How To Succeed In Transitioning A Family Business To The Next Generation

How To Succeed In Transitioning A Family Business To The Next Generation

Over the past 40 years, the information technology industry has seen the rise of telecom, the boom and bust of the dot-com bubble, and the financial sector implosion during the great recession. 

RCI Technologies has evolved with these changes, from a company overseeing outsourced technology in India to primarily using American talent for high-level project management; from being focused on serving large corporations to serving both the private and public sectors. 

The company is evolving again as its founders, Raj and Anisa Balwani, pass the torch to their daughter, Nisha, who became CEO in January. Planning the succession of a family business can be a source of heated debate and intense family politics. As the Balwanis show, it doesn’t have to be. 

Raj and Anisa Balwani are both of Indian descent, but Raj migrated from India and Anisa from East Africa. They met in the US.

Anisa's mother was an entrepreneur, who ran a soda factory after her husband passed away. “Mom always had an entrepreneurial drive,” said Nisha. When Raj, an engineer by training, came to the US, he did consulting work for Fortune 500 companies. He saw an opening in the market for a consulting firm to oversee technical talent in India. The husband-and-wife team mortgaged their home to start the business. “They were willing to risk everything to start the business.” As youngsters, Nisha Balwani and her older brother grew up stuffing envelopes in exchange for pizza. 

Nisha and her brother were never pressured to join the family business. Her brother started his own digital marketing company.

Nisha had worked in a large company, but knew her trajectory would be in a small company, a company she started, or the family business. “If I join the family business now [after she left Unilever], I can try [joining the family business] on for fit,” she said. “I joined as the director of business development, focused on building a clientele in the public sector. It was an industry in which the company wanted to build a presence. Nisha built strong relationships with clients and employees. 

But, there were struggles. As the founders of RCI, her parents were very involved in decisions. “I don't mind conflict, but I didn’t want it to make things contentious with my parents,” said Balwani. 

She left the company to attend Columbia University where she got her MBA, specializing in technology and entrepreneurship. She took classes in family business management and even brought her mom to one of her classes. One of her professors, Josh Baron, literally wrote the book on the subject—Harvard Business Review Family Business Handbook: How to Build and Sustain a Successful, Enduring Enterprise. 

When Nisha started to seriously consider going back into the family business, she emailed Baron. Her relationship with her parents was the most important in her life. She didn’t want decisions related to the family business to jeopardize this. The conversation and his book gave her:

Nisha’s parents made the decision to hire key lieutenants so they could start to step back. Nisha thought having distance from her parents would minimize conflicts, so she rejoined the company after graduating.

During the Covid-19 crisis, Nisha spent a couple of months living with her parents. Every night, at dinner, they talked about the business. Her parents told her stories she had never heard before. They shared the legacy they wanted to leave, what they wanted their roles to be moving forward, how key employees fit in, and how her brother and children might fit into the future of the company. 

“We were really thoughtful [about how to move forward],” Nisha said. “Speed is not always the right driver. I didn’t want to become CEO, to find out people were not happy to see me in that role.” Did the company have the right people on the bus, a concept developed by Jim Collins’ in his book Good to Great. You don’t need to figure out where to drive the bus and then get people to take it there. First you get the right people on the bus (and the wrong people off the bus) and then you figure out where to drive it. 

Interestingly, her parents wanted to stay involved in the company in very different ways. Her dad no longer wants to be involved in the technical side, but enjoys being involved in the financial management of the company. He will take an advisory role. Her mother is  like a senior partner in a consulting firm. She connects Nisha with critical people in her network and is helping her develop a vision for the future of the company.

When she was officially named CEO, Nisha was concerned that people would think she got the role because of nepotism. Not so. Both employees and clients were excited about the announcement.

Have you developed a succession plan for your company?