Expecting the unexpected
Several family business leaders reported a renewed appreciation for strategic succession planning after unexpectedly having to assume the reins of their family business post-pandemic. As a consequence, they are making sure that contingency and succession plans are in place to protect their families and businesses for future generations. This is truly a global phenomenon which we are experiencing as we interact with family businesses across our network.
Added to this is the complexity that was brought about by the surge in digital transformation across the value chain within the marketplace. Handing the family business over to a new leader, new management or a new owner is all-encompassing. It isn’t exclusively about the selection and development of successors. It is equally about protecting the business brand and reputation, retaining knowledge to make sure that the business is sustainable for years to come, and navigating the digital paradigm shift to be able to transform complex challenges and risks into opportunities.
This is truly one of the most challenging experiences facing any leader, and most particularly an entrepreneur who has built a family business from the ground up. In the Kingdom of Bahrain and across the GCC region, we see some great illustrations of Family businesses which have not just survived the numerous upsets within the marketplace over the past few decades, but have also thrived through a transgenerational leadership shift, with some of them even having grown multiple fold over 4-5 generations. Across the region, we are also a marketplace that is significantly driven by family businesses and owner managed businesses that have the potential to create and shift behavioral and mindset trends.
When a business does not imbibe a disciplined approach towards succession planning and designing the architecture of their future enterprise, this makes it a genuine concern for stakeholders within the marketplace, while also having the potential to impact the confidence on the stability of the marketplace at a regional and international level. At an enterprise level it is not only a potential impediment to the smooth transition and continuity of the business; but also a disservice to the successor who is ultimately required to assume the leadership role, and the overall legacy of the business that was created over the years.
Giving NextGen a voice
Millennial generation leaders are having an increasingly important voice in the future direction of their family businesses and who will be chosen as a successor. They are being given more space at the management table to address increasingly complex issues, while also supporting the enterprise to leverage innovation and technology to be able to transform risks into opportunities, such as the accelerated digitization of business processes that are emerging globally.
These NextGen successors bring a fresh perspective that will transform certain key aspects of the family business, and potentially uncover previously unexplored opportunities that may redefine and alter the enterprise’s DNA and its identity down the road.
Many from the Millennial generation also bring a unique perspective and business philosophy from their predecessors as they seek greater personal freedom, a better balance between life and work, and a balanced outlook between profitability and social/ environmental responsibility. Family business leaders may need to be prepared to accept that the emotional attachment to the business may not be as deep for their NextGen successors as it has been with the first-generation entrepreneurs whose life and business have often been deeply intertwined.
“The generations coming behind us have a different mindset – a different ecosystem – that isn’t right or wrong, it’s just different. They are inspired by different things, they are fast, machine orientated, and deeply involved in social media. To engage their interest in succession, there has to be a psychological attachment. It’s important for them to see that this is a business with a social purpose, and that’s what will continue to motivate them.” – Mr. Khalid Abunayyan, Chairman of Abunayyan Holding Company in Saudi Arabia.
We believe the regenerative capability of family businesses is their superpower. However, there is good news for all stakeholders involved:
For the NextGen leaders: The life lessons, organizational and family-based support network, and the pragmatic mindset of your predecessors towards growth are the most invaluable guide you can have into the marketplace.
For Family Business Leaders: if you are still speculating and concerned about handing your business to your next generation – They are ready!
For the marketplace: Many current-generation successors have learned important lessons from their own succession experiences and are making every effort to make sure that more thorough processes are in place for the next generation, while they work towards securing the confidence in their brands and the marketplace.
With this in mind, we are hosting our annual 2022 MESA Region Family Business Summit this year in Riyadh, Saudi Arabia themed “Next Generation: Leveraging Innovation to drive Transgenerational Prosperity”. The Summit is scheduled to take place between the 11th-12th October 2022, and we hope to attract some of the most innovative minds in the industry. The Summit will feature keynote speakers and industry experts including Prof.Alfredo De Massis who is an award winning expert in the Management and Governance of Family Enterprises; and the Global Leader of Family Business for KPMG Private Enterprise, Tom McGinness.