About Family Businesses – Part 5 – Asrar Qureshi’s Blog Post #711

About Family Businesses – Part 5 – Asrar Qureshi’s Blog Post #711

Dear Colleagues!  This is Asrar Qureshi’s Blog Post #711 for Pharma Veterans. Pharma Veterans welcome sharing of knowledge and wisdom by Veterans for the benefit of Community at large. Pharma Veterans Blog is published by Asrar Qureshi on  WordPress, the top blog site. Please email to asrar@asrarqureshi.com for publishing your contributions here.

Photo Credit: Andrea Piacquadio

Photo Credit: Fox

This series of articles partakes from some material published in INSEAD Knowledge. INSEAD is in France and is highly ranked among the most prestigious business schools of the world.

We continue to look at some negative factors which became barrier in the development of the Pharma companies. 

Over-Centralization

Centralization is common in most organizations; over-centralization is also not uncommon. It is when the owner insists on doing/approving everything, even a ten rupees expense. There is zero delegation and zero tolerance for any initiative from anyone. All actions must be vetted and approved by the Chief. It is not just about money; it is about everything that happens in the company. The chief must be consulted, and approval be taken before starting anything. And the chief has no fixed time for coming and going, so the staff keeps waiting indefinitely. In one such corporate in Lahore, the owner would go to banks in the morning, then go to Chamber of Commerce and Industry, then attend some other things, and finally land at the office around 4PM. He would then set until 10PM because everything was on his table. He would expect that the staff must be available till he was in the office. The poor staff who came in at 8.30AM would be forced to sit late every day. The corporate stands nowhere even after a long time. This is a common story in over-centralized organizations.

There are several serious consequences of over-centralization.

One, talented people do not join, or if they somehow come, they would leave early. The organization shall be left with mediocre, low-profile staff who will be incapable of achieving much. Their survival lies in the utmost respect and deference to the owner, which they do at all times, and still remain scared. The overall morale is low, and the environment promotes high degree of routinization. Two kinds of people flourish in such organizations. One, the devious, conmen type who keep the boss happy with stories which are half-truths and keep skimming him at the other end. They will build scenarios of doom to extract money for ghost fears, and successfully take money and benefits. The other kind is the typical person who licks the boots of the owner, gets some title, becomes a medium between staff and owner, and then rules the staff even more viciously than the owner. This is the kind whom everyone dreads and despises, but no one seems to be able to control them. This further leads to expansion of their coterie and such juniors are prepared who perpetuate this system. 

Except the beginning, there is no justification for over-centralization. And nothing good comes out of it. Letting go at appropriate times is as important as keeping in.

No Expansion

The direct fall out of over-centralization is that the organization does not expand. It will not branch out, ever, because the owner cannot be cloned to run multiple shops. There are so many businesses which failed to recognize and avail the opportunity to expand, and finally disappeared or became irrelevant.

There used to many shops which proudly claimed that they did not have any other branch anywhere; many have closed already. Shezan Bakers were pioneer and most respected in their trade, but they kept working with few branches only. Gourmet came from behind and took over all the empty space. Cakes & Bakes, Kitchen Cuisine, and Jalal Sons are following the same path. Shezan is nowhere in the competition. Among pharmacies, Fazal Din & Sons were the most known and most respected pharmacy. They were known throughout Pakistan. Along with medicines, they carried the agency of every known brand of medical devices. They did not recognize the need for expansion, while Clinix established a chain of pharmacies. They were followed by others, and then Fazal Din also started branching out through franchises. It was too little, too late. So many other people had taken over the space where FD&S could have established a conglomerate.

This is the story of majority of the pharma companies which had taken a bold initiative and started pharma business just after Pakistan came into being. They had all the space available for expansion and they could become as big as they wanted. Poor vision, lack of initiative, lack of courage, and failure to decentralize, led to the unenviable state they are in now, if they still exist.

Failure to Hand Over to Next Generation

In a country, where every father claims he is doing all the efforts for his family, particularly children, he still fails to handover to the same children when they grow up. In many pharmaceutical companies we know, the children are inducted with fancy titles, but do not have the liberty and authority to do anything. They cannot even run the existing business on existing terms independently, not to talk about new initiatives or new ventures. The psyche behind this attitude may be extreme possessiveness or extreme insecurity, but it happens.

History tells us that Mughal would-be Emperor, Aurangzeb waited till he turned 60 and his father Shahjahan was touching 90. Finally, he imprisoned his father and sister Jahan Ara, killed his brothers, and declared himself as the King. He was already senile, and therefore he got himself entangled in the useless war with South, which finally led to the downfall of Mughal Empire. Pharmaceutical companies running on the same pattern have fallen down the same way. The founding father did not let go of anything until it was too late. The younger generation who was initially excited to be part of the family business gradually lost heart and steam. By the time they got the command, they were not in the right frame of mind and body to take it much farther. 

We have done our major discussion on positive and negative factors; we shall now take up the suggestions and recommendations to handle family businesses better.

To be Continued……

Disclaimer: Most pictures in these blogs are taken from Google Images and Pexels. Credit is given where known; some do not show copyright ownership. However, if a claim is lodged at any stage, we shall either mention the ownership clearly, or remove the picture with suitable regrets.

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