In the globalisation era, as large multinational companies and global consumer brands entered Indian markets, significant multicultural influences entered India as well.
Nuclear families have been on the rise ever since, and the erstwhile joint family businesses now have to deal with changing social norms reshaping the fabric of that joint family system, while still making sense of what the future of "family" and "family business" will look like. Families have to be proactive in shaping how the next 50 years unfold for them, rather than assuming continuity.
Entrepreneurship continues to create wealth. Family businesses have created wealth so far and continue to do so. Some are unlocking that wealth through IPOs or stake sales, while others are investing in acquisitions.
This marks a new phase for Indian family businesses and entrepreneurs alike. As they enter this transition phase, their priorities should expand beyond wealth creation to include preservation, transition, and designing structures that can endure across generations.
Family businesses operate in a world which is more volatile, less predictable and harder to read than the one their founders built those businesses in. Wealth products and wealth management strategies have grown correspondingly sophisticated to deal with this complexity. Professionalisation in family business and family wealth management ensures that families are not managing tomorrow's complexity with yesterday's tools.
But professionalisation without robust governance frameworks is bound to fail. Families need to lay down clear governance frameworks for both the business and family wealth, so that decision-making policies guide decision-makers without dependency on any single individual.
Succession is most often thought of narrowly, in the context of a family business owner's next-generation handover. Ideally, every enterprise, whether family-owned or otherwise, needs a clear succession framework defining who will be the decision-maker in the absence of the primary decision-maker.
That successor may or may not be a family member in a family business, but having this clarity in place is what ensures continuity.
Next-generation members, whether from a multi-generational business or a first-generation one, need to be prepared to deal with their future. As times change, they may or may not want to operate the venture their parents started or inherited.
Either way, they need to be prepared to be good shareholders, good directors on the board, and good stewards of what they inherit. Some next-gen members have a keener interest in managing family wealth through a family office than in taking on an operational role in the business.
Even then, their preparedness to perform well in that money management role is just as crucial.
As times change, families may no longer follow the standard definition, i.e. family comprises grandparents, father, mother, children and grandchildren.
Divorces, remarriages, same-gender marriages, children born without marriage, adopted children, and many other non-traditional configurations of a family are already becoming more common.
Families need to proactively think about how they will deal with such configurations in the future as they consider intergenerational transition of wealth, business and legacy. The wiser course is to plan for this complexity rather than avoid it: build a shared family vision, a family constitution, and grievance redressal mechanisms and document all of them well.
Nurture psychological safety within family relationships, so that a next-gen member does not have to fear failing in an entrepreneurial pursuit, and a senior member does not have to hesitate to say how much something hurt them.
Expression of feelings in a genuine, non-judgemental way and clear communication practices need to be inculcated among all members of the family.
A business may mutate, evolve, get acquired, get listed or be liquidated, but a family that follows these principles can become a longer-lasting structure: a family institution that outlasts any single business venture and sustains multi-generational prosperity.
The writer, founder of Sapientia Family Office Solutions, is a family business and family office adviser.
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
