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Thought Leadership Article: Leading Innovation in a Family Business

by Lauri Union and Carmen Suen

Family businesses, in general, tend to be more risk averse than non-family businesses, and so they are often considered to not be very innovative. However, research has shown that family businesses are actually far more efficient in converting innovation input to innovation output, and in that sense are actually move innovative than non-family businesses. These seemingly contradicting phenomena – being relatively risk averse and also innovative – are in fact both true, which is why leading innovation in a family business is no easy feat. Vaibhav Vohra '08 saw firsthand how difficult it can be when he tried to introduce new technologies to his third generation family business, Continental Group, a national leader in the logistics and supply chain industry in India.

An Evolving Family Business

Vaibhav’s grandfather started the business in 1957, as one of the oldest custom brokers in India. His father worked in the business all his life. Under the leadership of Vaibhav’s grandfather and father, the business had grown and evolved over the years: from ocean and air cargo management to freight forwarding, travel, textile manufacturing, and real estate. Today, Continental Group focuses on logistics infrastructure in commercial operations.

When his grandfather passed away in 2005 – the same year he graduated from Babson – Vaibhav went back to work in the business at his father’s request. He felt it was his responsibility as the eldest son to help out, as his younger brother had just started high school. With a great business education behind him, Vaibhav felt he was ready to return to his family business. He brought home with him a lot of entrepreneurial ideas he learned at school, and was ready to help the business grow. One of his big ideas was to modernize the company with new technologies. At that time, Continental was managing its freight forwarding business across multiple regions in India with virtually no computerization.   Successfully executing in this complex environment without technology was a feat his father was managing, but with a very large staff and a huge personal effort.

Clashes Between Two Generations

Vaibhav had learned much about information systems while he was Babson. He was certain he could have a major impact on the business by implementing computerization, which would reduce complexity and cost, while minimizing human errors. However, to Vaibhav’s dismay, making changes in the company was much more difficult than he had expected. He thought he was bringing solutions to help the company, but every time he brought up the idea of modernizing the business, his father would reject it. It seemed like there was no way he could convince his father to let him do what was best for the company. Vaibhav knew he was right about the need for computerization, but was at a loss to know why his father would not allow him to proceed.

Although Vaibhav was frustrated and did not understand the reasons behind his father’s objection to modernization, he did not give up. Instead, he tried a different tactic. He went back to his father and asked him directly what he wanted him to do. His father told him he wanted him to focus on improving sales. And so Vaibhav started putting all his energy into bringing on new customers and growing revenue, setting aside his transformational ideas for the time being.

Improved Relationship = Better Business

This seemingly small gesture led to huge improvements in the relationship between father and son. Vaibhav’s father was happy to see that his son was making great contributions to the company in the area that concerned him most. Vaibhav was pleasantly surprised to discover that he was able to talk to his father without creating conflict. The two were finally in agreement about the business – at some level at least.

Eventually, Vaibhav was able to ask his father what his issue was regarding modernizing the company.  Vaibhav’s father explained that he was concerned computerizing would mean laying off staff – people who had been long-time loyal employees in the company – and bringing in new managers. Vaibhav’s father had had bad experiences with hiring new people into management positions and discovering they were not loyal to the company.

After a year or so of working closely on his father’s priority – growing sales, and having more conversations with his father around understanding him rather than trying to convince him he was right, Vaibhav both earned his father’s trust and developed a deeper understanding and respect for his father and the business. It was at this point that Vaibhav’s father approved the modernization project.

Looking back, Vaibhav realized that in order to move forward, he had to step back first and take a “journey of appreciation”. Before making changes, he first needed to learn more about the history and evolution of the business by asking about it and listening to his father’s story. As Vaibhav learned the family story, he found a new appreciation for his father, the family, and the business. He also found it easier to communicate with his father about business. This led to a better relationship between father and son, which then resulted in a better working relationship and more opportunities for shared success.