MON 25TH SEP 2017

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Bringing the family business community together

Technology In Family Business

3rd July 2017 Elle Hansen - Regeneration Partners

People haven’t changed much in the last few decades, but the world that families live and do business in has changed massively.

From smart phones with more computing power than NASA used to reach the moon, to 3-D printing enabling Star Trek-like teleportation of solid objects, an explosion of futuristic technology has reshaped seemingly everything. But many family businesses have failed to keep up with that change.

It is not uncommon to find family businesses today operating with information systems and manufacturing processes several generations behind the times. It’s a potentially serious shortcoming. The Harvard Business Review suggested that failing to cope with technological shifts is one reason family firms struggle to survive more than a generation or two.

Efficiency is often the first casualty. Management information systems, in particular, become far more efficient when up-to-date computer hardware and software is applied to the task. With appropriate technology, fewer people do more work. When firms adopt new technology instead of adding new employees, they can grow cost-effectively while technologically backward competitors struggle to fund expansion, global consulting firm KPMG recently noted.

Internet e-commerce lets even the tiniest firms sell globally — if they are tech-savvy. The techno-averse are relegated to merely local markets. Mobile commerce, one of today’s most promising opportunities, depends on just-out technology to track customers, analyze needs and offer them what they want, when and where they want it.

Family businesses are slow to pick up new technology, for several reasons. The International Journal of Entrepreneurship and Innovation Management noted that family firms are generally more conservative than publicly owned companies. And family CEOs tend to be longer-tenured. That means, over time, they can get out of step with changing technology.

Often family firms have an “if it ain’t broke, don’t fix it” attitude of complacency that makes it difficult to update antiquated systems. Family businesses may have less access to external financing, especially public capital markets. Family leaders tend to be cxtra-protective of wealth. Some view new technology as a threat to their ability to maintain control.

Family businesses can start doing better by viewing technology as an essential part of strategy. Existing technology needs to be regularly evaluated for effectiveness and appropriateness, just like marketing, manufacturing and other functions. If existing systems fall short compared to what’s available — and what competitors are using — the gap needs filling quickly.

New technology may be easier for a family business to accept if it’s seen as a way to increase profits and value of the firm, rather than as a cost or a threat to family control. If current leaders still resist, younger family members may be more willing to champion an update.

Senior leaders who remember yesterday’s technology as hard to use without a lot of costly and time-consuming training should look at current offerings. Today systems are generally more user-friendly, significantly reducing costs of training, implementation and maintenance.

This assessment is time-sensitive. Technology evolves constantly, with ever-increasing speed. Every year and even every quarter that passes with outdated technology means a firm is falling further behind competitors and its own potential.

A few decades from now, people will be about the same. But business technology is likely to be so advanced as to be almost unrecognizable to us today. Now is not a minute too soon for a family that wants a long-term future in business to evaluate what it has and make sure its technology is up to the challenge.

Find out more at familybusinessregeneration.com

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