In today’s ‘Borderless’ world where Global uncertainty seems to be the norm, the role of a CFO has never been more critical. He is not only responsible to carry out his standard set of roles and responsibilities but also act as a strategic advisor and as a Sounding Board to the CEO, Management team and the Promoters. He plays the key role of a ‘Risk Officer’ when it comes to evaluating and conceptualizing the promoter’s strategic vision. The role has also moved much beyond ‘crunching numbers’ and involves discussions with key stakeholders (internal and external) keeping the organization’s future in mind while leveraging on past experience. The role becomes even more critical and challenging in a Family Business environment where he is also a part of the ‘Change Management Process’. In this issue, we examine the relevance of succession planning in family businesses, explaining this with relevant examples from an Indian as well as a Global context. This issue of MyCFO also talks about the role that Business Intelligence plays in shaping the decision making ability and its role beyond a ‘post mortem’ of the past.



One of the concerns that all businesses face more so the family run businesses is the identification and grooming of a successor or group of people (team) which would fill the void once the leader retires – either by choice or due to other circumstances. Succession planning is important to maintain the organisation’s effectiveness through least possible disruption due to a change in the leadership. There have been numerous examples in the past where smart and proactive succession planning has helped companies to carry on the business juggernaut in the smoothest possible manner. McDonalds is a classic case in point where the company had to name a successor within an hour of the death of its 60 year old chairman, Jim Cantalupo. This was possible only due to years of succession planning and grooming the next leadership team. GE is another case in point where Jack Welch started the process of succession planning in 1994 way before he was due to retire. Jeff Immelt, W James McNerney and Robert L Nardelli were in the fray to replace Jack Welch and finally Immelt who was the youngest of the lot succeeded Jack Welch in 2000. The other two went on to become CEO’s of 3M and Home Depot respectively. Succession planning does not necessarily mean that the baton has to be passed on to a family member; it simply means that the ‘best man’ would lead the company. The case in point is that of Ranbaxy Laboratories Limited when Parvinder Singh (Ranbaxy’s promoter and CEO) handed over the reins of the company to D. S. Brar (not a family member) amidst stiff opposition from family members. Mr. Parvinder Singh believed that in the interest of the business it was better to hand it over to a ‘non – family’ member. There are numerous instances in the Indian context where one has come across cases where succession planning is considered to be ‘essential’ and has been discussed at great length. Tata group has been in the news to appoint a successor to Mr. Ratan Tata. A 5 member advisory committee of eminent personalities has been formed to assist the Tata group in arriving at this decision. The Godrej group also has appointed a facilitator last year to work out a succession plan as more and more family members join the group. The GMR group has in place a plan wherein the successor to Mr. G.M. Rao would be nominated by a majority vote by the board of directors (comprising of his 2 sons, 1 daughter and their spouses) purely on the basis of performance. These examples only reiterate the importance of succession planning not only at the ‘leadership’ level but at all levels in an organization. At a ‘strategic’ level, succession planning is probably the most important HR risk. The consequences of appointing a wrong successor could be much worse than slow growth or decline in market capitalization. This is easier said than done especially in an Indian context where the ‘family silver’ is passed on to the next generation rather than the best person suited to take over the mantle. Family managed companies would do well to remember that the chosen successor should have the necessary education and skills and be made to work his or her way up the management to gain the maturity needed to appreciate the privileges and responsibilities involved. Alternatively, they should be bold enough to appoint a professional manager, when there is no suitable candidate within the family. We are not seeing this happen enough in mid-sized companies, though the larger Indian companies have been more mature and practical in dealing with this situation. Are you thinking about succession planning for your organization?


Today’s businesses rely heavily on data and the information it delivers about their companies, for decision making purposes. Whether it is for the purpose of customer acquisition, improving operational performance, or understanding competitors, all of the information is presented in the form of complex and large amounts of data. BI systems offer applications and programs that enable an organization to monitor the current and past activity of their company. In addition to this however they can also use the BI tools to make predictions about the company’s future based on a possible decision.

Though some may consider this a complete waste of time and finances, any thriving company knows the importance of making an informed decision. BI systems contain a variety of tools that allow managers or executives to view real-time information about the inner workings of their organization. This empowers them by ensuring that they are completely informed on all aspects of the organization and how each one is performing. Getting familiar with how productive each area of your organization is allows you to funnel all of that knowledge into the choices you have when it comes time to make crucial decisions. Basing decisions on the statistics and predictions made by the Business Intelligence applications guarantees that the organization is not blindly stumbling forward into the unknown. Some of the BI tools being used are Business Objects (SAP), Oracle BI and Hyperion (Oracle), Cognos and IBM analytics (IBM), Pentaho, Databeam, Quick Insights and MAIA to name a few. Contrary to popular perception, there are reasonably priced BI options available in the market today.

‘Seven Strategy Questions: A Simple Approach for Better Execution’ by Robert L. Simons talks of how one must translate your organization's competitive strategy into day-to-day actions that will enable your company to win in the marketplace through channeling resources into the right efforts, striking a balance between innovation and control, and getting everyone pulling in the same direction. How do you accomplish all this? For more information on this book, please visit




WealthTree is assisting a Promoter Managed Group in the Industrial Enzymes business with building a business plan for the next 5 years, charting a direction for the group including suggesting a business diversification plan, sales strategies, product and customer rationalization, organization structure, valuation models, cash flow forecast, among other areas. The business plan also includes benchmarking of financial parameters with peer group companies. The Business Plan will allow the Promoter Group take on personal targets and cascade them down the organization. For more details on this project, please contact Deepak Narayanan at


PricewaterhouseCoopers Survey reveals that Family Owned Businesses wanting to make an Ownership or Management transition are fully ready or equipped to do so.

The PricewaterhouseCoopers Family Business Survey 2010/11 has been recently released. The respondents were family business owners and managers (1600) in 35 countries. The survey reports some motivational numbers in that 60% of the respondents will grow their businesses over the next year and more than half (56%) are upbeat about their markets. 95% are optimistic they can compete effectively with the market leaders in their niche. While a surprisingly large number of family firms have seen demand for their offerings increase during the past 12 months (modest growth: 32%, significant growth: 16%), 34% have seen a reduction in demand, up from 10% in 2007 when PwC first conducted the global Family Business Survey.

Transition emerges as a key issue with 27% of the business owners expecting a need for change in ownership or management within the next five years. The red flag is that 48% of these Promoters have no plans to accomplish the transition. Only half of those who have made arrangements know who will take over the top job. 62% have not prepared for the death or sickness of key managers and only 29% have adopted procedures for resolving conflicts between family members. Norbert Winkeljohann, member of PwC’s Network Leadership Team, says: “To ensure a smooth transition, family businesses must do some careful planning. Companies that survive a change of ownership are usually those that have developed a good plan, outlining how the succession will take place and what criteria will be used to judge when the successor is ready to take over the reins.”

To access the survey, please visit




WealthTree, in partnership with Exim Institute, was ‘Knowledge Partner’ to a seminar on ‘ASEAN Free Trade Agreement’ organized by BizXchange (a B2B initiative by the Times of India group) on the November 16, 2010. Bizxchange, in one of its recent initiatives to educate SMEs, is scheduled to host a series of knowledge sessions through road shows. The seminar was attended by promoters and senior decision makers from various Industry sectors. For more details about the event, please visit For copies of the presentation made, please contact Deepak Narayanan at

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