Same passion, different paths

How the next generation of family business leaders are making their mark

Next Gen Study 2017

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Key findings from our 2017 Next Generation Study

Our Next Gen Study

In 2016, we published, Great Expectations: The Next Generation of Family Business Leaders, hearing from the next generation about their ambitions, their challenges, and the future – both their own and their firm’s.  This year, we dig deeper into these issues to understand how next gens are tackling key issues to ensure success: digital, innovation, social impact and professionalisation.

Everything we’ve learned about next gens - both from this year’s interviews and our experience in working with them - tells us the same thing: they have a clear vision of the future of their family business, and strong ideas about how to get there. This holds true whether they are inside the family firm looking out, or outside the family firm looking in.

Their own experience and education mean they assign particular importance to areas like digitisation, innovation, and professionalisation, and their global outlook makes them keen to diversify, whether in terms of products, markets, or ways of working.

The common denominator is strategic direction: the need for a compelling corporate strategy and practical execution plan for both the short and medium term. This ties in with themes in the 2016 Family Business Survey: the prevalence of a ‘missing middle’ in the strategy of many family firms. Many have effective short-term business plans, and a long-term vision that is measured in generations; it’s the five to ten-year period that is not being adequately addressed.

Fortunately, the next gen priorities align strongly with medium-term strategic thinking. This bodes well for family firms as a whole if the current generation recognise the skills, drive and experience of the next gen to drive the business forward.  


Going their own way: Four paths to success

Meet the Stewards, Transformers, Intrapreneurs and Entrepreneurs

 

From our extensive work with family firms across the world, we see four main approaches that next gen are taking to build their own paths to success. These paths do, of course, evolve, and some next gens straddle more than one.

Likewise there is no ‘right’ way: all four are routes to success and many will move between them during their careers.

But these are nonetheless a helpful way to separate the different challenges, risks and opportunities faced by the next generation, and how ‘success’ can look and feel very different depending on the route they choose to take. 

It can also open up new ideas and possibilities and highlights options for different ways of building a path for the future.

 

Stewards

“Stewards” lean towards following a conventional family business career path, training, studying and preparing themselves to keep the firm profitable and professionally managed. 

Meet the Stewards 

Pg 13 of 80; PDF, 3.2mb

Transformers

“Transformers” focus on innovation and reinvention of the family business. They rely both on their own talent, as well as support from the current gen.

Meet the Transformers

Pg 21 of 80; PDF, 3.2mb

Intrapreneurs

“Intrapreneurs” also have transformative ideas, but they choose to carve out a specific venture within the firm, rather than overhaul the entire business. These new ventures can look and feel like a start-up, but they still enjoy the secure support and funding of an established family business.

Meet the Intrapreneurs

Pg 30 of 80; PDF, 3.2mb

Entrepreneurs

"Entrepreneurs" make a clean break from the family business to start their own ventures. 

Meet the Entrepreneurs

Pg 38 of 80; PDF, 3.2mb

“When I came into the business I asked the question, 'Where am I going to be in five, ten, fifteen, twenty years' time?' but no-one in the older generation could answer me. I need to see what am I working towards and where am I going.”

Justin Hearne, Danroc, South Africa. Third generation

Discover more

“All the digital marketing and social media lies with me”

It’s no surprise that whatever route to success they choose, next gens are leading the charge when it comes to how the business prepares itself for success in the digital world; in other words, that they have a business strategy fit for the digital age and can reap the benefits as well as respond to the myriad of challenges. As ‘digital natives’ they feel much more comfortable with technology and see its potential for change. This year’s study results suggest that companies which acknowledge they have a risk or issue in this area tend to be more willing to give next gens the freedom to implement change. The adoption of digital tends to start with self-contained ‘projects’ in the area of communications: online sales and marketing, client relationship management (CRM), and social media. How are the next gens tackling this issue?

Read the chapter (Pg 49 of 80; PDF, 3.2mb)

“I aspire to be a creative disrupter”

Innovation is a big priority for many next gens, and some of the best examples come from next gens who have followed the path of being entrepreneurs rather than those who remain within their family business. In many ways the pattern - and the challenge- with innovation is the same as it is with digital.

Read the chapter (Pg 52 of 80; PDF, 3.2mb)

“We didn’t want to be seen as an unprofessional, family-run company”

In the 2014 Family Business Survey, we looked in detail at the professionalisation of the family firm. This remains a key agenda item for many next gens, especially those with business degrees or MBAs. Some are making progress at a group level in areas like finance, reporting, HR processes, and branding; others are putting their ideas into action as the manager of a business unit or division. And some have learned the hard way that this sort of change is long overdue. How are the next gens making a success of this?

Read the chapter (Pg 55 of 80; PDF, 3.2mb)

“It’s about business development and new product development”

Diversification is another area where next gens can make a big impact. Some have been able to spot new ways to exploit the family firm’s existing capabilities. Others see diversification in terms of markets rather than customers: given that many next gens have studied or worked overseas they can be keener on - and more comfortable with - geographical expansion than their parents. And in some cases the drive for diversification is through new products. How are next gens diversifying the business?

Read the chapter (Pg 57 of 80; PDF, 3.2mb)

“You have to do something good to do good”

When you talk to today’s next gens it’s clear that they are independent-minded and ambitious for their own careers, but they often define success very differently from their parents. Successful next gens have the same entrepreneurial spirit that characterised their family firms in the first place, but many of today’s next gens believe business should be a force for good, not just a way to generate wealth (though it’s that same wealth that makes such an attitude possible – an irony many are well aware of). They see a big difference between ‘philanthropy’ for its own sake and ‘social investment’ for a specific purpose. Some are also trying to embed social impact at the heart of the business and drive true transformation so that it is in line with this social purpose. How are next gens building their legacy?

Read the chapter (Pg 60 of 80; PDF, 3.2mb)

 

 

 

 

Achieving success for the firm and the next gen: Five key factors

As we talked to next gens and looked at the four the paths next generation are pursuing, it is also clear that there are a set of common success factors whichever path they pursue. This is what we refer to as the ‘five Cs’. 

What are they? Find out here.

Pg 65 of 80; PDF, 3.2mb

In their own words: Next gens’ advice for other next gens

We asked our next gen poll respondents what advice they would give to other next gens as they prepare to ‘go their own way’.
 

What are their recommendations? Find out here.

Pg 72 of 80; PDF, 3.2mb


In their own words

We spoke to Kaushal Dugar of Teabox, Christina Sorbara, of The Sorbara Group of Companies and Arjun Jindal of Machino Polymers Ltd., to find out how they are tackling some of the key issues faced by next gen leaders.

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Personal perspective: Kaushal's story

“The tea industry has run the same way for 150 years, and the attitude has been if it’s not broken, why fix it? - going my own way"

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Personal perspective: Christina's story

"I want to be part of shaping the future growth of the company for the next generation"

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Personal perspective: Arjun's story

“Preparation starts from when you are born. I've been going to office with my grandfather for as long as I can remember.”

Contact us

David Wills
Global Leader - Entrepreneurial & Private Business, PwC Australia
Tel: +61 3 8603 3183
Email

Sarah Rodwell
Global Next Gen Club Lead, PwC UK
Tel: +44 (0) 207 213 1214
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Oriana Pound
Chief of Staff, Global Clients & Industries PwC UK
Tel: + 44 (0) 207 804 8611
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Ahpy Bokpe
Project manager, Global Entrepreneurial & Private Business, PwC UK
Tel: +44 (0) 20 7804 6253
Email

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