Executive Insight

Ensuring Business Continuity: Succession Planning in Indian Family Business

Barclays Wealth has just published a white paper entitled, ‘Ensuring Business Continuity: New Thinking in Building a Sustained Leadership in Indian Family Business’. The report explores the key factors helping family-run companies in India to grow and sustain their business. It is based on interviews conducted with over 200 leaders of family-owned businesses with an annual turnover of more than US$40m in five cities across the south Asian country – Mumbai, New Delhi, Bengaluru, Kolkata and Chennai.

While family businesses in India have successfully co-existed with new-generation entrepreneurs and transnational companies over the past decades, they are grappling with governance and leadership issues in the face of continuous changes in a dynamic business environment at home and abroad.

According to the Barclays Wealth research, the two key factors for success are:

1. Strong and professional leadership coupled with proper systems and processes are critical for building a long-term, sustainable business environment
2. Robust internal processes in corporate governance lead to increased transparency and attract strategic investments.

The India-specific study also highlights regional biases on issues such as leadership traits and the criteria used to choose a successor.

Source: Barclay’s Wealth

Read the White Paper

Sourcing Clause Could Deter Foreign Retailers in India

MUMBAI, Jan 23 (Reuters) - Local-sourcing requirements could deter foreign retailers from taking advantage of new rules allowing them to take full ownership of their operations in India, and many potential investors are seeking more clarity from the government.

India formally eliminated restrictions on foreign investment in its single-brand retail sector earlier this month, but made it mandatory for foreign firms to source 30 percent of their requirements from small and medium enterprises. The caveat defines small industries as those with a total investment in plant and machinery of up to 50 million rupees (about $1 million).

In December the government suspended plans to open India's $450 billion supermarket sector to foreign firms, backtracking from one of its boldest reforms in years. Removing restrictions in the single-brand sector -- which was announced at the same time as the supermarket policy change -- was relatively uncontroversial.

A number of retail players are pressing ahead with plans to enter and expand in the country in joint venture partnerships with a 51 percent foreign ownership cap (see story). The 51 percent cap, which was permitted even earlier, does not make local sourcing mandatory.

Read the report

Source: Reuters

The Quiet Revolution - New International Standards Adopted for Domestic Workers Worldwide

“On June 16, 2011, with the world’s attention consumed by street protests in the Middle East and a stubbornly bleak global economy, a quiet revolution took place. Overcoming initial skepticism and resistance, members of the International Labour Organization (ILO)—governments, trade unions, and employers’ associations—voted overwhelmingly in favor of a new groundbreaking treaty that, for the first time, established global labor standards for the estimated 50 to 100 million domestic workers worldwide who clean, cook, and care for children and the elderly in private households.

ILO Convention 189 Concerning Decent Work for Domestic Workers did not topple any dictators, but it does radically change how domestic workers—the vast majority of whom are women and girls—and their work inside the home are valued, recognized, and protected. Its desperately needed and long overdue protections shake deeply entrenched gender discrimination in social and legal norms, and, in some countries, the lingering legacies of slavery.

Many countries exclude domestic workers from labor laws partially or completely, denying them basic labor protections that most other categories of workers can take for granted, such as a minimum wage or limits to hours of work. Such exclusion—together with discrimination and a profound devaluation of work associated with traditional, unpaid female roles has—led to a wide and disturbing range of abuses against domestic workers around the world, many of whom are migrants and an estimated 30 percent of whom are children under the age of 18.”

Source: Human Rights Watch

Smart Cities – What Will Our Future Cities Look Like?

Many municipalities around the world are exploring the Smart City concept as a way to make themselves better places to live, work, and grow. ABI Research reports that the market for technologies that feed into and support Smart City programs and projects will grow on a global basis from $8 billion in 2010 to exceed $39 billion in 2016, accounting for $116 billion in cumulative spending during that period. In order to demonstrate some of the ways in which this money is likely to be invested, Cisco created an interactive infographic showcasing its smart, connected City of the Future.

Download Infographic

How will all that money be spent? ABI Research tells us that “these cities may be installing municipal wireless networks, implementing e-government initiatives by providing access to city departments and initiatives through websites, integrating public transportation with intelligent transportation systems, or developing ways to cut their carbon footprints and reduce the amount of recyclables consigned to the trash heap”. It adds that Smart City projects frequently share some of the following characteristics:

• A networked infrastructure;
• Information and communication technologies (ICT) to increase prosperity and competitiveness – for citizens and local businesses alike;
• Collective community intelligence based on effective planning for urban and regional development, and innovation management; and
• A focus on social and environmental sustainability through the participation of citizens in city processes, with the aim of balancing growth initiatives with the protection of valuable natural resources.

ABI Research’s new study, “Smart Cities: Municipal Networking, Communications, Traffic/Transportation, and Energy,” examines more than 50 actual Smart City projects around the world, providing data on the technologies that can make a municipality more efficient and more responsive to its citizens.

Source: ABI Research

Collective Innovation - Where Good Ideas Come From

Steven Johnson, author of Where Good Ideas Come From discusses nature and process of collective innovation...

Where Good Ideas Come From: The Natural History of Innovation is an exploration of environments that lead to breakthrough innovation, in science, technology, business, and the arts. 

Peter Senge - Navigating Webs of Interdependence

Whether you are part of a family, organizational team or business in a supply chain, systems thinking is a valuable approach to understanding the complexity of today's world. Peter Senge, author of The Fifth Discipline, Senior lecturer at MIT and Founder of the Society for Organizational Learning shares his perspectives on leadership and systems thinking in this video produced by IBM. Senge focuses on the problems that are most difficult to solve and the mental models today's leaders need in order to build a smarter planet. Leaders today need to be able to be prepared reassess their strategies, work across multiple groups to find solutions and have the vision to work through high leverage solutions over time. Working smarter means working in ways that are collective and are based on collective intelligence across cities and supply chains to produce social, ecological and economic well being.

Company Culture Can Drive and Define a Business

Eucalyptus Systems CEO Mårten Mickos is a devotee of management guru Peter Drucker. In this insightful video presentation from Stanford University’s Entrepreneurship corner, Mickos elaborates on Drucker's position that "company culture eats strategy for breakfast," by offering amusing examples of culture building from his time at MySQL AB.

As CEO of MySQL AB for seven years, Mickos grew that company from a garage start-up to the second largest open source company in the world. After the acquisition by Sun Microsystems of MySQL AB for $1bn, he served as Senior Vice President of Sun's Database Group. 

Previously, Mickos held multi-national CEO and senior executive positions in his native Finland. He is a member of the board of Electrosonic. Mickos holds a M.Sc. in technical physics from Helsinki University of Technology. In 2006 he received the Audemars Piguet "Changing Times Award: European Entrepreneur of the Year 2006" and the Nokia Foundation Award. 

The Future of Families – A New Report from the OECD

Since the 1960s the social institution of the family has undergone significant transformation. In many countries, the extended family has all but disappeared, and the traditional two-parent family has become much less widespread as divorce rates, re-marriages, cohabitation, single parenthood and same-sex partnerships have all increased.  With rising migration, cultures and values have become more diverse, with some ethnic minorities evolving as parallel family cultures while others intermingle with mainstream cultures through mixed-race marriages. Families have seen more mothers take up work in the labor market, their adolescents spend longer and longer in education and training, and the elderly members of the family live longer and, increasingly, alone.  The repercussions of these changes on housing, pensions, health and long-term care, on labor markets, education and public finances, have been remarkable. Recent demographic projections performed by many OECD countries suggest that the next 20 years are likely to see a continuation and even acceleration of changes in household and family structures.  In particular, the numbers and shares of single-adult and single-parent households are expected to increase significantly, as is the number of couples without children.

A new report from the OECD explores likely future changes in family and household structures; identifies what appear to be the main forces shaping the family landscape between now and 2030; discusses the longer-term challenges for policy arising from those expected changes; and on the basis of the three subsequent thematic chapters, suggests policy options for managing the challenges on a sustainable basis.  

Read the report

Source: OECD

40 Million Jobs Needed

More than 40 million people are unemployed in developed economies alone. In a series of four videos, three partners from consulting firm McKinsey & Company discuss the underlying causes of the jobs crisis and some of the ways business and government can cooperate to create the millions of jobs that are needed.

McKinsey’s emerging perspective is that “the jobs crisis in the developed world is not a product of recession alone, and will not be solved simply by restoring economic growth. Growth is necessary and desirable. But in many countries, the historical link between growth and job creation was weakening before the current downturn began. “

“Moreover, high job vacancy rates in some regions and industries suggest that labor markets are also failing to match supply and demand for skilled workers. While the causes of unemployment vary from country to country, any holistic approach to creating jobs and economic opportunity must address both the demand and the supply side of the jobs equation.”

At the World Economic Forum Annual Meeting 2012, taking place in Davos January 25–29, McKinsey will be convening leaders from the public, private, and social sectors to further explore “this pressing issue”.

Video Topics

A complex phenomenon

Closing the skills gap

Closing the information gap

Public-private cooperation

 

 

Watch the videos

Source: McKinsey & Company

Keeping Executive Pay in Line With Company Performance and Value

Occupy Wall Street and other populist movements highlight public concern with executive pay, but managers and board directors are faced with increasingly difficult tasks that warrant proper compensation.

Our panel next week at DealFlow Media’s Activist Investor Conference in New York City examines how investors can keep executive pay in line with performance and company valuations.

We will be answering five important underlying questions:

• Is there (actually) a problem (with executive pay and company performance/value) alignment? (a recent NACD/Pearl Meyer survey of directors suggested that there wasn’t)
• Do financial incentives affect executive effort and decision making?
• What does alignment look like?
• What constitutes “proper” or “reasonable” executive compensation?
• What metrics are available to determine if executive pay is reasonable?

Joining me on the panel are:

Yaniv  Grinstein, the Breazzano Family Term Professor of Management and Associate Professor of Finance at Johnson Graduate School of Management, Cornell University

Paul McConnell, a partner with executive compensation and governance firm Board Advisory

Stephen O'Byrne, President and co-founder of Shareholder Value Advisors Inc.

More information: The Activist Investor Conference