Citi Private Bank released The Future of Family Enterprise: Turbulence and Transformation in the 2020s, a report that’s the result of a study in cohort with Cambridge Family Enterprise Group (CFEG). Two-thirds of families surveyed say they are moderately to extremely concerned about turbulence ahead, and how it will impact the next generation of leaders.
This research report examines those major concerns and provides the latest thinking, strategies and approaches going forward. It’s clear that most businesses and industries will be disrupted or at least seriously impacted by the turbulence of the 2020s. In today’s complex and hyper-connected world, the pace of change has accelerated, disruptions occur more frequently, and a crisis anywhere can have a butterfly effect with global ramifications.
What were the findings of the study?
Family-owned businesses and offices will be affected, and those that aren’t prepared to address new threats and opportunities will be left behind. Family-run firms—and the families that own them—require a distinct set of strategies to ensure their continued resilience.
The Future of Family Enterprise study and interview research shows that enterprising families expect turbulent times ahead and recognize the imperative to change – although, they are less certain about their ability to change in the ways that are needed to succeed. While generally optimistic about their future success, they are more confident about their ability to perform well through the 2020s (10 years) than through the next generation (25 years).
How can family enterprises forge successes?
The report aims to help families design effective strategies to meet the challenges on the horizon by explaining how family enterprises can change course and set strategies to be on an effective path. It describes how the global macro-landscape has shifted, key dimensions of the new family enterprise success formula, and presents five strategies for implementing it:
- Reorient and retool your owners: Ensuring owners are well-equipped for today’s fast-changing, hyperconnected world is increasingly important for family enterprise success.
- Get ready to pivot: The ability to pivot to address threats and seize opportunities is the most defining characteristic of successful families.
- Accelerate your digital transformation: Strong digital capabilities often translate to strong financial performance and family enterprises must catch up.
- Make social impact a priority: Holistically approaching social impact, whether through community activities, philanthropy or sustainable investing, will be key for families in the coming decade.
- Engage and revitalize your family: Success requires a commitment to develop family governance and a family culture that includes all generations and types of talent.
What were the executives’ thoughts on the study?
“At Citi Private Bank, we’re committed to helping global families continue their success into future generations. This study identifies a unique blueprint especially for enterprising families to prosper through today’s highs and lows,” says Ida Liu, Global Head of Citi Private Bank.
“From having difficult conversations around transfer in leadership to investing in new technology, this report can be used to spark important multigenerational conversations within families about how to proactively adapt to upcoming challenges as well as opportunities.”
“In today’s ever-changing world, the very way families think about stewardship needs to change,” says Dr. John Davis, MIT Professor and CFEG chairman, who led the study.
“Instead of focusing on just preserving and passing the traditional family business, good stewardship today must be understood as growing multiple kinds of value according to the family’s values. This might include preserving the family’s traditional business, or not.”
“Each generation can, and often needs to, grow value with different assets and activities, which requires families today to deploy an agile strategy for what they own,” Davis said.
The report can be downloaded here.