Disruptive innovations : family businesses are aware of the importance

2nd edition of the Deloitte research study “family businesses at the time of the Next Gen”

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Neuilly-sur-Seine, Monday 22 may 2017

Deloitte publishes the 2nd edition of the study “family businesses at the time of the Next-Gen” based on a series of interviews conducted with 268 future buyers of family businesses in Europe, the Middle East, Africa. These results shed light on the opportunities and limitations unique to these organizations. Decisive and strategic for the competitiveness of enterprises, the disruption is at the heart of this edition. Indeed, although aware of the real challenge of disruptive innovation in terms of development, yet too few family businesses operate this lever.
Almost 47% of future buyers of family businesses believe that their market will change in depth over the next 2-3 years
27% believe that they will lose market share in their sector for the benefit of new competitors
69% of them consider that the family is a source of innovation
For 81% of the respondents, the corporate culture encourages innovation and the emergence of new ideas
The change in family relationships is seen for 24% of respondents as the most important factor of disruption.

Innovation : align projections and reality

Sensitive to the importance of innovation and prepared for the imminence of the change, 47% of future buyers of family businesses expect their market to be profoundly modified in the next 2-3 years. In the Face of changes in their market, they are ready to innovate and to adapt, sustain and grow their organization.

Although they have necessary qualities such as the autonomy and agility, the family structures present some rigidities. Thus, their innovative approach is less effective and more ambitious than envisaged.

“Future buyers are driven by a real goodwill, but the difficulties focus on the human and governance. The teams do not always have all the freedom to innovate and may lack training for their role as agents of change. The bulk of the work is to be performed within the company itself. Family businesses need to develop their internal communications to better share their strategy and bring together the potential of employees in the service of strategy, analysis Christophe Saubiez, Partner in charge of family Businesses at Deloitte.

Who can lead the process of disruption ?

Today, this problem is considered mainly managed by the Directorate of the company (61%) rather than by the family council (28%). Family businesses are faced with the limitations of this approach insufficiently collegial.

“The leaders are not the best placed to ensure that policy is disruptive. They are already stressed by everyday subjects that are their priority and don’t leave enough room for the disruption, ” explains Christophe Saubiez, Partner in charge of family Businesses at Deloitte.

Even if 50% of future buyers recognize that the role of the leader in terms of innovation is to be actively engaged, they are 40% estimate that the disruption is the matter of all and that the leader must, above all, indicate the path to follow. Then comes the question of in-house skills : for 35% of the respondents, there is a lack of skills and employees need to train and evolve to succeed, to be more contributory.

Families mostly safe to follow the right direction

The study indicates that 81% of prospective buyers believe that the corporate culture encourages innovation and the emergence of new ideas. In addition, 84% of respondents indicated that the family understands what is a change is disruptive and they are 75% consider that initiatives are put in place to stimulate innovation.

“We see a clear difference between the perception of these future buyers and the reality on the ground “, stresses Christophe Saubiez. “They have a solid understanding of the phenomenon of disruption, its challenges, and its impact on the market, but they are less likely to operate these new levers to improve their performance “.

The transmission, the opportunity to communicate

Innovation is not an issue to be addressed in a transversal manner within the family. This creates differences of awareness, understanding and involvement in the process.

The intrafamilial transmission of the company and the arrival of the buyer may be an opportunity strong to address this issue. Indeed, at the time of the succession, the vision and strategy of the company are reviewed and are the subject of a new communication. For 73% of the respondents, this momentum is ideal and natural to address the subject of the disruption.

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