YCH Group: How to remain an innovative family business across generations

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From its origins as a manufacturer of hospital equipment for the Indian market, Thermax has grown into a multinational corporation operating in 90 countries, offering integrated solutions in heating, cooling, power generation, water treatment and recycling, air pollution control, and chemicals with a focus on ensuring clean air, clean energy and clean water. The founding family, which owns a 61% stake in the firm (the rest being publicly held), has steered the company toward helping speed the transition to renewable energies via the development of greener technologies. In addition, the family has shown unwavering commitment to social responsibility and philanthropic endeavors. The case features a detailed history of Thermax's evolution as a family business, with a particular focus on how the family has navigated the challenges of intra-family succession. The dilemmas faced by owner-managers as they hand over the reins of the family business, combined with the outsize impact of succession on the future performance of a business, have contributed to making succession the single most studied topic in family business research. The Thermax case study illustrates the varied forms succession can take over the course of four generations. It also explores the different ways family members can contribute to the family enterprise system via operational roles in the company as well as involvement in board governance, ownership governance and philanthropic work. The case is based on interviews with five members of the founding family, all of whom hold (or have held) executive and/or operational roles in the company. The dynamics of intra-family succession form the crux of the case. Since the company was created in 1966, each generation has brought different leadership qualities and competencies to their respective roles and has contributed to making Thermax a leading conglomerate in the energy and environment space.

The case looks at the fundamental challenges, tensions and opportunities associated with an internally run venture as opposed to an externally funded startup or spin-off company. It discusses the genesis and context of Kontor, an internal venture funded by Resmed Inc. Resmed is an S&P 500 MedTech company. At the time of the case, May 2024, Resmed was also experiencing increasing external competitive threats and pressure on its margin due to GLP-1s, a class of medicines. Kontor is an internal venture at Resmed trying to find its way through turbulent times. Kontor applies Resmed's class-leading comfort and fit technology to the AR/VR space, thus making these devices more comfortable for the user. Kontor has been running for several years and Erika, the case protagonist, is the newly appointed general manager. The current turbulent situation is causing the executives to question investment in the internal venture. Erika must deal with many challenges, but the fundamental question is whether Kontor will create the most value for Resmed as an internal venture or whether it should be spun out and in what manner. The case compares five strategic possibilities: 1) Spinning out the business and running Kontor independently of Resmed with external investors, 2) keeping Kontor wholly owned by Resmed but, run it off-balance sheet, 3) sell Kontor to a strategic buyer, 4) keep running Kontor internally with operational assistance from Resmed Inc, or 5) wait and see how the venture goes without making a decision in the near term thus preserving all options.

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Family-run companies have unique challenges—balancing family interests with the goals of investors and the company itself. Yet there is not enough clarity on how this affects performance in different countries. We wanted to fill that gap. Our work...