Why 90% of Family Businesses Fail? Dr. Anuraag Guglaani Explains
Dr. Anuraag Guglaani shares insights on family business dynamics, workforce evolution, entrepreneurship, and technological innovation in corporate governance.
In the latest episode of The Dollar Diaries, we had the privilege of engaging with Dr. Anuraag Guglaani, Chairperson at Wazir Holdings and a seasoned leader whose experience spans over 30 years across 24 industries and 26 countries. Dr. Guglaani's multifaceted expertise provides rare insights into the dynamics of family businesses, leadership, innovation, and the evolving landscape of global business—especially in the Middle East, Africa, and Asia.
This blog post distills the key lessons from our conversation with Dr. Guglaani, focusing on transformational challenges in family businesses, workforce dynamics, the importance of mindset shifts, and the future trajectory of entrepreneurship and corporate governance.
A Unique Lens: The Dynamic Landscape of Family Businesses in the Middle East
One of the defining features of Dr. Guglaani’s expertise is his deep involvement with family businesses across various regions, particularly the Middle East and Asia. Family businesses dominate many economies, and their success or failure impacts a wide spectrum of stakeholders — from employees to communities.
The Challenge of Transition:
Dr. Guglaani highlights a significant challenge in family businesses: transitioning leadership from one generation to the next. Globally, statistics reveal that around 70% of family businesses fail to survive into the second generation, and 90% do not make it to the third. This steep attrition poses a serious threat not only economically but socially, since these businesses often provide livelihoods for numerous people.
The failure rate often boils down to management issues, emotional entanglements, and resistance to change. Legacy leadership tends to have trusted advisors who may resist change because their positions or loyalties are entrenched. At the same time, the younger generation returning from Western educations often faces a culture shock when joining the family business. The rigid corporate frameworks they have learned abroad clash with the traditional, relationship-driven, and often informal workings of family enterprises.
A Melting Pot of Challenges:
In regions like the UAE, where expatriates form the majority, the situation becomes even more complex due to the diversity of cultures and expectations. Dr. Guglaani paints a vivid picture of a retail salesperson who must simultaneously cater to dozens of nationalities, each with distinct cultural nuances about service and interaction—a microcosm of the broader challenge family businesses face in a globalized, multicultural economy.
Bridging the Gap: Training and Mindset in Family Business Succession
One of the most insightful points Dr. Guglaani makes is about the need to bridge the gap between traditional practices and modern, structured approaches through proper training and mindset realignment.
Training the Salesperson as a Cultural Psychologist:
He explains that a salesperson who understands cultural psychology — the unspoken preferences and service norms of different nationalities — can significantly improve customer experience and sales outcomes. Unfortunately, many companies monetize margins rather than invest in such crucial training, leading to lost opportunities.
The ‘Experience Trap’:
There is also the concept of “one year of experience repeated 20 times,” where employees or advisors become experts only within their limited domains, lacking exposure to external changes and innovations. This stasis kills growth and puts the business at risk.
Empowering the Next Generation While Respecting the Past:
Young family members bring fresh perspectives, often seeking to introduce technology, e-commerce, and disruptive innovation. However, to successfully integrate their ideas, the existing leadership and trusted custodians must manage the transition carefully. Dr. Guglaani advocates fostering respect in this process, ensuring younger leaders gain credibility by contributing meaningfully.
The Power of Failures: Faster Learning Through Collaboration
Dr. Guglaani underscores the importance of failure in the learning curve. He argues that failure is inevitable and essential for growth. However, prolonged failure in family businesses can be damaging.
Collaborative Models to Accelerate Success:
To mediate this risk, he champions collaboration models, such as family businesses incorporating startups through equity partnerships. This “plug-and-play” system leverages the agility and innovation of startups, backed by the infrastructure and market reach of established family groups. Such partnerships reduce the failure rate and help younger family members gather operational experience in a real-world setting.
A Strategic Approach to Equity Sharing:
Instead of taking full control, family businesses take majority equity (51% or more) to support startups operationally and strategically while allowing founders to retain significant equity (49%), which is often valued much higher after institutional support.
The Future of the Workforce: Freelance Economy and Flexible Work
Dr. Guglaani comments on a major shift in the global workforce from conventional full-time employment to freelancing and project-based work. He explains:
The traditional 9-to-5 employment model fosters complacency and limits innovation.
Freelancers and contractors, often paid by milestones, inherently adopt entrepreneurial mindsets, looking for creative and efficient problem-solving.
This trend accelerates innovation and allows companies to access diverse perspectives without long-term commitments.
He views this evolution as positive for businesses and individuals, making knowledge and services more dynamic.
The Golden Handcuffs Paradox
Through his extensive leadership experience, Dr. Guglaani shares a cautionary tale about "golden handcuffs” — benefits so generous that employees become employees in name only, tied down by perks like assigned drivers or lavish benefits, which discourage movement to other opportunities.
While these perks can enhance productivity and morale, they risk making employees less flexible and less innovative, because there is little incentive to challenge the status quo. Dr. Guglaani stresses finding balance — benefits should empower growth and engagement, not dependency.
The Changing Nature of Ownership: Renting Over Owning
Addressing generational shifts in how people approach ownership, Dr. Guglaani and the host discuss the rise of the "subscription and lease economy," where:
Cars, homes, entertainment (streaming services), and gyms are more commonly leased or rented than owned.
This trend offers flexibility and mobility.
Yet it may encourage a diminished appreciation for the value of possessions, possibly impacting attitudes toward investment and wealth building.
Despite this, Dr. Guglaani reminds us about the importance of investing in what truly matters — health, mind, and soul — assets that outlast material goods.
Education Reform and Entrepreneurship: The Need for Early Exposure
Dr. Guglaani expresses a strong belief in teaching entrepreneurship at school levels—particularly around Year 9—to impart problem-solving, innovation, and market-fit thinking before traditional academic and career tracks dominate student choices.
He criticizes:
The current education system which often focuses on surface-level academic achievements.
The lack of motivation or effective methodology in teaching essential skills like Arabic in the Middle East.
The notion that entrepreneurship should not necessarily be a formal 4-year degree but a practical, experience-based discipline.
Diversity and Governance: The Modern Boardroom
In his various board roles, Dr. Guglaani advocates for more inclusive and dynamic governance structures:
Boards should blend finance and audit expertise with technology, AI, automation, and cybersecurity knowledge.
He emphasizes the need for youth and gender diversity, suggesting a ratio where no more than 60% of board members are male, with the remainder composed of women and youth, resulting in more balanced decision-making.
Hiring should follow a ‘3x3 rule’: three shortlisted candidates interviewed by a panel of a young person, a woman, and an experienced male, ensuring diverse perspectives from the outset.
Relationship vs Transactional Mindsets
One of the most striking points made by Dr. Guglaani relates to cultural business dynamics:
The UAE and similar regions operate predominantly on relationships-based mindsets, relying on trust built over time, mutual respect, and cultural understanding.
Indian businesses, for example, often adopt a transactional approach — focusing on deals and immediate gains.
Bridging these approaches is essential for success — multinational teams that understand and respect the client’s cultural context outperform those who do not.
This insight explains why some Indian products struggle to gain direct contracts with major clients like luxury hotels, despite strong brand presence globally.
Innovating with Tradition: Real-World Examples
Dr. Guglaani shares fascinating examples of innovative adaptation in traditional industries, such as Kafu—a startup that delivers fuel directly to customers' homes and businesses, bypassing the conventional gas station model:
They buy fuel at wholesale, eliminating retail infrastructure costs.
Operate with trucks and drivers who fill vehicles at customer locations, gaining efficiency and convenience.
This volume-based business model offers significant cost savings to customers and streamlines operations.
This example highlights how innovation can disrupt even the most traditional sectors by applying technology and logistics intelligence creatively.
The Evolving CFO and Leadership Skills
Finally, Dr. Guglaani touches upon the evolving role of Chief Financial Officers (CFOs), who now often take on strategic, visionary roles beyond their traditional finance and risk oversight:
The modern CFO is expected to contribute to growth and innovation, factoring in technology and opportunity assessments alongside risk.
Similarly, the boardroom demands professionals who are tech-savvy, adaptable, and forward-looking, not just strong in audit and financial controls.
A Blueprint for Sustainable Growth and Leadership
Our conversation with Dr. Anuraag Guglaani offers a rich and nuanced roadmap for family businesses navigating the modern business world. The challenges of transition, innovation adoption, workforce transformation, and governance reform are intertwined and require deep cultural understanding, empathy, and visionary leadership.
Dr. Guglaani’s blend of military discipline, business acuity, and cultural intelligence offers a master class in how to craft organizations that are resilient, adaptive, and future-ready.
For family businesses and corporates alike, his core message is clear: Invest in people, embrace change respectfully, build genuine relationships, and cultivate disciplines that support continuous growth. Above all, lead with purpose—one that inspires commitment without forcing discipline, and fosters innovation without alienation.