formal governance process,to be strictly adhered to by all constituents of the business and overseen by a formal family ‘brand council’. Maybe you can liken to what is now happening with family-led businesses to the Tata Brand Equity fund,set up by Ratan Tata back in the mid-1990s,wherein each business using the Tata brand pitches in a royalty contribution,with the brand tenets dictated centrally by Tata Sons,the holding company of the salt-to-software conglomerate.

This focus among family businesses on treating the brand as the most critical part of the business legacy,and most importantly institutionalising its management for all time to come is a welcome step. It reveals a changing mindset—a move away from narrow,short-term one-upmanship to focus on long-term value creation. A recent report by PricewaterhouseCoopers says that India will produce the maximum number of new multinationals amongst all emerging markets,now to 2020. And most of these new India-born multinationals may well emerge from the current crop of family-led businesses,who of late are taking this opportunity seriously,starting from getting everyone in the family to agree on a common brand vision.