PwC conducted in-depth conversations with 35 next gens from 21 countries and polled more than 100 additional next gens for its new report, ‘Same passion, different paths: How next generation of family business leaders are making their mark’. The results showed an incoming generation of family business leaders confronting generational gaps and culture change.
Digital is one area that businesses can no longer ignore. It is also one area where the generation gap still lingers. Our research shows that next gens are excited to tackle digital, but often at a pace that can be uncomfortable for the current generation. In today’s business landscape, all firms – family businesses or otherwise – need to address the digital challenge, and the next gens seem to grasp this.
Three quarters of those polled believe it’s very important or essential to have a strategy fit for a digital age. As digital natives, they feel much more comfortable with digital technology and see its potential for change. However, only 7% of respondents believe their firm is currently doing this well.
Partly due to a greater degree of transformation and investment needed to effect digital change, many current generation leaders may be cautious about committing to it. About a third of next gens polled (36%) expressed frustration that the current generation does not fully understand the potential for digital and the risks it could pose.
Likewise, the vast majority of next gens see innovation as a core component, with 82% responding that innovation is very important or essential to business success. However, a mere 15% of those polled see innovation being implemented well at their firms.
Going Their Own Way: Four Paths Forward
In the study, PwC identified four main approaches next gens are taking to build their own paths to success: stewards, transformers, intrapreneurs, and entrepreneurs. Some next gens straddle more than one of these continually evolving paths, but they can provide a helpful way to separate the different challenges, risks and opportunities that the next generation faces, and how success can look and feel different depending on the route they choose to take.
- Stewards – Individuals focused on ensuring the long-term sustainability of the family firm and protecting its profitability by staying true to the established core business.
- Transformers – Next gens who take on the task of driving significant change in the family firm, with the scope and support to do so.
- Intrapreneurs – Those whose families carve out a specific venture for next gens within the family firm – effectively the opportunity to be an entrepreneur within the firm itself.
- Entrepreneurs – Next gens who pursue their own ventures outside the family firm, often in completely unrelated sectors.
- Commitment – The business needs to make a long-term commitment to the development of the next generation, but the next gen should also reciprocate with a willingness to invest time in the business and give it a chance to work.