In India, what do the house of Ambanis, Birlas, Tatas, HCL, Godrej and Wipro have in common? They are all homegrown family business organizations. In the context of these business houses that have become the very fabric of India since the dawn of the Indian growth story, it’s important to reflect why homegrown family business organizations need to invest in leadership development.
Succession planning: in homegrown family businesses, leadership succession is often viewed as a simple “passing the baton” from one generation to the next. However, focusing solely on succession—merely identifying who takes over—without cultivating true leadership can be a potential pitfall that endangers the long-term viability of the business. The next generation may inherit control, but they may not always possess the skills, vision, or character required to lead. This is why developing leaders, not merely successors, is critical for the future success of any family-owned enterprise.
Building a leadership bench: a successor is someone who takes on the role of leadership—often due to bloodline, familial obligations, or company bylaws. However, being a leader requires much more than simply being the designated heir. A leader is someone who can inspire, motivate, and steer the business through changing landscapes, while fostering a shared vision among the entire family and the management team. To ensure continuity of business, family businesses must invest in leadership development programs to develop a pool of leaders who are adaptive, visionary, and capable of making decisions that not only preserve the legacy but also push the business forward.
Grooming the loyal, legacy managers: old time loyalists, the “old boys” who have grown the ranks to the managerial levels, need to be groomed in leadership skills. This is because, new young successors who are being groomed for more strategic roles in the organization, may, due to their new ways of thinking be in collision with “the old boys” of the organization, leading to a turf war due to which eventually the organization suffers. Developing the old boys will help in their longer-term retention.
Mentoring: a mentoring approach focuses on developing the leadership talent, not just managing the succession. It helps shape young men and women from the family to embrace core values such as integrity and hard work, while also ensuring they are mindful of their stewardship role. It’s not enough for them to step into leadership positions merely by virtue of bloodline. Mentoring guides them to become true leaders—individuals who are driven by purpose, who can make informed decisions, and who understand the weight of the legacy they carry. By emphasizing this mindset, they can be helped in making them move beyond being just successors and encourage them to adopt the responsibility and vision necessary for long-term success.
Building Emotional Intelligence: And this is a long-term term ongoing intervention. Young successors need to be coached, mentored, and handheld on what they perceive as their perceived strengths and areas of development. They would be required to make decisions under pressure, and hence, their emotional capacities and being intelligent about them & to be calm under pressure would be tested.
Understanding & navigating change: India is an amalgamation of many mini-Indias. A leader who is groomed for more strategic roles needs to understand the larger context of India, a country that wants everything within a budget and of world-class quality. A deeper understanding of the view from the top, and keeping both ears to the ground, is what would make leaders transition and take the organization to the next level. Further, change has been the new normal for the longest time. Leaders who can’t see the anticipated change coming and are not groomed to be ahead of the curve will not be able to lead an organization for a long time. With the millennials and the Gen Z taking over critical roles in the organization, it makes a lot of sense for organizations to look at their development from a strategic standpoint and not just a tick-the-box activity. Last but not least important, while AI and technological advances are being a great enabler, it has also threatened to take away a lot of jobs. Organizations led by able leaders who have the foresight and the vision to change the organization will thrive if they stay invested in their overall development.
Modern family businesses face unique challenges that make leadership development especially important. These include balancing family dynamics with business performance, navigating succession planning, and maintaining long-term vision across generations. Without strong leadership, the family business can become a victim of internal conflicts, a failure to adapt to changing markets, or the erosion of family unity.
A Harvard Business Review study found that family businesses that emphasize leadership development across generations outperform those that do not. Yet, in many cases, family business leaders often focus on the short-term goal of identifying a successor, neglecting the need for a strategic and intentional leadership development process. The costs of overlooking leadership development are steep: mismanagement, missed opportunities, and eventually the demise of the business.
This blog has been written by Rupender Khaira, an Associate Partner with GrowthSqapes.