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How a dose of entrepreneurship can propel a stagnating business
In a world rapidly changing through globalization and technology; with cloud computing and the internet of things, there are many businesses that come to a crossroads, and sometimes, are even faced with a seemingly dead end. Often this happens because the business that brought prosperity in the past is no longer attractive and profitable today, and will perhaps not exist in the future. This is the challenge for the next generation of business leaders, and in this article, we will examine a few examples of a successful dose of entrepreneurship that turned around dwindling family businesses from the growing country of India.
WIPRO was a mid-sized, prosperous company that manufactured hydrogenated oil. It was probably the largest company in its industry because it was a supplier of Unilever, which branded and sold WIPRO’s hydrogenated oil in its flagship product, Dalda. Dalda was the most widely used cooking oil in India, better known than even the name of its maker. However, the product was soon labeled as “unhealthy“ as a cause of high cholesterol.
It was around this time in the 1970’s when WIPRO second generation member Azim Premji came back from USA in order to take charge of the company. He was in the midst of his studies but had to abandon it following the sudden death of his father. One of the first things Azim decided to change was to shift the company‘s focus from the production of oil into assembling computers. Although this was a radical change at the time, he plowed forward and he recruited a number of knowledgeable personnel from DCM and put together a fine team. Soon after, WIPRO expanded from hardware to software and is now ranked among the top three software companies in India. The turnover today is perhaps a thousand times what it was when the company was a mere producer of cooking oils, and Azim has been listed among the 10 richest men in India thanks to the success of his family business.
Another example can be seen in a commodities trading company that was owned by three generations of the respected Mariwala family. The firm specialized in trading coconut oil, but a third generation family member by the name of Harsh Mariwala wanted to give the business a makeover. Coincidentally, this was also during the 1970’s, and he was sure that the company‘s profits could be higher if they diversified away from the stagnant commodities trading market. But he was met with severe opposition from his uncles who did not agree with his idea, and the family parted ways. Harsh went on to start a company called Marico, which specialized in consumer goods, and today Marico is among the leading FMCG companies in India, which produces a wide range of popular products including Parachute (coconut oil) and Saffola (cooking oil), with subsidiaries including Kaya Skin Clinics. Marico is also spreading its wings internationally leaving its footprints all over Africa and South East Asia .
Family businesses are often built on a long tradition of a unique product or service, but it must also be vigilant of the rapid ups and downs of today’s economic cycles. Now more than ever, family firms should not be resistant to a healthy dose of entrepreneurship that might have the potential not only to turn a nice profit but also propel the business into new industries and markets and create an even greater legacy.