“Family businesses have unique characteristics and dynamics that make paying attention to … global trends even more important than non-family businesses,” says Wendy Sage-Hayward, Senior Consultant at The Family Business Consulting Group.
This is partially because of the complications of family dynamics mixed with decision making around complex issues, such as the growing influence of artificial intelligence and other fast-changing technological advances, as well as responding to uncertain geopolitical, climate and market conditions.
However, family enterprise can be nimble, highly motivated and entrepreneurial, with potentially patient capital to adapt to the many challenges they face.
This is critical at this moment in time, when the generational wave of business and wealth transfers is underway, adding succession issues and generational differences to the challenges family businesses face.
Four experts with experience advising and running family businesses, who were featured speakers at Family Enterprise Canada’s recent Families Summit of Minds, offer advice on how enterprising families can successfully face the challenges of a volatile and uncertain future.
Wendy Sage-Hayward
Senior Consultant at The Family Business Consulting Group; Academic director at Family Enterprise Canada (FEC); Owner in Sage Hayward Vineyards in Saturna Gulf Island in B.C.
Sage-Hayward has advised family business leaders, boards, and owners globally on governance and rising generation preparation and conflict resolution for more than 30 years.
What are key issues that family businesses need to adapt to in a rapidly changing world?
“Family businesses face challenges like other businesses navigating the impacts of climate change, globalization, technology advancements and more due to our continuously changing landscape.
They typically have a long-term perspective focusing on preserving wealth and legacy for the rising generations, which influences their decision-making processes. Embracing these challenges ensures longevity of their businesses and their values.
The emotional ties in the family may affect how they make strategic choices. Founders, for example, may be willing to take more calculated risks to allow them to stay competitive as well as attract and retain the next generation of leaders who are increasingly values-driven.
Family businesses have more complex decision-making structures due to the dynamics between the family, business and ownership systems. Managing different inter- and intra-generational perspectives around social change, sustainability, diversity and inclusion, and the like can be sensitive and potentially explosive if not managed well. Putting in well-structured governance can help families navigate these challenges.
Family businesses are uniquely positioned to address these global trends.
They are nimble, highly motivated and often entrepreneurial in their approaches. They invest in things they believe in and that are congruent with their values.
In Canada, we have an important responsibility and opportunity to seize the changing landscape by supporting family businesses to invest in innovations related to concepts such as a circular economy and sustainability, for example, while ensuring a positive social impact.”
Do you have any advice or strategies to address these issues?
Family businesses can start to address these global trends by being proactive, adaptive, and strategic.
This involves getting educated and staying informed about global trends.
They might consider building strategic partnerships with their suppliers to share knowledge, collaborate, and capitalize on emerging opportunities.
Most importantly family businesses need to implement robust governance structures which foster healthy and constructive dialogue as well as strategic decision making about the future of their businesses within the family. This will foster the ability to work through their different perspectives on matters that shape the direction of their enterprises.
Matt Knight
Executive Director, Alberta Business Family Institute at the University of Alberta
Knight is a board director, executive leader, family business advisor, and impact entrepreneur with more than 15 years of experience in leadership, strategy consulting and family business management.
What are key issues that family businesses need to adapt to in a rapidly changing world?
“[These] include how to balance rapid advances in technology, specifically looking at ways to keep pace and leverage Artificial Intelligence (AI) and Machine Learning (ML), while balancing and respecting traditional approaches like a longer-term economic outlook and strong purpose and values.
While managing this change, they must also address how to prepare for succession and the generational wealth transfer from baby boomers that is forecasted to be more than $1.1 trillion.”
Do you have any advice or strategies to address these issues?
“Regarding technological advancements: First, invest in regular training and education for the current generation, next generation and employees. One example is ABFI’s new courses on transforming family business with AI. Don’t underestimate how informal training, like providing employees and family members time to experiment and innovate with new generative AI tools, even for 15 minutes a day, will go a long way.
Next, look to foster innovation and encourage family members and employees to look at incremental innovation – change does not have to be big or need a large budget. Build an environment and culture where experimentation and even failure can be safe.
In succession and generational transition: Start planning now to build in time for transition – do not wait. Create a formal, documented plan that outlines potential processes, including timelines, roles, and responsibilities.
Have hard conversations and engage all stakeholders, including family members, key employees, and external advisors, to have a comprehensive view with multiple perspectives.
Invest in training and mentoring for post secondaries, family business advisors, and business families in your community. If you have not already, build out your advisory board to include board members with experience in succession, innovation and technology, governance, and family business.”
Owen Matthews
Founder and chairman, Victoria-based incubator Alacrity Canada, a Wesley Clover initiative
Matthews was founder of communication software firm Newheights Software Corp., acquired by Vancouver-based CounterPath Solutions Inc. (now part of Alianza Inc.) He is now a General Partner at Ottawa-based private investment firm Wesley Clover International, founded by his father, Mitel’s Terry Matthews, and a managing partner at Vanvouver-based sustainability and climate tech venture fund Emend Vision Fund.
What are key issues that family businesses need to adapt to in a rapidly changing world?
The younger generation are more involved in social and environmental issues. Many in that younger generation have little interest in the family business, because it doesn’t speak to their values or interests.”
Do you have any advice or strategies to address these issues?
“The shift to activist investing is important to engage [younger generations].
To get their children into business, the older generation need to recognize the social and environmental impact of their work and involve their children to drive change.
I have seen this approach get the next generation to participate in business.”
Drew M. Ratcliffe
President, family firm Arpeg Group of Companies, based in Vancouver
Arpeg is a third-generation business with real-estate and other investments in the Pacific Northwest.
What are key issues that family businesses need to adapt to in a rapidly changing world, and do you have any advice or strategies to address these issues?
“One issue is resetting investment strategies to preserve wealth in a climate of uncertain and possibly negative growth in economic terms.
My advice in this area would be that family businesses leverage their typically stable and patient capital. Difficult capital markets should create opportunities for well-capitalized family businesses to participate as lenders of debt financing at returns closer to equity investments while benefiting from a lower risk profile.
Additionally, there is the issue of leveraging digital change and automation that has undoubtedly affected all businesses. Family businesses, like ours, might tend to be a bit slower on the acceptance of new tools and systems, owing to their longer horizons.
Here I would advise that the future benefits of connectivity and automation will accelerate family businesses’ competitiveness and engagement among distributed family members. Enhanced digital literacy will stand to benefit family businesses by offering the tools and individual agency to enhance togetherness – key functions of keeping the family business together.”
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