Family business leaders of tomorrow are being encouraged to bring their families up to speed on the value of new technologies after almost 40% of families admitted they did not have a digital strategy.
Digital awareness among next generation family business leaders was high, but other family members may not be as aware of the opportunities that digital technologies can offer, the latest Deloitte survey of next gen family businesses found.
Almost a quarter (20%) of the 575 next-gen leaders polled in 52 countries in Europe, the Middle East and Asia early this year said their families did not have a digital strategy in place. A further 18% said their families did not have a strategy, but they were working on it, while 1% did not know if their families had a strategy at all.
Just over a quarter (26%) of families had a strategy for digital transformation solidly in place while about one-third 35 % said their digital strategy was fairly recent.
The survey said digital technologies underpinned new business models through integration and drove a rapid pace of change, which may at odds with the long-term stewardship of a multigenerational family business. Many families were adapting to the digital world in a short time and continuing this adaptation was an “important responsibility” of the next gen of family business leaders, the survey said.
“A misconception about digital transformation is that it simply means digitising the current way the business is run and how it interacts with others. But the opportunity for innovation is much greater. Take, for instance, the opportunities for digital customer engagement: It is not simply a matter of digitising the existing touchpoints, but about reimagining new levels and methods of engagement to get closer to the customer.”
Alexandra Sharpe, partner in Deloitte’s Family and Private Capital Consulting team, told CampdenFB: “Unsurprisingly there seems to be a bit of a generation gap when it comes to digitalisation, especially at a strategic level. Younger generations recognise that ‘digital’ isn’t a department anymore and that it needs to be part of the overall strategy.”
However, many next gens struggled to convince their parents the firm needed to do more on digital, according to the PwC Next Generation Survey 2017.
More than one-third (36%) of the 135 international next gens interviewed and polled told PwC they were often “frustrated” because the current generation did not fully understand the potential for digital and the risks it could pose.
“In this context it’s significant that 75% of the next gens we spoke to think it’s very important or essential to have a strategy fit for a digital age, but only a tiny 7% believe their own firm is currently doing this really well,” the PwC survey said.
“And while 56% of next gens play a key role in this area, as many as 27% do much less (though think they could contribute more), and 16% are happy to play a secondary role.”
Along with the recommendation next gen leaders educate their family members about digital technologies, the Deloitte report said members themselves may wish to invest more time and effort in exploring digital uses and implications.
“Family business leaders would be well-advised to think carefully about how to integrate diverse technologies and information systems into their business,” the Deloitte report said.
“What should be the purpose and role of the family business in a digital age? What changes could digitisation mean for the company’s business model, and how should current strategies and operations shift to effect those changes? Family businesses can leverage their traditional focus on long-term planning to “future-proof” the business for digital transformation, and to align the entire organisation—not just the business, but the family members, as well—toward a digital future.”