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Disruptive thinking: The path to continuous transformation in family businesses

No one is better equipped to take the reins of transformational leadership than family businesses, says KPMG partner Tom McGinness.
KPMG partner Tom McGinness.

When I look back at the unpredictability of 2021, I’m reminded that the pandemic was a stimulus for some disruptive and transformative innovations in medicine, technology, buying behaviour, entertainment and personal fitness that have had a seismic impact on the way we live and work.

Admittedly, the pandemic keeps proving to be a harsh wake-up call. It triggered a sense of urgency, the impetus to change and a voracious appetite for “Business transformation” in organisations and entire industries across the world. It also awakened many of us to the fact that the best way forward for businesses and society is not to wait for something to react to, but to stay sharply attuned to what’s happening socially, in the environment, politically and commercially – to take the controls and become better drivers of transformational change rather than wait to react to those changes imposed by external forces.

In my view, no one is better equipped to take the reins of transformational leadership than family businesses.

In recent roundtable discussions with family business leaders across the world, KPMG gathered contemporary examples of how their unique culture of “continuous transformation” allowed them to sustain their businesses throughout the pandemic, to react quickly when necessary, and to use their innovative power and courage to disrupt the status quo and take their businesses in new directions. You can find their insights and experiences in the recent KPMG Private Enterprise article Sustaining a culture of continuous transformation in family business.

Some of these family business leaders also described how a great deal of interest turned to technology and digital transformation. As enablers of change, these technological advances unquestionably have an impact. I know of many family businesses, for example, that sorted out their back offices during the pandemic in order to save costs and manage their liquidity. That makes sense when the goal is to stabilise the business and keep employees engaged, and it was essential for the survival of many businesses, especially during the early days of the pandemic.

Rethinking the concept of business transformation

While digitisation has had a transformational effect in many ways, family business leaders have made it clear that “Digital transformation” and “Business transformation” are not synonymous. The broader transformational changes that are often required in their business strategies require disruptive thinking if the goal is to continuously innovate and drive changes for regenerating the business. A new technology solution alone isn’t sufficient.

With an embedded culture of continuous transformation, I’m seeing family businesses turn their attention to their front offices, for example, and transforming their customer-facing strategies; increasingly prioritizing environmental, social and governance (ESG) strategies; and revisiting the family’s shared purpose as they look at potential new paths for the future to keep their business ahead of the curve.

Sustaining a culture of constructive disruption

It requires a lot of rigour, commitment and a deeply rooted shared vision to sustain disruptive thinking and a transformative culture.

I invite you to consider the ways in which you can support the continuous transformation of your business... To imagine the art of the possible, to disrupt the status quo and to create sustainable, long-term value for your company and all your stakeholders.

Here are some considerations that I hope will be helpful as you continue to build the transformative capabilities of your family business:

In the current environment, the context for “Business transformation” is often seen as a corporate/technology or process/systems change. But business transformation and digital transformation are not synonymous. The transformation of a company’s digital capabilities is an enabler for broader transformation efforts. It may be good place to start, but it’s only one piece of a much bigger and more comprehensive longer-term strategy.

Transformative change is energised by foresight. It is driven by the family’s purpose and values and their ability to continuously recognize new opportunities – or anticipate potential threats. It’s proactive, not reactive, and it has a long-term view.

Continuous transformation doesn’t come without risk. Top management should have a clear visibility of the relevant internal and external risks that can affect the family business, the strategy or the business transformation model that is adopted.

With continuous transformation, there is the potential for “Change fatigue” among management and employees. The amount of churn in the workforce is one indicator of waning energy. The key is to have good policies and procedures in place to help ensure that changes are integrated successfully and minimize disruption when turnover does occur.

While there are no best practices or one-size-fits all solutions to continuous transformation, there are best practices in terms of the process, which begins with a shared purpose to continuously create value for the family, the business and its many stakeholders.

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