ISB Report Highlights Urgent Need for Innovation in Family Businesses

Indore: Family businesses contribute more than three-fourths of India’s GDP, and their role in the country’s growth is expected to expand even further by 2047. However, a new study by the **Indian School of Business (ISB)** reveals that many mid-sized family enterprises are not fully benefiting from India’s economic growth. These businesses often focus on short-term profits, limiting investments in technology and ecosystem-building—advantages that global corporations typically leverage for long-term success.

### Key Findings

The ISB report titled **“Business Innovation – An Imperative for Indian Family-Led Business”** underscores that family businesses form the backbone of local and regional economies. Yet, many of them rely on slow-growth models and miss opportunities in high-growth sectors. Mid-sized enterprises, in particular, have strong operational foundations but often lack the foresight and ambition to invest in market creation, intangible assets, and future revenue models.

The report, prepared by ISB’s **Center for Business Innovation** and the **Thomas Schmidheiny Centre for Family Enterprise**, analyzed innovation and growth patterns across sectors including auto, retail, pharma, healthcare, IT, and construction. It found that investing in **product innovation, supply chain integration, and customer engagement**—rather than sticking solely to traditional operations—drives stronger long-term value creation and growth.

The study highlights that family businesses face their greatest risk not from market fluctuations but from **strategic inertia**. Without bold investments in integrated growth models, technology (including AI), and partnerships—particularly in high-growth regions of the Global South—Indian family businesses risk losing global competitiveness and limiting their expansion potential.

### The ERAISE Framework

To address these challenges, the report proposes the **ERAiSE framework** as a roadmap for long-term value creation:

* **E – Ambition:** Set bold, long-term goals
* **R – Risk-taking:** Make timely, courageous decisions
* **A – Innovation:** Innovate business models, products, and services
* **I/S – Speed & Scale:** Act quickly and scale efficiently
* **E – Ecosystem Thinking:** Build strong partnerships and networks

This framework emphasizes the importance of **courageous goals, timely decision-making, business model innovation, and strategic partnerships** to help family businesses expand, compete globally, and create sustainable long-term value.

### Expert Insight

Professor **Rajendra Srivastava**, Executive Director of ISB’s Center for Business Innovation, said:

> “Indian family businesses are entering a new era where maintaining heritage must go hand in hand with agility and innovation. Focusing only on EBITDA is no longer enough. Now is the time to invest aggressively in technology, design thinking, platform business models, and brand and market development. The report cites examples of companies that have expanded and captured growth opportunities in India’s dynamic markets through innovation.”

### ISB’s Role in Family Business Development

Recognizing the unique challenges of family-owned businesses in a competitive environment, ISB—ranked 12th globally among business schools by the Financial Times—has partnered with business families for over a decade through programs like the **Post Graduate Programme in Management for Family Business (PGP-MFAB)**. This initiative professionalizes family enterprises while preserving their legacy, equipping the next generation of leaders with modern management tools, global exposure, industry interaction, and hands-on experiential learning to achieve sustainable growth and innovation.