Seven key business lessons from Thomas A Timberg’s book The Marwaris: From Jagath Seth to the Birlas

Thomas A Timberg’s Harvard doctoral dissertation was on the Marwaris as industrial entrepreneurs. Attending the Fifth Mumbai International Literary Festival, he spoke on Friday on ‘Marwaris: The Kings of Commerce’. Here’s an extract from Timberg’s 2014 book, The Marwaris: From Jagath Seth to the Birlas (Penguin India), in which he lists 7 key business lessons by earlier Marwari businessmen which are still valid “and perhaps will remain so”.
1) Watch the money

There are two key functions performed by the Marwari business firms and business groups – strategic management of investment funds by moving them to where they are most productive in the long term and close financial monitoring of the enterprises in which they have a share. It is perhaps the changes in Harsh Goenka and Kumar Managalam Birls’s business styles that point to a dilution of finance-centric strategies in present times.

2) Delegate but monitor

Successful business have to learn how to delegate, otherwise the span of economic activity can engage in will be limited. They also have to know when to intervene, fully aware that a decision to intervene is costly. Usually it is easier to replace an unsatisfactory executive rather than turn him around. Ineffectual executives and family members are gently moved out to cushy and uncritical positions.

3) Plan but have a style and a system

This is somewhat ambiguous as we clearly see a transition from an intuitive style to a more systematic one. However, this may be, as some suggest, a product of the transition from business founders to inheritors.

4) Lead to expand and do not let the system inhibit growth

A key characteristic of successful businessmen, as Aditya Birla said in his perhaps inappropriate criticism of Ratan Tata, is a drive to expand. Many forms have expansion in their mission statements but few implement it.

5) The right corporate culture

The firm or group must have a style which befits its market and the times. Changes or adjustments constitute one of the most difficult tasks. Corporate culture in a firm is critical in inspiring loyalty, especially of competent managers about which commentators like Tarun Khanna are so concerned. Financial incentives can go only thus far, and are sometimes counterproductive.

6) Don’t get blown away by fads

The shelf life of half the management fads is six months. Professors, including those from business schools, devise striking and attractive theories which bear no responsibility for success. A responsible manager has to be more tentative and experimental in his approach. As any school debater knows, there are usually at least two sides to any question, even multiple sides as in the Anekantavada of Jain logic. The problem is to decide which is right in a given situation.

7) Do not miss new developments

Some businesses describe themselves as ‘knowledge businesses’. As a matter of fact, all are. The world’s oldest family businesses have had some very successful ventures and a lot of failed ones because of missed opportunities.