A Ph D holder from Cranfield, UK, Professor Kavil Ramachandran, has spent 15 years (1986-2000) at the Indian Institute of Management (IIM), Ahmedabad, teaching entrepreneurship and strategy. Today, he deals in family business and entrepreneurship at the Indian School of Business or ISB, Hyderabad. A business consultant to some medium and large family-run businesses in India and overseas, Ramachandran, has stepped down from the boards of companies like Aurobindo Phrama, to sit on boards of start-up companies run by his students, including Richcore Life science and MyIndia.com. He feels he ?can give more to start-ups than an established company.? In an e-mail interaction with FE?s Shweta Bhanot, Ramachandran shared his views on the on-going transition at Indian family-run business houses and the challenges there. Excerpts:

We are seeing the next generation taking over at Indian family-run corporate houses. What aspects do they need to keep in mind as they do so?

Family business is like a relay race where the baton is passed over from one generation to another. Hence, the young generation has a responsibility to successfully preserve and grow the wealth and legacy, and pass them over to the subsequent generations. In that sense, they have to remind themselves that they are the custodians of wealth of the family. In a rapidly transforming economy like ours, there are immense growth opportunities for them to express their entrepreneurial talents. The young generation should take advantage of the situation and exploit the opportunities, again in tune with their responsibilities of custodianship.

What are the challenges companies face in such a transition stage? How can they make the process smooth?

Building on the analogy of the relay race, there has to be very good homework done about the roles, responsibilities and capabilities required to continue the journey. This also means that a clear road map is prepared for the person who is retiring about what he or she would do subsequently. The retiring person should redefine the portfolio of activities that he or she would do and add value to the growth of the organisation in the capacity of an advisor, if possible. The process of transition should be worked out in advance so that the baton change could be smooth.

Are professionally-run businesses better off than those that are family-run?

Family run and professionally run businesses are not mutually exclusive. All businesses, whether family owned or otherwise have to be professionally managed. Increasingly, business families train their members to be professionally qualified and behave professionally in the business context. As a result, well run family businesses have the benefit of the passion of the owner as well as the passion of the professional embedded into the same. This does not mean that family executives are always better than non-family professionals. Of course, professionally-run businesses are always better off than non-professionally run businesses, whether they are family owned or not.

Do you think a split among family members can help grow a family-run business further?

I do not think so. In fact, global experience is that split is most often painful both for the business as well as the family. The well governed family businesses stand as testimonial of the benefit of keeping family ownership together for running businesses professionally.