New Delhi: In an evolving global business environment, quality executive management education is in demand both in developing and developed countries. Hischam El-Agamy , executive director of Lausanne, Switzerland-based IMD International, one of the top global business schools in executive education and family business, speaks in an interview on the importance of succession planning in family businesses and how executives can learn from entrepreneurial innovation in India. Edited excerpts:
Family business is a forte of IMD. How important is succession planning to family-run businesses?
The three issues—succession planning, operating management and strategy—are related. There is a professor in Hong Kong University who studied 250 Asian companies. He observed that if succession is not resolved in a family business, then its impact can erode the share value by 60% five years before the succession happens and continue to affect three years after it. Efficient succession has to be done in the right time. Corporate governance is clear; family governance is mysterious—it’s a challenge, it has emotion in it. Succession planning should happen when there’s harmony in family. Unfortunately, we wait until there is crisis. In India, it’s more difficult than in the US or Europe. In a country like India, you need competence-mapping. It’s important in India to look at family business in a professional, non-emotional way.
Shifting landscape: El-Agamy says executive education will change as focus shifts from shareholder value to stakeholder’s value.
Is this evolving as a specialized stream?
Education helps. We show cases and give frameworks as per the context. In emerging economies, an increase in the number of family businesses will require more education. We started family business programme in late 1970s, followed by Harvard, then it went to Europe. Now, consulting companies and banks are opening new segments on family business. A number of Indians are coming to our campus for such a course—current leaders and elder generation are coming with compact questions for a specific solution, while the young generation is coming to look at innovative ways of business.
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Hischam El-Agamy of IMD talks about the challenges in family business and why E-MBA is an effective stream for B-schools.
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Tell us about the executive MBA (E-MBA) discovery expedition to India; how has it been helpful?
We have two types of expeditions. One for executive MBA and one for full-time MBA. For E-MBA, we come to India, and for MBA, we go to South Africa. E-MBA has three expeditions other than face-to-face classes during its 14-month programme. In India we try to understand their entrepreneurial capability and investment in social sector. Second one is on China—to know how to enter a new market—and third one is on Silicon Valley—to understand the technicality of venture capital. The question is why we will bring senior executives with 15 years of experience to India? What is fascinating in India is entrepreneurial innovation. Innovation happens in India because of certain urgency like needs, competition. The driver is different. It is important to learn these dynamics. When Indian companies go for innovation, they go for all verticals—luxury as well as bottom of the pyramid. This is an important learning for those who are in conventional corporate structure. We make our participants (senior executives) work for Indian companies to understand the business...get exposed to challenges. This learning is a win-win.
You have a strong alumni base in India but no executive or full-time programme running out of India.
India is a great market. We have discussion about it. But you have to understand that even though we are one of the top five B-Schools, we are very small; and when you have a problem of size, you have to make adjustment. You have to develop some core competence and ours is that it’s a global meeting place. We are different than others—we are 95% executive education and 5% regular MBA. We have 7,500 people graduating from executive programmes from our campus compared with just 90 in MBA.
A campus in India right now may not be the right argument—size is an issue, resources an issue. But we are developing events around competitiveness in India, we are writing case studies. We are preparing some short-term programmes to come here and run it in an international way. We see it coming in 2013. If we come to India, we want to be relevant.
Where do you see the future of executive education?
These are the people who are facing constant challenge of the evolution in the business landscape. There was never more need than now; it will increase tomorrow after tomorrow because of business complexities. The executive education will change as focus shifts from shareholder value to stakeholders value.