Tag Archives: Infosys

Family Businesses in Transition

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In my previous post, I had pointed out cyclical changes in economies. Here, we look at family businesses and how these are undergoing times of transition. Unlike in the Western world, India has a large set of family businesses, although we now prefer to call them promoter-driven businesses. These are essentially businesses built up by the father (often alone), brought to maturity, and then handed over to the eldest son, or divided up among the sons.

There are some promoters who realise that the handover needs to be professional in order for the company to succeed in the new world. They also realise the value of a good education — both in a good institution and in the company playground — for the son or daughter to lead the company towards success.

Yet again, there are some promoters who realise that they know how to run the business even when others have mishandled it. These are the likes of Infosys. The company was built up by a team of five or six software engineers, so it was not seen as a family business. But when push came to shove, it was the Narayana Murthy who acted as if he had his own blood in the business. And it is he who has stepped in to put things right, along with his son. It is now a matter of waiting and watching to see what happens.

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Many thanks to the unwitting scion of a family business who talked to me all through a Mumbai-Delhi flight, rather than listen to music or play on her iPad, for helping form this post.

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Where Credibility Stems From

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Credibility – the confidence that is critical when trying to sell your product or service – comes from several sources. For startups, the source might simply be (baseless) confidence in one’s ability to deliver. Later on, having proven results to the company’s name makes it easier to approach other potential leads. And over a period of time, even results become irrelevant if enough customers have bought the same product or service. Once the market reaches a tipping point, herd behavior among customers kicks in if other factors are conducive.

I can easily imagine some of Infosys’s earliest clients buying their IT projects after listening to the bunch of youngsters who sounded like they barely knew what they were doing. Over a period, having done multiple projects and delivered results that were measurable, they would have found it easier to present credentials. Of course, the company is busy setting its own house in order now, but that’s another story.

Showcasing credibility is easier with experience, but the process has to start somewhere. Perhaps square one is not a bad place to begin.