Traditionally in a small scale or a medium scale family business, the
family heir is expected to join the business soon after he sharpens his business acumen. He is often not expected to pursue any higher education as the 'on-ground' experience is given more
weight over exposure to theoretical know-how. However in today's world of
complex form of doing business, many of the families take the alternate route of
"acquiring the knowledge first and then followed by applying the
same to understand the latest trends and methodologies in the contextual industry".
In my view, both the paths hold their own importance although I am more
of a supporter of the second path. In today's world where the competition is so
high, it is important to stay ahead of all your competitors which mean that if
your competitor is doing something innovative you have to respond by adopting a
counter-measure that can actuate the most appropriate response. Higher
education can bring in the required discipline in the business operations. It
can help in executing innovative ideas to gain competitive advantage. From my
point of view understanding the industry's modus operandi is very important and
for that the plan of joining the family business can be postponed for some
time.
Just to illustrate with an example, recently one of my uncle lost a huge chunk
of business value because he was unable to track down the movements of the
inventory from the warehouse to the main unit. While it was known to him that
automation would bring in discipline to his business and would help him prevent
the leaking, he lacked the practical experience of bringing about the change.
An experience of modern inventory management of the industry would have helped
him implement an enterprising solution with ease. My uncle could also have been
more aware of the difference between continuous and periodic ordering
policies. Things would have been
different if he had applied these widely used industry concepts.
Similarly for large scale family businesses there are innovative ways of
doing things being tested in the industry every other day which can be applied
to these business. An experience with a different business entity would only
help dealing with the complex business reality. Additionally, the old
businesses often fail to take steep path of growth and profit. Expansion
becomes difficult when the age-old formula is continuous applied with minimum
or no change. E.g. my father is in the wholesale business for almost 30+ years
and he has never thought of venturing into retail space or he has never thought
about vertical and horizontal integration of his current business.
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