AMONG the next generation of family business leaders, three in four have big plans to take their business forward. However, generational challenges persist, largely in digital and innovative areas, according to PwC Global Entrepreneurial & Private Business Leader survey.
PwC conducted in-depth conversations with 35 next gens from 21 countries and polled more than 100 additional next gens for its new report: Same passion, different paths: How the next generation of family business leaders are making their mark. The results showed an incoming generation of family business leaders facing generational gaps and culture change.
“Our research shows that digital is one area where the generation gap can be a real positive,” said David Wills, PwC’s Global Entrepreneurial & Private Business Leader. “While next gens are excited to tackle digital, the current generation is often more cautious about embracing the proposed pace of change.”
In today’s business landscape, all firms — family businesses or otherwise — need to address the digital challenge, and next gens seem to grasp this. Three quarters of those polled believe it’s very important or essential to have a strategy that fits the digital age. Because they’ve grown up in that digital age, they feel much more comfortable with digital technology and see its potential for change. That said, only 7 per cent of respondents believe their firm is currently doing this well.
Partly due to the greater degree of transformation and investment needed to bring about digital change, many current generation leaders may be cautious about committing to it. About a third of next gens polled (36 per cent) expressed frustration that the current generation doesn’t fully understand the digital potential and conversely, the risks it could pose.
Likewise, the vast majority of next gens see innovation as a core component, with 82 per cent responding that innovation is very important or essential to business success. However a mere 15 per cent of those polled see innovation being implemented well at their firms.
In the study, PwC identified four main roles next gens are taking on to build their own paths to success: stewards, transformers, intrapreneurs, and entrepreneurs.
Stewards – Individuals focused on ensuring the long-term sustainability of the family firm and protecting its profitability by staying true to the established core business
Transformers – Next gens who take on the task of developing significant changes in the family firm, with the scope and support to do so
Intrapreneurs – Those whose families carve out a specific venture for next gens within the family firm — effectively the opportunity to be an entrepreneur within the firm itself
Entrepreneurs – Next gens who pursue their own ventures outside the family firm, often in completely unrelated sectors.