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Next-generation family businesses leaders
Ready to thrive in a disruptive environment
The Deloitte EMEA Family Business Centre recently completed a Next Generation Survey, taking an in-depth look at the opportunities and challenges that exist for family-owned businesses. Themes such as succession, disruption, growth and strategy were discussed.
A strong contingent of Irish family-owned businesses completed this survey, the findings of which were released last month. Some of the key findings are as follows;
Our Key Findings
- Of the next generation of leaders of family-owned businesses interviewed by Deloitte, 56 percent of Irish businesses interviewed expect that the market in which they operate will face disruption in the next two to three years. 35 percent also expect to lose market share to new entrants.
- When asked about the catalysts of change within the market in which the business operates, economy (65 percent), customer mindset (60 percent) and public policy (46 percent) came out top from an Irish perspective. Interestingly, enabling technology was the third highest ranked catalyst from a European perspective at 54 percent. However, in the Irish market, just 44 percent of those surveyed noted it as a key driver of change.
- Just over half (56 percent) of Irish businesses surveyed say they have a strategy in place to anticipate disruption. However 50 percent see disruption as a normal part of the business cycle with 38 percent seeing it as an opportunity.
- While 65 percent of Irish respondents said that they discuss the potential for disruption with family members, they appear to do so much less than their European counterparts (72 percent). 41 percent of Irish respondents indicated that they only discuss disruption every six - twelve months whereas the majority of respondents in the rest of Europe discuss it at least once a month.
- According to the next generation, the biggest disrupting factor for family-owned businesses in Ireland is market disruption (40 percent) with changes in family relationships at 17 percent. 24 percent of those surveyed across Europe however, said that changes in family relationships was the most disruptive factor. Again, this may be down to the impact Brexit is set to have on Ireland, and the uncertainty businesses face.
When radical changes and disruption emerge, family businesses face different challenges compared to non-family businesses, but they can also play to their strengths, build on them, and achieve competitive advantage. In particular family businesses benefit from independence and leeway. Their fast structures – including their autonomy based on the way most of them are financed – allow them to react quickly as conditions on the ground change. This is an immensely valuable asset in times of disruption.
On the other hand, family businesses also need to find methods to alleviate their weaknesses in a time of disruption, such as limited funding and resources.
Companies need to explore new approaches and strategies, in which innovation and learning are essential for success. However, even with the right strategy, it can be difficult to bring everyone into agreement about what should be done. An important part of running a family business is seeking and obtaining valuable input from non-family employees and executive management. Doing so helps to keep the company flexible, dynamic and open to new ideas.
It is fundamentally important that the company culture should back up its strategy, and bolster risk-taking, agility and collaboration.
Finally, to thrive in a disruptive environment, family companies should also take a proactive approach to their talent model and recognise that the workforce of tomorrow will require different skills than those today.