Can Indian conglomerates escape the shadow of shared leadership?

Simply put, who will succeed Mukesh Ambani, Ratan Tata and Gautam Adani at the Reliance, Tata and Adani groups, respectively? None of the three has a clearly designated successor, with Adani being the latest to talk about shared leadership of the group going forward.

Over the last few years, the issue of succession has been brushed under the carpet of family councils, executive committees and other such formations. This lack of a central authority assumes a coalitional co-leadership that presupposes a perfectly rational collective mind, which is a denial of basic human nature. 

With family businesses in India extending their sway over the country’s economy, any number of consultants and gurus can be found to dish out such seemingly pat solutions.

Also read: Avoiding the patriarch trap: Lessons in succession planning for Adani and Ambani

But evidence—anecdotal as well as empirical—suggests that while ownership can be shared, when it comes to running multibillion-dollar groups with multiple businesses of high complexity, leadership-by-committee rarely works.

At the Hinduja group, the four brothers, Srichand, Gopichand, Prakash and Ashok Hinduja, signed a perfectly cordial agreement—that any asset belonging to any one of them belongs to them all. The fragility of the sentiment was tested soon enough, as the brothers’ successors questioned its validity, leading to a bitter family feud. 

In November 2022, the family decided to smoke the peace pipe and settle its affairs out of court, but this came only after a lengthy and wasteful legal battle.

Similarly, at the erstwhile Ranbaxy group, Parvinder Singh’s two sons, who were running the business jointly after their father’s death, ended up engaged in a bitter and highly public blame-game once the unravelling of their fortunes started. 

The late Parvinder Singh himself had a running battle with his brothers, besides of course his infamous boardroom clash with his father Bhai Mohan Singh.

As Leo Tolstoy wrote in his novel Anna Karenina: “All happy families are alike; each unhappy family is unhappy in its own way."

Joint leadership is somewhat like that: when things are going well, no one has a problem. But the moment there’s a bone of contention, rifts surface. Strangely, two of the three large Indian groups in question have had first-hand experience of the perils of contested leadership.

At Reliance, Dhirubhai Ambani would have thought the house he was leaving behind was in order, with his two sons running the business together. After all, there had never been any sign of discord between the brothers during his lifetime. It was only after his death that differences surfaced.

At Tata, it was even worse. While J.R.D. Tata clearly named Ratan Tata, a family member, as his successor, the various satraps of the group refused to accept his decision and Tata had to fight an attritional battle to assert his supremacy.

Both Reliance and Tata hit stable paths only after an undisputed leader took charge and stamped his singular authority over the entire business group.

Also read: How does a family settlement resolve disputes within joint family businesses?

That the problem runs deep can be seen from how a similar dilemma dogs other successful groups like Bharti Airtel, where again it isn’t clear who among Sunil Mittal’s two sons Shravin and Kavin and daughter Eiesha will succeed him.

Some experts have floated the idea of a Walmart-like structure for Indian family groups. The Walton family plays no operating role in the company and exercises its rights merely as a shareholder, while retaining only board-level oversight of the business.

While it is possible for India’s business families to emulate that model, given the outsized roles of incumbents, it will be a tall order for their inheritors to detach themselves completely.

Tata, for instance, had already stepped aside as chairman of his group when he led the decision to oust his handpicked successor Cyrus Mistry. Even the latest development at Tata Trusts, which owns 66% of Tata Sons and through it controls the various group companies, leaves scope for confusion. 

A high-powered four-member executive committee set up to oversee the Trusts includes Venu Srinivasan of the TVS group, Vijay Singh and Cyrus Mistry’s first cousin Mehli Mistry, who is close to Ratan Tata. But with Tata as its chair, the key question still remains: Who will be his successor as the head of the all-powerful trusts?

At Reliance Industries, Mukesh Ambani’s three children—Anant, Akash and Isha—have been given clear operating roles in the different businesses of the group, which would be fine if the three businesses they manage were independently listed companies with no cross-holdings. 

That’s unlikely to happen, which means that there will always be the question of who takes the final decision when a group-level issue comes up.

Also read: Embrace democratic decision-making in family business succession, says Jatin Popat

Family businesses by their very nature need a clearly identified successor. The alternative is to fully professionalize such groups, leaving even the topmost roles to professional managers, with no intervention in how they run them. But that calls for the kind of distancing from the business that most Indian owners find difficult to achieve.