Gautam Kumra, Asia chairman at McKinsey & Co., recently outlined the defining characteristics of successful owner-managed CEOs in Asia, citing examples such as Mukesh Ambani of Reliance Industries, Falguni Nayar of Nykaa, and Sarath Ratanavadi of Siam Commercial Bank.
Kumra, who served as the lead author for the newly released book “Shapers and Founders: The Untold Stories of Asia’s Extraordinary Owner-CEOs,” emphasized that the most effective leaders possess the ability to hold opposing viewpoints simultaneously. This includes balancing long-term strategic vision with short-term operational needs, as well as maintaining a macro perspective while scrutinizing minute details.
According to Kumra, these executives distinguish themselves by extracting exceptional performance from their teams and maintaining a rigorous focus on their organizational mission. His research, which involved interviews with approximately 30 top executives, found that owner-CEOs consistently outperform professional managers and state-owned enterprises in terms of shareholder returns and capital efficiency.
“Owner CEOs, as a category, are the ones that are creating the most value and the best performance,” Kumra stated. “Their return to shareholders is the highest… They’ve collectively, as a category, created a lion’s share of the value.”
One notable example shared by Kumra involves Anand Mahindra, chairman of the Mahindra Group, who promoted an executive assistant to lead the company’s South African operations. Mahindra prioritized real-world life experience and confidence over traditional academic credentials, taking a calculated risk on an individual whom others might have overlooked based on paper qualifications alone.
Kumra noted that these leaders frequently provide “stretch opportunities” for their employees, encouraging initiative and rewarding self-driven action rather than merely following directives. He drew a parallel to McKinsey’s own internal culture, which similarly emphasizes continuous learning through challenging assignments.
However, Kumra cautioned that leadership transitions remain a significant vulnerability. He observed that companies often struggle during the handover from a founder to a professional CEO, with performance typically declining around five years post-transition. This decline is often attributed to founders’ difficulty in fully delegating authority and letting go, even as their tenure winds down.
Furthermore, Kumra pointed out that many founder-led companies operate using idiosyncratic methods that have not been institutionalized. This lack of standardized processes can make it difficult for incoming professional CEOs to assume control effectively, as the operational knowledge often resides solely with the outgoing founder.
So owner-CEOs outperform professionals. That explains why family businesses in Asia seem so resilient during economic downturns compared to state firms.
Interesting how they balance macro vision with microscopic detail. Most CEOs I know can only do one or the other, not both.
Does this apply to Southeast Asian SMEs too, or is this purely about large conglomerates like Reliance? Would love more regional nuance.
I love the Mahindra example. It shows that in Asia, character and lived experience often matter more than a fancy degree.
The point about transitions being a major vulnerability is spot on. So many founder stories end poorly because they never truly let go.