The English language has a way of muddying the waters of some of the most basic ideas. Take the simple word “my”. What do you think the word means?
You will say: it means ownership. “My pen” means “the pen which I own”.
And what do you make of the phrase “My country”? What about “my faith”, or “my profession?”
It becomes apparent that the simple two-letter word actually means two opposite things, depending on where you use it. When I say “my country”, I mean “the country I belong to”. When I say “my profession”, I mean “the profession I belong to”.
Behind this basic confusion lies a larger truth. You cannot own something larger than yourself. You can only enjoy the privilege of belonging to it. I am surprised how many people I meet who seem to have never thought about this.
This basic incomprehension becomes painfully apparent in some businessmen and entrepreneurs when they refer to their business organisations. Some businessmen actually believe that they own their businesses.
On paper, this may be true — you may be the sole shareholder of a private limited company. The accountant and the judge would both call you the owner. But that’s where the definition ends and the stupidity begins.
A business organisation is, except in the most simplistic of cases, larger than its paper owners. A business organisation is a collection of people, a shared vision, and other (I hope!) very valuable intangible assets like goodwill, credibility, etc. It is far larger than any single human or group of humans. The house of Tatas is far larger than even the iconic Jamsetji Nusserwanji or JRD.
Most businessmen I meet cannot understand this. They cannot comprehend that even if they have founded the business, given it life, brought it into this world, and are financially and legally responsible for it, they do not own it the way they own their pen or watch. They belong to their organisations.
The tragedy does not stop here. In India, many of these businessmen come from communities which sometimes have highly feudal, patriarchal cultures and values. When these people use the phrases “my son” or “my daughter”, they actually believe that they own their children. The degree of this feeling of ownership and control has to be seen to be believed. Occasional news reports of honour killings in our country and elsewhere remind us how extreme and deadly is this incomprehension sometimes.
We cannot escape asking ourselves this question: why do so many otherwise mature adults screw up with this basic insight?
My feeling is that the root of the problem lies in the way members of Indian business communities see their businesses. They do not see their businesses as living organisms which are nurtured by teams, employees, advisors, vendors, and customers. They see their businesses as merely a means of livelihood.
Take a step back. See the economic and cultural background of many of these communities. What means of livelihood did they have, historically? How did they pay their bills? They had two primary occupations: agriculture and trading. They tilled the land in a harsh climate, saved to ensure their family’s survival, and the more enterprising of them got into trading of commodities whenever they saw opportunity. Money did not come easy to this land, and the inhabitants’ will to survive and prosper was essential. Note how the major business communities of India all come from relatively arid areas — they did not get the benefit of the alluvial soil of the Ganges. Nature was something to struggle against, not something to revel in with song and dance.
The key element missing in this scenario was employment opportunity. The Industrial Revolution did not hit this belt. There was no stage in their history where hundreds of thousands learned that one can make an honourable living employed in large corporations which, on the whole, treat their employees fairly. These communities jumped from agriculture to trading to (in some cases) business creation.
With such a background, and a feudal culture, it becomes almost automatic that one who creates a business hoards it, hoards not just the wealth generated but also the control of the wealth-generating entity itself. Traditionally, businesses were tightly family-run, and rarely was an employee given any important decision-making powers. With this foundation, it seemed natural to treat the business as merely a money-making machine: that was its genesis. A business was, to the businessman, merely a means of livelihood. Under easier circumstances, he would have sought other means of livelihood. Many of these business owners were, I suspect, reluctant businessmen.
A new era and exposure to the larger world changes our thinking — we now question this model itself. We have seen a much larger vision of what a business can be. The biggest factor to bring about this change has been the growth of knowledge based businesses, where specialists with very little money and no entrepreneurial risk appetite are nevertheless so vital to the business health that the business owner is forced to realise that non-family members do matter. Trading has, in the meantime, lost its sheen as globalisation and cross-border competition have eaten up margins. Therefore now, the tightly-controlled family-run business faces challenges competing against a new class of business organisations. But mindsets take the longest to change.
I have been asked: what’s wrong with a tightly-controlled business, run by its owner as if it is his personal backyard? This question refuses to go away, therefore I pose counter-questions to my friends:
- Would you want your business to last beyond your life?
- Will your business employ others?
If you can say “no” to both questions, then there’s nothing with wrong treating your business as merely a means to earn money for yourself. There are many businesses in this category. A lot of freelance professionals, e.g. chartered accountants, lawyers, consultants, designers etc. operate one-person businesses. They will never build organisations beyond a secretary or two.
But for the rest of the businesses, there is little or no future unless you at least employ other intelligent and motivated people. That’s when the tightly-controlled personal backyard model begins to hit limits. If at that point, you wish to follow the tight-control model, then your business will never blossom.
People have actually asked me, “What is this blossoming?” I can answer only by pointing to a child. Will we take delight in a child who, even at age 30, needs to be fed and clothed, taught and told what to think? Do we just want to treat the child as an appendix to our own existence? Or do we want him to grow beyond us? I find the answer to their questions in the very idea of freedom. What is the value in the idea of freedom, if we don’t want to see individuals growing and living independent of us? The ability to use freedom is only possible if the entity is “set free”, is allowed to blossom. A business is just like a child. You may create it, but it should be allowed to grow beyond your control. A business needs to be permitted to blossom. Only then will it enjoy the full potential of the freedom and power it carries.
The fundamental power source in an organisation is its team. Even blue-collar workers are part of this team — an idea many business owners of the old school cannot appreciate. Forward-thinking business leaders in Japan have learned this secret decades ago, and have led many aspects of the quality and productivity revolution in manufacturing. If you want your business to exploit its full potential, you need to allow your team the freedom it needs. You need to let the business grow beyond you.
As a businessman or entrepreneur, you do not own or control your organisations the way you own your petty physical possessions. You are merely a custodian of these entities, and they are much larger than any human possessions. And this applies to your children too.