BIRLAS
'Family' spirit and frugality help the Birlas keep pace with changing times
For
most of its over 150-year history, the Birlas have been a major
player in the business life of India. Since their entry into industry
in 1919, immediately after World War 1, they have consistently stood
amongst the leading industrial houses, jostling for the top spot with
the Tatas.
In terms of leadership amongst big business and influence in political circles, the Birlas were unsurpassed, at least till the 1970s, under the group's patriarch GD Birla who was responsible for forging much of the solidarity which private enterprise displayed in the momentous decades from the 1920s to the 1960s. What lies behind the Birla success story?
In terms of leadership amongst big business and influence in political circles, the Birlas were unsurpassed, at least till the 1970s, under the group's patriarch GD Birla who was responsible for forging much of the solidarity which private enterprise displayed in the momentous decades from the 1920s to the 1960s. What lies behind the Birla success story?
It
is worthwhile to speculate what has enabled the family-firm to remain
dynamic and at the forefront of business leadership. The firm had
started in the mid 19th century with trading and speculation, first
in Bombay and then from its gaddi in Calcutta's Bara Bazaar.
After making windfall profits in speculative markets during World War 1, the family made the transition from old-style trading to modern industry by first entering jute and then expanding into a number of sectors.
After making windfall profits in speculative markets during World War 1, the family made the transition from old-style trading to modern industry by first entering jute and then expanding into a number of sectors.
This
expansion continued in the colonial period and then independent
India, through the somewhat restrictive regimes of 'Nehruvian
socialism' and the 'license-permit Raj' of the 1960s and '70s. When
the country embarked upon liberalization in the early 1990s the
Birlas were well positioned to take advantage of the opportunities it
brought.
It is now well acknowledged that capitalism thrives on certain traits and values - the stuff of culture. It may be worthwhile to discern what values have shaped the Birlas and how these may have contributed to their success. A key tenet has been to look upon the family as a social entity. Individualism is discouraged and relations within the business are built for the longterm.
A broad view is taken of the family to include kinsmen, business associates, managers and employees. GD Birla was known for his legendary ability to hire and retain mangers and delegate responsibilities to them.
Much of these relations of trust led to associations forged for life. He delegated easily and was able to build up an inner circle of talented people upon whom he depended. In his lifetime he expanded the business from a family-run firm into one which evolved into managerial capitalism, although based upon kinship ties. Basant Kumar and Aditya Birla worked largely within this structure.
The coming of Kumar Mangalam meant the shedding of the kinship-based baggage and expanding the pool of managers, drawing the best talent wherever it could be found.
To Kumar Mangalam goes the credit of turning the kin-based managerial capitalism into a true meritocracy. However, in doing so he retained the spirit of the 'family' in that relations with top managers are seen as long term and based upon mutual trust and loyalty. This family-oriented style has worked well for the fourth generation of the Birlas.
Another Birla trait is of frugality in personal life, which has historically been a code of behavior for generations of Marwari merchant families, a trait shared by Chinese business families and not dissimilar to the ethic of the Protestants. Merchants have been expected to maintain a frugal life-style, as personal conduct is closely related to credit and 'trust' in the market place.
It is now well acknowledged that capitalism thrives on certain traits and values - the stuff of culture. It may be worthwhile to discern what values have shaped the Birlas and how these may have contributed to their success. A key tenet has been to look upon the family as a social entity. Individualism is discouraged and relations within the business are built for the longterm.
A broad view is taken of the family to include kinsmen, business associates, managers and employees. GD Birla was known for his legendary ability to hire and retain mangers and delegate responsibilities to them.
Much of these relations of trust led to associations forged for life. He delegated easily and was able to build up an inner circle of talented people upon whom he depended. In his lifetime he expanded the business from a family-run firm into one which evolved into managerial capitalism, although based upon kinship ties. Basant Kumar and Aditya Birla worked largely within this structure.
The coming of Kumar Mangalam meant the shedding of the kinship-based baggage and expanding the pool of managers, drawing the best talent wherever it could be found.
To Kumar Mangalam goes the credit of turning the kin-based managerial capitalism into a true meritocracy. However, in doing so he retained the spirit of the 'family' in that relations with top managers are seen as long term and based upon mutual trust and loyalty. This family-oriented style has worked well for the fourth generation of the Birlas.
Another Birla trait is of frugality in personal life, which has historically been a code of behavior for generations of Marwari merchant families, a trait shared by Chinese business families and not dissimilar to the ethic of the Protestants. Merchants have been expected to maintain a frugal life-style, as personal conduct is closely related to credit and 'trust' in the market place.
ET140905
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