Strong Values Drive Growth for Family Business Amid Disruption Fears
Family businesses should seek to maximise the competitive advantage that comes from their strong values-led culture, according to the Global Family Business Survey 2018 released by PwC.
This year’s survey saw family business leaders globally reporting robust health, with levels of growth at their highest level since 2007. Revenues are expected to continue growing for the vast majority of businesses (84%), with 16% saying it will be “quick” and “aggressive”.
Regionally businesses in the Middle East and Africa were the most optimistic, with 28% expecting aggressive growth. They are followed by those in Asia Pacific (24%), Eastern Europe (17%), North America (16%), Central/South America (12%) and Western Europe (11%). First-generation family businesses clearly outperform those run by subsequent generations in their ability to achieve double-digit growth, highlighting the need to balance business model continuity with an appetite for disruption.
The top three challenges cited by family businesses are innovation (66%), accessing the right skills and capabilities (60%) and digitalisation (44%). Indeed, 80% see digitalisation, innovation and technology ranked together as a significant challenge.
Most strikingly, the 2018 edition of the survey demonstrates a link between putting values at the heart of strategic planning and strong growth prospects.
While 75% of family businesses believe their stronger culture and values gives them an advantage over non-family businesses, less than half (49%) of respondents have those values articulated in written form. Among those family businesses reporting double-digit annual growth, 53% were able to point towards a codified set of values. This reflects the increasing emphasis needed on integrating business ownership strategies and family business growth strategies.
The survey also contains insights into how the pace of technology change and generational differences are informing family businesses’ approach to legacy and succession planning. Concern about the threat from digital disruption, ranging from new competition, to security vulnerability, and understanding of the threat, is higher than average (30%) amongst media, entertainment (65%), retail (53%) and financial services (52%) sectors.
Over a quarter (26%) of large organisations (with $100m+ revenues) identify AI/Robotics as a concern over the next two years, significantly higher than those with $20m revenues or less (16%). 69% of respondents say they expected or encouraged the next generation of future leaders, including family members, to gain experience and develop skills outside of the family business to ensure they keep pace with innovation.