Scaling Dilemma…Growth amidst Tradition and Change

In today’s world, where technology has made market entry much easier and scalable we see multiple products and services entering in different categories. Most of them come with their own unique value proposition which ensures that they stand out from the existing list of service providers. Sometimes these new value propositions create new customer segments itself. If we look at traditional family business also, we will see some which have grown and thrived and some which have fallen aside.

As a very small kid there were 2 shops in cochin that I would go with my grandparents for shopping particularly for weddings and other functions in the family. The first one Seematti which translates into Queen of Silks has a very interesting story. Its present promoter Mrs. Beena Kannan was forced to take over the business after the sudden demise of her husband at a very young age around the turn of the century. The business even then had been operational for close to 100 years.

At the turn of the century saree as an attire was losing out to other forms of clothing particularly among the younger generations as other types of clothing were often perceived as more manageable. Also, at that time the weaving community, the traditional carriers and custodians of ageless artisans were losing out to new automatic machine-made synthetic sarees.

Seematti worked on the key parameters to reestablish and redefine the business.

Worked with traditional weavers to understand their techniques and capabilities and contemporized traditional designs after conducting intense research into the weaving techniques.

Tried to understand the history of the garment itself as traditionally each garment was created with a specific climate and requirement in mind a lot of this knowledge had been lost as this was only known to that creator community.

To widen the use of sarees tried to redefine saree as a garment that was youthful, sensuous, chic and an object of desire which could be used under different situations as a different kind of wear without being restricted as only a traditional wear. Different types of products were created to address each of these segments.

To communicate the same to the mass's advertisements were radically redone communicating the different products of sarees which cater to the different needs of the consumers.

The needs of the customer buying experience had totally changed and hence the outlet was redesigned to meet the needs of today’s consumers adding ample parking space, incorporating all the needs of the family under one roof so that the entire shopping needs of the consumer could be met by entering a single outlet.

To meet many of these needs’ funds were needed for which the holding patterns were restructured to get in the required funds.

The thought behind this article was because a few weeks back I saw that the second outlet, which was very similar as Seematti both in terms of offerings, size and tradition then if not better had closed and the outlet was locked.

Why is it some traditional business and families grow and flourish while others struggle to scale or continue to meet customer requirements.

1. As the business grows more members of the family join in and then their descendants. As the business grows so do the members of the family and their ambitions. For most traditional family business, the primary importance is to keep the family united above everything else.
2. Everyone should defer to the head of the family is the pattern followed in most business families. Sometimes they are very strong personalities and they do not mold anyone to succeed them effectively leading to downfall once these personalities have moved on.
3. The business values endorsed in them through generations are the real crown jewels and the real reasons for their success. Some of these don’t get adapted to the changing business and consumer needs.
4. Traditional family business finds it tough to attract outstanding external talent
5. The governance levels in most businesses are low and hence find it difficult to attract outside funding when needed for business growth.
6. The business and the families are often not transparent about their wealth and what they are doing with it.
7. Though there is great potential in their business the owners decide to contain it to avoid visibility of their wealth and for avoiding the statutory needs that gets associated with the business as they scale up
8. Fear of displacement. Sometimes the needs of the business would need you to expand the same to more towns and states and countries which is not followed.
9. Fear of losing control and letting go which also leads to lesser innovation etc.
10. Lack of building Customer centricity due to centralized control very often on one individual. This also leads to missing out on the opportunities which are coming up ahead of the curve and hence fall out on opportunities.

In conclusion, scaling a family business involves navigating a complex set of emotional, financial, and operational challenges. Balancing family dynamics with professional management, planning for seamless succession, establishing robust governance, accessing capital, maintaining brand identity, fostering innovation, and attracting top talent are all critical factors that determine success. While these hurdles can seem daunting, many family businesses have successfully expanded by embracing best practices and adapting to changing market demands.

With strategic planning and a commitment to balancing tradition with innovation, family businesses can not only scale but thrive, ensuring their legacy continues for future generations. To continue learning more about scaling and why some family businesses grow and thrive while others fall aside do subscribe to my LinkedIn page, Rejos Business Bytes, or my website, rejofrancis.com

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