Watch out Start-ups!

Ratika Gore

Author: Ratika Gore

Date: Wed, 2016-09-21 13:26


As I was listening to my ex-student, sipping coffee in my campus cabin, talking about his decision to quit his new start-up venture, I wondered ‘why was this happening?’

He was a pedigree professional; from a premier engineering college, with 2 years work-experience in a consulting firm, and an MBA from a prestigious institute. He was our poster boy for budding entrepreneurs on our MBA campus! He started his venture in the 1st year on campus and had the conviction to opt out of the placement process. Since the launch, he showed decent revenues within 4 months of operations, scaled from 1 to 2 centres within 8 months of starting. He had the fire, the ‘junoon’, stamina for crazy hours, conviction, knowledge, initial success, institute support, even support of parents and girl friend... he was not only poised for growth, there were not too many obstacles in his path. So what was going on here?

After 2 coffees and 1.5 hours of conversation on various business challenges and workable solutions, he blurted out, ‘I don’t want to work with my partner any more, I have had enough’. The option of a conversation with his business partner didn’t interest him at all... Evidently he had been trying to communicate for 5 months now. An offer to mediate a conversation didn’t interest him either. The decision had been made. ‘Woh mera bada bhai hai! (He is my elder brother!) How do I argue with him? Agar mera dost hota (if he had been my friend) I would have challenged him back with a what the #**# and argued it out over beer’, he finished off before looking down.

His business partner is his elder cousin brother! It struck me, while I was talking to him as a professional, his context is now that of a Family Managed Business (FMB).

The interesting part about communication in most FMBs is that ‘expectations, obligations and duties’ can be big barriers to effective communication. I also work with FMB students on campus and it is interesting to note how communication changes. ‘I know him since I was a kid’ or ‘I understand what he needs’ are serious baggage to work with. The assumption that ‘I know what the other person needs’ without looking at it objectively can create serious noise on how the sender creates the communication message. ‘But he should have known what I want’ or ‘I can’t argue with his decision, he is elder to me’ can add noise in how the receiver perceives the message. Serious breakdowns in communication happen when there is no real opportunity built for feedback to complete the communication process. One of the keys to success of many large, successful family managed business houses is that they have managed to curate a culture where real 2-way communication is encouraged. In fact, the younger generation is expected to come up with better perspectives and ideas.

What intrigued me here was that even when professionals who are bred in a culture of flat structures and open discussions are faced with a family work environment, they can find themselves ill-equipped to take on communication breakdowns.

Going back to my ‘watch-out’, bootstrapping or partnering with family members is a very attractive and real option, but perhaps one needs to keep eyes open to such challenges. New communication rules and processes can be set up. I would go even further in saying; new venture comes with a new canvas, so maybe it could also be time to create entirely new traditions!


Originally published in Business Today on July 13, 2016

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I have read one more article by Ratika Gore base-lined on need for effective communication. I must admit the simplicity with which she articulates her thoughts on the subject is very impressive. The real life example she cites in her articles helps the reader to connect better with her thoughts and lends credibility to her proposition. I really like the problem-reason-solution style of her writing. True, two-way and clear communication is the backbone of any successful FMB. Family Managed Businesses have always been prevalent in India. By large, most of India's biggest companies are still family-owned, with global names like Reliance, Dabur, Bajaj and Tata in this league. Reliance split in year 2005 very is a clear example of how improper communication on succession planning by Dhirubhai Ambani, founder of Relaince group led to disagreement among Ambani brothers thereby leading to company split.

It is well explained with a form of example in a consise manner the hurdles, issues and the disputes we encounter in managing the FMB business. FMB has its own challanges & the biggest hurdle is to succeed is closed channel of communication. In the current case it is well elaborated that a talented and a dynamic person cannot express his views and is getting frustrated which can lead to an impulsive decision, he is carrying the baggage of elder brother sort of hierarchy in FMB is always dangerous and not really good for long term business relationship. All Fmbs are always loaded with expectation, perception, responsibilities, duties, etc and when either of them falter than the business suffer. To sort out problems of FMB startups, the best way is to have flat hierarchy, open communication & multiple platforms to have innovative communication to remove all obstacles.

Young bright enthusiast millennial come with fresh idea and they believe their ideas is best and unique in this world and it can turn into million counting machine but sometimes its not true. Conflict certainly arise when this Idea are great but not commercially viable or scalable. Therefore it is important for any millennial to develop two way communication channel specially attitude of listening with empathic way. With proper feedback action can be corrected for better meaningful way thus it can reduce frustration level among entrepreneurial and they can move forward towards meaningful goal achievement. Many times in family management business such communication are exist but majority times creative ideas are killed by senior members and junior members cannot overrule since they are obliged to follow advice of senior due to respect, blood relationship and lack of economic freedom. Secondly Indian DNA has not been much collaborative where we listen each other and work irrespective of caste, religion, gender, color. Since childhood family head taught us to follow order of Senior most family members which resulted poor decision making and execution capabilities of individual and individual are not growing as leader. This is basic problem of Indian Society. One thing every founder needs to understand that no one in this world perfect and no one knows everything. People who had decoded this genesis are successful entrepreneur. Further millennial has to build team with diverse views because you are not expert in all area and founder job is to lead team but not to work as employee which hardly Indian FMB understand and that’s why either their business are not growing or there is conflict of opinion arise within circle. There is also gap arise in thought process of Young and old Minds since young mind need to reach faster and quicker way to achieve their dream while old one who are experienced they feel speed will not bring success. This battle everyone has to fight and only those who are psychologically strong thriving or else everyone loose hope. Every problem has solution and solution only comes out if you engage in communication with other with whom you have conflict or differences of opinion. Listen to their point of view and put forward your point of view and than negotiates position which is beneficial for both to move forward for achieving common objective. There is need to takeup mentorship or coaching with someone else ratar than your family members. This help to resolve various conflicts and bring fresh perspective.

The simplicity of showing the importance of communication is marvelous. Once again she quoted a failure reason of a start-up due to communication gap. It is very common in our Indian culture, especially in Family Managed Business or a new venture where partner or investor is from our close relation. There are process of proper communication, but new idea were ignored / killed by senior family member/s and junior family person need to obey his senior member decision due to many reasons. But this is a brutal fact of Indian society. Latest, example we have Tata, where new Chair person’s working style were not matched with the values and ethics of the organization and founder member decided to terminate his service. Two- way communication is very much important in our routine life. Any decision in business is not going to get complete without feedback from listener / recipient. The way Prof. Ratika use to explain the importance of communication or any part of communication and relate them with real examples is tremendous. We have witnessed with so many failure and split / partition in big FMB (like Reliance and Birla’s). Our young generation is far away from the formalities to express their views, thoughts, new business ideas or their dislikes. They simply try to jump into the solution part rather than to follow the process or don’t like to stick with individual decision. The article is very much eye opener for millions of dreamers, who wish to come up with new business ideas or Start-Ups. Idea can be great, but it might possible that it will not be financial viable. Idea may require some twist and turns to become a good business. For that everyone must understand the importance of Two-Way communication and to be a successful person. Listening is the first quality of a great communicator. Thanks Pramod Kumar Mishra

Effective communication is very important in case of Start-Ups as they have lesser time to execute the tasks in compare to stablish organisations in fixed period of time. Current generation is capable to handle personal & professional life very well if environment support the same. In few cases only we observe younger generation carry any personal relation at work places. Now in this effort, I would recommend elders to show broadness to accept organisational & personal role differently. This is very much required for start-ups. Communication is the only tool which helps human being to define their existence. Here, we have very important points like two-ways of communication one side is personal & other side is professional. Most of the family owned businesses, now a day implemented these communications very well to manage personal & professional responsibilities. Open discussion culture helps family owned business to run effectively. Sometime culture & emotion comes under professional ways but we need to think of organisation, employee & their families, all are dependent on this business to run their family need. So, both family & business are interdependent. Craziness about work & communicating in passion is required for growth of any start-ups. So, new tradition of communication is important to transfer knowledge, requirement & on time deployment of tasks. This is important for start-ups businesses. Sometime complete business decision makes or breaks the rule of business. We need to focus in our effective communication to get things done with cheers.

The blog highlights the importance of business communication in the emerging family managed businesses of India. Reading the title, however, forms an impression that it may give an insight on some of the commonly talked issues of the new age start-ups but it’s surprising or rather impressive to see the point made here. Ratika mam has been successful in engaging the reader by starting with a story and I loved the way she has explained the relevance and the criticality of effective business communication through a real life example. This beautifully written piece actually reminds me of the fact that Indian culture since ages has been about only respecting the views and opinions of elders rather than having a discussion within a family. Though, this culture is drifting towards the western kind, where even the teenagers are free to express their opinions and make their own decisions: There are still a lot of families in India which operate in the same old manner. Since childhood, we have been taught to follow what our parents say and we by large have been doing the same. This problem of two-way communication becomes worse in case of the family managed businesses. But the times need to change and this issue needs to be addressed. It’s the responsibility of the both the generations to break the ice and ensure clear and effective communication within their businesses. The old need to be more receptive and the young need to be patient. The minds of this new generation are full of creative ideas, imagination and the enthusiasm to bring about a change while the senior management is still comfortable with the old school of thought. It becomes suffocating for both to work under the same roof. Often, it is found that the personal lives of people get affected by differences in their professional thinking. Both need to understand and also accept that there is a gap in their thinking and the mind set and work towards it. This is a psychological battle which needs to be fought and the fight is not going to be easy.The issue under discussion is not just restricted to family owned businesses but is relevant to all the start-ups and even big organizations. The big idea is the most important thing to start a business but running any business requires a clear and transparent communication between all the stakeholders. This requires listening to people, developing a learning attitude and understanding different perspectives. A lot of organizations have already realized this and this is the reason why most of the companies have become flat organizations. The top giants like Amazon and the emerging startups like Paytm have incorporated this and they have been very successful in ensuring employee satisfaction.

I wish I could have read a similar article describing so precisely and succinctly the most important factor for success of any start up two or three years ago. Though 80% of start-ups in India fail within first 3 years, ~30% start-ups fail because of lack of core team. Further, if I draw some parallel from my experience as a start-up founder, it will resonate with the article more. It was March 2016, when I started on building my company in automobile post-sale services. First biggest step was leaving a well-paying, cushy job at Honda. In my initial days, I was working more than I used to in my previous job, learning more every day, and pushing my limits farther with each passing day. And I was enjoying it all. As I converted a few orders and increased the top line to an impressive number, I realized that I am not ready to scale up. I realised one alone can't run a service business model with no unique tangible product. One has so many customer touch points, and so much to lose with one lost ticket, and on top of everything the competition grew multiple-fold in these 2 years. I wasn’t even able to think of taking a leave. Soon I was on a lookout for a cofounder. None of my friends were yet willing to sacrifice their job for an unstable paying company. I was getting good response from B2C channel and I had to soon enter into B2B market as well. For the same reason I didn't give much attention to the choosing the co-founder part and looped in my brother-in-law for the position. This decision was not only because he was a pass out from one of the Top 5 management B schools in India but because he was also ready to invest in the idea, an addition on the left side of the balance sheet. Wow! I gloated from within. I thought I hit the bull’s eye and suddenly every dot seemed to be connecting. But as the time passed, it all started to wither. I was not the same person anymore, operating the same business. I was so bogged down at times because of the communications that was happening within the core team and decisions that were being taken. But as this all started happening frequently the results were pathetic. We were missing out on big deals and balance sheets started looking deep red. But finally he joined a corporate again, not because of our friction but because of personal reasons. But the great learning was I realized the importance of business communications at large. And I resonate with the article at large.

Family owned businesses are complex and have a completely different operating dynamics. Most partners are family members or close relatives who are/were involved in building up the legacy and the reputation of the firm and have also helped in maintaining the same (of course some partners are more involved than the others), and a lot of points that Prof. Ratika Gore makes are very pragmatic and to the point, but having said that, can the communication between two members (of different generations or of the same generation with a considerably difference in age) be the same as that between two friends? Another question that arises is, how does one approach an elder, peer or even a younger member of the family who has been more involved with the daily workings of the business, to have a constructive conversation without crossing the arbitrary boundaries that we ourselves and especially the Indian society has set around us? An interesting point that Ms. Gore touches upon is designing a communications coursework for FMB program that incorporates the above said points and the level of practicality involved in the application of the knowledge learnt from the same. How does a person make his/her idea clear on the dealings of the business without hurting the sentiments of the other member of the family? I have always been baffled by the inner workings of a family managed business especially the small and medium scale enterprises. The balance they strike between family and business relations and displaying the maturity to listen to ones inferior, does this correlate to the factor of being based in a Metro or a Tier 1 city against a Tier 2 and Tier 3 city play a part in these interactions. Can a family be mature enough to differentiate between conversations that involves decisions to be made from a business point of view as opposed to conversations that are personal? The answers to the above questions, according to my humble opinion, is like most management solutions, “It depends”. It depends on the exposure the elder member is ready to give to the fresher, or the maturity the other younger one displays in comprehending the undercurrents involved in the business. In the end, I would like to conclude with theses final thoughts, it does not matter if it is a start-up or an established business, when a family is involved, clear communication along with a high level of diplomacy is required if it wants to survive and evolve in this competitive environment.

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