Early in September, employees at Wipro, the soap-to-software conglomerate, received an email about senior-level management changes.
The message was not unusual in and of itself — except that this announcement was about Rishad Premji, elder son of chairman Azim Premji. The email said that Rishad Premji, who joined Wipro’s IT business three years ago as manager in the financial services division, would be taking over as chief strategy officer starting January 1, 2011. In his new role, the 33–year-old will report to the joint CEOs Suresh Vaswani and Girish Paranjpe.
That was reason enough to create a buzz because Azim Premji, who has close to an 80% stake in the company, has always maintained that ownership and management are two separate issues and that his children (he has two sons) don’t automatically qualify for top jobs. Most observers, however, believe that it is only a matter of time before Rishad Premji — who has an MBA from Harvard and worked with firms such as General Electric and Bain & Co. before joining Wipro in 2007 — takes over the mantle. Younger son Tariq works at Premji Invests, the private investment fund of Premji.
Close on the heels of Rishad’s move up the ladder at Wipro came another announcement, this from the telecom giant Bharti Airtel. Shravin Mittal, the 23-year-old son of founder and chairman Sunil Mittal has joined as manager in the company’s subsidiary, Bharti Airtel International-Netherlands (BAIN). BAIN is the entity through which Bharti Airtel carried out its recent high-profile acquisition of mobile and data services operator Zain Africa. According to a company statement, Shravin Mittal will assist BAIN’s management in the integration of Zain with Bharti’s operations. He may also be elevated to the board or an equivalent position at BAIN, or at any of the other companies in which he is an employee.
Before taking on a role in the family business, Shravin Mittal worked at JP Morgan Cazenove in London where he was an analyst in the technology, media and telecommunications division of the investment banking unit. He has also worked with Merrill Lynch in New York and Ernst & Young in London.
A similar story is playing out at many of India’s other top companies. Be it the UB Group, DG Piramal Group, HCL Group, RPG Group, Godrej Group, TVS Group or Future Group — the list could go on — Generation Next, or members of the millennial generation in their 20s and 30s, is moving in and moving up the corporate ladder. “Such succession planning was always a given in Indian family-owned enterprises,” says Mumbai-based business historian Gita Piramal. “The trend continues.”
There is a difference this time around, however. The current crop of young people has all the right credentials expected of a top-level business executive. They were educated at Ivy League institutions, come armed with work experience from both Indian and global companies and are bubbling with ideas and ambition to take the family business into the next orbit. While such appointments were once looked upon as nepotism and unprofessional, today they many are being classified as change agents. John A. Davis, faculty chair for the Families in Business program at the Harvard Business School and the chairman of Cambridge Advisors to Family Enterprise, notes that Indian business families are now developing talent in the next generation and then using it to benefit their business. “The hiring of young, smart, foreign educated, globally experienced family members to me sounds like a positive move,” Davis says. “[This brand of] nepotism is aligned with professionalism.”
“This generation is better prepared and has a mind of its own,” notes K. Ramachandran, Thomas Schmidheiny chair professor of family business and wealth management at the Indian School of Business in Hyderabad. “They are [more] globally integrated than the earlier lot.” Indira Parikh, president of the Foundation for Liberal and Management Education (FLAME) at Hinjewadi, adds that the youngsters are also more attuned to the way business is conducted today. “The new lot is more familiar with the present-day language of business and management. Terms like strategy, vision, value and investing in people are part of their idiom.”
The crop of executives from Generation Next is also more impatient to make a mark. Adi Godrej, chairman of the Godrej Group, attributes their drive to the fact that “they are coming [in] at a time when the Indian economy is doing well [and] they see much larger opportunities for themselves and their businesses.” As Venu Srinivasan, chairman and managing director of TVS Motor notes, “This is the New India and this generation is out to conquer the world.”
Creating a New Image
One big area of focus for GenNext is to revamp the image of their family businesses to appeal to young consumers like themselves. The push stems from the much-talked-about demographics of the country. Of India’s 1 billion-plus population, over 50% is estimated to be under 25. According to Parikh of FLAME, marketing studies estimate that the annual discretionary income of India’s youth is a whopping US$3 billion, with families supplementing that number with an additional US$3.7 billion. Jagdeep Kapoor, head of Mumbai-based Samsika Marketing Consultants, points out that “the 20-somethings [now] earn as much as what people earned in their 30s decades ago.”
“Markets in many industries, as we know, are focused on younger consumers,” Harvard’s Davis says. “I see the next generation [of business executives] adding great value in both technology and marketing, and also importing management practices that they have learned from other countries.”
Take 31-year-old Radhika Piramal, who took over as managing director of Mumbai-headquartered luggage maker VIP Industries, the flagship company of the DG Piramal group, earlier this year. She reports to her father and the company’s chairman Dilip Piramal. Soon after her appointment, Radhika Piramal, an MBA from Harvard, told a business daily that she wants to impart a more youthful character to the 39-year-old family brand. VIP, which acquired leading British luggage maker Carlton International in 2004, has long been sandwiched between U.S.-based Samsonite at the premium end and the makers at the low-end unorganized portion of the sector. “We want to transform VIP into a vibrant and youthful brand,” Radhika Piramal told the publication. “We will have a multi-brand and multi-location strategy.”
Radhika Piramal began her career with VIP in 2001 as brand manager. She then moved on to its European operations. After a few years at the family business, she left to join the New York office of management consultancy firm Bain & Co in their private equity practice. Then, to hone her brand management skills, she moved to FutureBrand, the New York-based specialist marketing consultant. She has also worked as an analyst at the global management consulting firm Mitchell Madison. Radhika Piramal returned to the family business as executive director at VIP in 2009.
A similar exercise is taking place at the 113-year-old Godrej Group, which has businesses ranging from soap to retailing, agricultural products, consumer durables, chemicals, technology and real estate. Though long a trusted brand, Godrej has struggled to find resonance with the youth market. The fourth generation of the Godrej family — Adi Godrej’s three children Tanya Dubash, 41, Nisaba Godrej, 31, and Pirojsha Godrej, 29, and their cousin, Navroze Godrej, 27, are trying to change that.
While Dubash, who joined the family business in 1993, is executive director and president of marketing for the company, Nisaba Godrej is president of human capital and innovation at Godrej Industries and Pirojsha Godrej is executive director of Godrej Properties. Navroze Godrej is manager of special projects at Godrej & Boyce. Navroze Godrej is the son of Jamshyd Godrej, the chairman and managing director of Godrej & Boyce. “They are working hard for a younger corporate image,” says Adi Godrej, who is gradually taking a backseat and playing mentor to the younger generation.
At the UB Group, 23-year-old Sidhartha Mallya, son of Indian liquor magnate Vijay Mallya, was seen as a valuable addition to the group’s top-level management, which consists largely of old loyalists. Sidhartha Mallya’s grooming began at 18, when he was appointed director of the board of United Breweries, the company’s holding arm. He cut his marketing teeth first at U.K.-based rival firm Diageo, the world’s largest liquor company, and then at Glasgow-based whiskey maker Whyte & Mackay, which was acquired by his father in May 2007. A few months ago, Sidhartha Mallya joined United Spirits as the deputy general manager for new sales outlets. His job is to provide a lifestyle focus for the company’s premium portfolio of brands and connect with young consumers.
Sidhartha Mallya also manages his father’s Indian Premier League (IPL) cricket team, Royal Challengers Bangalore. At the IPL matches held earlier this year he displayed his marketing skills. For the first time in the sport, the younger Mallya introduced a day package for cricket lovers. This included VIP seating at the team’s matches, a stay at a five-star hotel and travel on his father’s Kingfisher airline.
On Unbeaten Tracks
For 28-year-old Pallavi Gopinath, the chance to take part in an entrepreneurial journey brought her to work alongside her father, Captain G.R. Gopinath. He revolutionized air travel in India with Air Deccan, the country’s first low-cost airline. The younger Gopinath hopes to do the same for the logistics industry with Deccan 360, an express logistics and transportation venture. Pallavi Gopinath, who has three master’s degrees in literature, media and aerospace, has worked with the BBC in London and Airbus and Avions de Transport Regional (ATR) in France. She joined Deccan 360 in Bangalore as a management trainee in 2008.
The elder Gopinath though, needed to persuade his daughter to switch gears. “I told her that when there were great opportunities in India, it was a crime to work for foreign companies,” he says. But his most succinct advice to her was: “You can prove yourself in a start up. [If] you join after we are established, people will grudge your entry and brand it nepotism.” Deccan 360 is already going places. Earlier this year, Reliance Industries, one of India’s largest conglomerates, picked up over 30% stake in the company. Pallavi Gopinath is now the associate manager of operations. Carrying on the family legacy, she says, is “not a burden.” She now views it more “as a challenge.” The company wants “to expand fast. I want to make my dad’s dream come true.”
At Chennai-based TVS Group, which has a presence in areas including automotive components, finance and electronics, TVS Motor chairman and managing director Venu Srinivasan is also looking to his daughter Lakshmi, 26, to chart out new directions. The younger Srinivasan has been in the news recently for her engagement to Rohan Murthy, son of Infosys co-founder N. R. Narayana Murthy. But earlier this year she made headlines on the professional front when she was appointed additional director on the board of Sundaram-Clayton, the holding company of TVS Motor.
An economics graduate from Yale with a doctorate in engineering management from the University of Warwick in the U.K., Lakshmi Srinivasan started her career as a management trainee at group company Sundaram Auto Components in 2003 and later moved to TVS Motor. Her elevation comes at a time when the group is exploring new growth opportunities and is betting on the new generation to steer it ahead. “We tend to make managers out of family members. Now the role of the family will be more as trustees providing strategic direction,” says the elder Srinivasan. The path for his daughter, he adds, is to act like an entrepreneur and not a manager. “She will have to look at new opportunities and not go down the beaten track.”
What does it mean for the rest of the team to have younger family members at the workplace in such senior positions? Does it change the dynamics, particularly for professionals who may have known them as children? Experts say that the average age of professional managers in many family businesses is 57. The managers also typically spend long years in the same company. The result can be a low appetite for risk and inability to think out of the box. “While the previous generation [of owners] was happy to maintain the status quo, the current crop wants younger people they can relate to,” notes FLAME’s Parikh.
Suresh Talwar, partner at Mumbai law firm Talwar Thakore & Associates and a board member of many Indian and multinational companies including Larsen & Toubro and Johnson & Johnson, says that there is “a sense of discomfort among professionals talking to people half their age.” There is also a fair bit of skepticism about what the youngsters actually bring to the table. As a mid-level manager with the Godrej Group, who wishes to remain anonymous, says: “There’s a lot of cackle about strategy, but very little to show on the ground.”
But there are also many old-timers who simply go with the flow to maintain the status quo. But that attitude is not healthy either for the company or the youngsters because “it is very easy to be seduced by professionals saying ‘Yes sir.'” warns Parikh. It is equally tough being stonewalled for being the owner’s kid, however. Pallavi Gopinath, for example, was turned away when she applied to the marketing department at Deccan 360. Employees there worried that she’d squeal to her father if she didn’t like their ideas. Her next stop was operations “because it’s the meat of the logistics business”. But the younger Gopinath says her boss in that department didn’t give her any work. Instead, she kept busy by identifying and choosing franchisees. In her current role, she monitors the franchisees and is busy fine-tuning Deccan’s hub-and-spoke business model. “It’s always better to have people better than you so that you can learn from them,” Pallavi Gopinath says.
Zahid H. Gangjee, founder of Zahid Gangjee & Associates, a Kolkata-based organization and HR consultancy that helps companies with change management, offers another take. Success, he notes, can often make members of Generation Next lose their initial realism. “They start taking risks, and when proven right, they feel they are infallible,” he points out. Adds board member Talwar: “This generation will taste success and [will] be blunt, but they must realize that they can’t be as successful as they are without a fleet of professionals.”
Clearly the younger generation has to work hard to disarm the skeptics, earn their respect and keep the boat steady. According to Adi Godrej, “If the youngsters are wise, well qualified and go about their work sensibly, people are going to accept change.” ISB’s Ramachandran adds that all stakeholders have a critical role to play in how GenNext performs. “The father and the extended family of investors, market watchdogs, financial institutions and professionals will keep them grounded. It’s all part of the ecosystem.”
Harvard’s Davis meanwhile believes that young family members may have a lot going for them, but they “do not necessarily have the wisdom that is nurtured over decades of business experience, nor do they necessarily have the credibility with older and more experienced managers and employees.” He advises that youngsters not only have to contribute their talents to a business, but must also have the humility to listen to and appreciate the wisdom and guidance of older employees. “Family members that learn this rule tend to mature into better leaders who are strongly supported by the employees of their company.”