Family businesses must prepare the next generation to run faster and stronger, while also reshaping the enterprise to welcome new leaders, says Kavil Ramachandran, one of India’s leading voices in family business consulting. A member of the Supervisory Council at the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business, he shares his insights in this interview.
There are several factors—some that have helped Malayalis build strong family businesses, and others that have held them back. Even favourable conditions become strengths only when they are effectively utilised.
Malayalis have gained wide exposure by working and doing business across the world. There are very few countries where Malayalis are absent. This global exposure is a clear advantage. They place a high emphasis on quality and are highly adaptable to different environments. There is also openness in accepting people from outside.
Women enjoy respect and status within families, which has enabled greater participation of women in many family businesses. There is a natural inclination towards trade. However, even in Kerala’s traditional cash crops, value addition and capability building remain limited.
Family comes first for Malayalis. While this is positive, many tend to view family business as a birthright or even as an employment exchange for family members.
For most, family business remains a means of livelihood. Only a few elevate it to the level of an institution.
Kerala is geographically protected by the Western Ghats. In a similar way, there seems to be a psychological boundary as well. Despite having global exposure, many entrepreneurs remain satisfied with limited growth.
Although senior members try to involve the next generation in learning, the adoption of professionalism and structured family governance practices is still limited.
This is a universal challenge. Letting go of power is never easy.
Leaders must continuously reflect on what comes next, both professionally and personally. Transition requires emotional and practical preparation.
One useful approach is to shift into a ‘doubles game’—moving from being the sole decision-maker to sharing responsibility. Choosing the right successor or partner in this phase is critical.
Preparation should begin early—ideally when the leader is around 50–55 years old. Successors must be identified, their roles clearly defined, and responsibilities gradually delegated. By the age of 60, the performance of the next generation should be evaluated seriously, and the transition accelerated.
By 65–70, roles within the family business should be fully redefined.
A family business is a relay race. Each runner must be prepared in advance for their lap.
Successors should be equipped to run faster than their predecessors. This requires careful planning, a clear roadmap, and well-defined roles for both family and non-family members.
Each generation must be continuously empowered. At the same time, the business itself must be strengthened to receive new leadership.
Once responsibilities are handed over, senior leaders should avoid interference. If employees seek guidance, they should be directed to the new leadership. Even if there is an urge to step back in, restraint is essential.
Think big. Move beyond seeing the business merely as a livelihood—build it as an institution. Continuously assess what it takes to remain competitive in any market and act on it. Markets evolve constantly; new opportunities emerge while others fade.
Entrepreneurial thinking is essential. Even while leading a family business, one should not remain trapped in traditional ways. Identify opportunities and act decisively.
Professionalisation should not be delayed. Introduce family governance systems and professional management from the outset.
Wealth in family businesses is often inherited across generations. Leaders are custodians of that wealth—they must preserve and grow it, and pass it on to a more capable next generation.
Continuous learning is crucial to remain relevant. Leaders must also become catalysts for change, rather than resisting it.
The conversation must move beyond family business to family entrepreneurship.
Any business that fails to evolve with time will lose relevance. Industry shifts, product evolution, and structural changes affect family businesses just like any other.
Family businesses cannot afford to continue in the same traditional manner. If they adapt quickly and operate with the agility of a startup, the next generation will naturally be drawn to them.
At the same time, the next generation should not view the business as an employment exchange. That approach leads to overcrowding without meaningful financial returns.
A shift in mindset is essential:
Open discussions within families help define and internalise the purpose of the business
The goal should be to build a sustainable, growing institution—not merely assign roles to all family members
Move from “family business” to “family entrepreneurship”
Revisit and rethink business portfolios regularly
Allow family members to take on diverse roles: operating ownership, strategic involvement, governance roles, or even passive ownership as investors
Not every family member needs to be involved in day-to-day operations. A flexible and modern approach to roles can strengthen both the business and the family.