This article from Harvard Business Review is brought to you by Deloitte Private.
A family enterprise represents a singular vision: a set of unbreakable core values that has lasted generations and must endure for the generations ahead.
These core values build family enterprises’ bonds of trust with customers, employees, suppliers, and communities, beyond a level most other enterprises can achieve.
The global pandemic has tested those bonds. It struck at a moment when many first-generation Asia-Pacific (APAC) family enterprises had reached an inflection point, with founders and next-generation heirs already weighing digital transformation, governance practices, and other matters outside their realm of experience as they begin their processes for succession planning.
To plan for the future while managing and building their stakeholders’ physical, emotional, digital, and financial trust, next-generation APAC family enterprises are increasingly turning to professional expertise that extends beyond their life span or reach, and that weighs family members’ interests along with objective assessments of the enterprise’s partners’ and customers’ needs.
The road ahead
As the pandemic continues, the ongoing process of maintaining and building a trusted legacy and succession plan has become a top priority, essential to strengthening the enterprise’s bonds of emotional and financial trust.
Yet only about half of APAC family enterprises have built clear succession plans, for various reasons. Perhaps, for example, an enterprise founder wants to continue to lead an enterprise indefinitely, or a new generation feels unready to assume leadership responsibilities. So a family enterprise needs unbiased guidance that accounts for family dynamics and interests in drawing blueprints for multiple succession scenarios.
For family enterprises, defining the future must go beyond just pairing names with roles and responsibilities. Planning must ensure that family members of all generations, as well as leading advisors and executives, feel secure about their roles in building the enterprise’s future and their ability to influence its evolving strategic vision. In short, the process should bring the family and business goals together.
Sending clear signals
Many APAC family enterprises are experiencing the pandemic’s great disruption both within and outside their organizations. While daunting, this moment presents them with the rare opportunity to strengthen trust among their employees, partners, customers, and communities for decades to come.
A moment of crisis calls for transparent, ongoing communication—at all times, on all levels. It’s imperative for the enterprise to get ahead of a crisis by displaying empathy, communicating strategic actions, empowering leaders to make decisions, and announcing immediate plans for succession, development, a sale, or an initial public offering.
Taking the reins
For the next generation of APAC family enterprises, a key step in preparing to take the reins is to introduce trusted outside counsel that helps them manage their messaging and supports and strengthens their core values.
Succession planning may reveal a new mission for the family enterprise. Vietnam’s largest private conglomerate, Vingroup, with a portfolio of subsidiaries in diverse sectors including automotive, mobile, real estate, hospitality, entertainment, education, and healthcare, has started a subsidiary, VinSmart, as its next generation of leadership embarks on the enterprise’s digital transformation.
To embrace changing audience needs, external counsel helps Vingroup’s incoming leadership establish the enterprise as an emerging technology leader in areas including smart devices, artificial intelligence (AI), and automation. Getting this objective expertise is instrumental as Vingroup rebrands for its future.
Another key leadership consideration is managing growth through acquisition. Visy, an Australian-headquartered paper, packaging, and recycling company, recently acquired a significant glass manufacturing business, which has reinforced its presence in the Asia-Pacific region as a leader in the delivery of sustainable packaging solutions.
Visy’s work with its trusted advisors on this transformational acquisition enhanced its visibility as a leader in its sectors, demonstrated its commitment to high-value manufacturing jobs, expanded its sustainable-manufacturing ethos, and fulfilled the generational aspiration of the founders of the family enterprise.
With many APAC family enterprises still run by their founders, the unexpected, widespread disruption of the pandemic caught some organizations off-guard. As the next generation prepares to take the lead at many family enterprises, all of them need to be ready to manage the next disruption.
For enterprises experiencing transition both inside and out, this is the right time to welcome external counsel into the family. An objective partner’s perspectives, insights, and expertise will help an enterprise ensure that its bonds of trust prevail for the generations ahead.
Bring your family and business goals together. Read more from Deloitte Private.
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