Way back in early nineties I was editing the Delhi edition of The Financial Express. One morning while skimming through various newspapers and magazines for new ideas for stories, I came across two family-owned businesses (FOB); one showing declining trend and the other of prospering business. I became interested why the two FOBs were showing opposite trends though both were FOBs of long standing reputation. I became interested in knowing more to find out the reasons as I thought it would make a good story. The story was assigned to a correspondent with a brief to investigate their decision-making process.
The story was on my desk after a fortnight and it was both interesting and revealing. It was interesting as it showed the arrogance of the failed FOB whose owner was self-righteous and arrogant individual. The successful FOB believed that collective wisdom was better than individual wisdom. The former, as I said, was arrogant and thought that others were less intelligent than him and, therefore, incapable of giving him good advice. The latter FOB was self-effacing and down-to-earth and believed the combined talents of different thinking individuals would help to understand the problem in a wider perspective.
The former took decisions without consulting and never took into confidence his managers and, therefore, his decision-making was impulsive and erroneous. When his managers failed to achieve the desired targets he held them responsible for non-performance and give them pink-slips. As a result his managers were transitory. Those who stayed were pedestrian and sycophants and always supported his decisions. They worked in such a way that the boss was happy. Though revenues did not show much growth, they convinced him that nothing could be better in the prevailing market conditions. Since this owner was confined to self, he did not know much what was happening around in the market. As he lived comfortably, he was happy with the way he ran his business.
The latter individual had developed a good circle of experts whom he would consult before taking the final decision. He had built up a good net-work of professors in various business schools whom he would consult before arriving at a decision. After he took a decision he would call a meeting of his department heads and ask them to do due-diligence and report to him in a given period of time. When all had reported to him, he would contemplate over their reports and develop two-to-three alternate decisions. These would be discussed thoroughly in the meeting of department heads and a decision would be taken. This then was to be worked on. The result was that everyone took ownership of the decision and worked hard to not only achieve the laid-down target but over-shoot it. The result was that his business performed much better than the industry average.
End note: Two years later I was going through the morning papers and was amused to read one news item that the former FOB had sold his business. Interestingly, the one who purchased it was the latter FOB.
Dr. Y. C. Halan, is the former Resident Editor of The Financial Express and Editor of HT Investor and Business & Management Chronicle.