Do Family Firms Need To Evolve To Meet The Needs Of The Next Gen?

The world is changing at a significant pace and that is certainly changing the way that all businesses operate, and that includes those in the family business space. Business leaders and senior management of the family firms of tomorrow will certainly need different skills to their counterparts in family firms today and our panel are in full agreement that family firms need to further evolve in order to engage, recruit, onboard, develop and retain the next generation of their businesses.

We asked our panel that given demographics around the world are changing, as are the desires and aspirations of the next generation, if they thought that family firms will need to further evolve in response to the changes affecting the next generation.

The results:

Do Family Firms Need To Evolve To Meet The Needs Of The Next Gen?

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• Yes - 97%
• No -3%

We can already see the next generation in family businesses ushering in a transformative era, characterised by a dynamic blend of tradition and innovation. As younger members assume leadership roles, there is a palpable shift towards embracing technological advancements, sustainable practices, and diverse perspectives.

These emerging leaders are redefining the traditional family business model, navigating challenges with agility, and leveraging modern strategies to ensure long-term viability. The infusion of fresh ideas, coupled with a commitment to preserving familial values, is shaping a new narrative for family enterprises, poised to thrive in an ever-evolving business landscape, with a next generation that have different perspectives on how they want to do business too.

Our panel was in complete agreement that there is need for continuing evolution of family businesses in order to attract and retain members of the next generation.

THE THOUGHTS OF OUR ‘THINK TANK’ REPRESENTATIVES:

“I think that understanding the needs of the next generation while ensuring that the next generation shows respect for what the now gen has built is incredibly important. The needs and mindset of the different generations means there are a lot more opportunities for change and to hear different perspectives but it also means there are more chances for conflict to arise. As the next gen becomes more confident and capable, a great relationship with the now gen is essential and requires evolution.”

Kyler Gilbert Vice President & Consultant, Business Consulting Resources

"I think younger generations have firm ideas about what they want to do with their resources but I also see that many seek meaning through the shared journey so long as it involves a shared purpose, values and there is openness to hearing the perspective of the younger generation.”

Elizabeth Bagger Founder, Avanti FBA

“One of the things that I have noticed from my research about next generation preparation in family enterprises is that most of what we know about the next gen comes from the encumbent. Thus, researchers and advisers need to further explore the voice of the next gen in order to better understand how to connect with them and to see how they want to be involved with the family business.”

Isabel Botero Adviser at Generation6 and The Fischer Chair in Family Entrepreneurship at the University of Louisville

“While family businesses offer great opportunities for growth, they still face challenges in effectively onboarding the next generation and creating the road map for them.”

Abirami Duraisamy Executive Coach For Family Managed Businesses, Outshine Outplay

“Family firms always need to adapt to their own next generation of successors and this is a good thing, and helpful in modernising and updating ideas and approaches as generations shift. Families need to be in constant dialogue about the massive global changes taking place to generate useful strategies to tackle the implications for their own businesses.”

Nick Mayhew Managing Director, Alembic Strategy

“My mantra is that ownership is more important than management. Cultivate an effective cohort of rising generation owners and they can set the purpose and values of the enterprise.”

Christian Stewart Independent Family Advisor, Family Legacy Asia

“One big generational divide is the expectations around work/life balance. Rising gens are demanding balance and will not sacrifice their wellbeing for the business. Gens in control expect the rising gen to do whatever it takes. There is a big divide here that needs to be managed.”

Jean Santos President, Business Consulting Resources

“I believe that of particular relevance are the next gen values, habits and aspirations concerning sustainability and the use/adoption of new technologies. Hence, family businesses may need to evolve by adopting more suitable business models.”

Elias Hadjielias Assistant Professor, Cyprus University of Technology

“The most successful family businesses are those that combine non-financial with financial goals and who harvest the innovative and entrepreneurial skills of the senior generation, including legacy and history, with the knowledge, perspective and skills of the next generation who are far more technologically savvy and can help modernise the business, building on the history of the past generations and the founders. I think family businesses need to recognise the need for change. We have seen one thing for sure, that family businesses will continue doing what they have always done until there is something quite major that changes things. I think they need to be more open and proactive about anticipating the changes, engaging the next generation and taking note of how the world is changing and acting in order to remain relevant.”

Kirsty Ross Family Business Director, Turcan Connell

“The world continues to change at a fast pace – demographics, working remotely, technology and AI are all present and real, together with the desires of the next generation to undertake roles that have purpose and impact."

"Family businesses need to recognise the changing needs of their business and the skills required of future leaders when engaging with their next generation as things have changed and changes will need to be made as to how the next generation are engaged and informed, educated on the nature and prospects for the family business and encouraged to get involved."

"The next generation are often located in different corners of the world but with modern technology there are tools to evolve ways of working and engaging and successful family businesses will embrace the opportunity and make it work."

John Broons Family Business Adviser, John Broons Consulting

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These results were part of the 2024 Global Family Business Think Tank Report that was published in Spring 2024. Check out the full findings in the report here