NextGen Talks- Digitising the family business: Getting the buy-ins
Voice-over: NextGen Talks is an initiative of PwC Nigeria's NextGen Club featuring family business owners, NextGens, successful entrepreneurs, and professionals. NextGen Talks: Shaping the African family business narrative.
PwC: Welcome to episode three of NextGen Talks, an initiative of PwC Nigeria's NextGen Hub. My name is Chinasa Ken-Ugwuh and I'm the host for PwC Nigeria's NextGen Talks. The COVID-19 pandemic like never before, proved the vital importance of strong digital capabilities for businesses. But only one in five family businesses say their digital transformation journey is advanced, though they continue to believe digitalization is a top priority. In the 2018 PwC Family Business Survey, 80% were worried about innovation and technology. This suggests strongly that as imperative as it may seem, family businesses still struggle with adapting to the use of technological innovations; a situation that usually occurs as a result of generational differences.
On that note, the topic for this episode is ‘Digitizing the family business: Getting the buy-ins.’ Joining me shortly on this episode of NextGen Talks is a young Nigerian entrepreneur who’s made strides in the technology space and understands the importance of digital transformation. But First, listen to our NextGen Talks nugget for this episode.
Voice-over: Moving faster along the digital journey requires an understanding of the value of data and analytic tools as well as a commitment to upscaling your workforce. You should also recognize that digital transformation must be a part of a cultural shift that is supported by highly engaged leaders.
PwC: Our guest for this episode of NextGen Talks is Iyinoluwa Aboyeji, also known as Iyin. Iyin is the General Partner and Co-founder of Future Africa, a platform that provides capital, coaching and community for mission driven innovators. He is passionate about partnering with missionary talent and capital to build an African future. Iyin spent the last few years as the CEO of FlutterWave, a business-building payment technology and infrastructure to connect Africa to the global economy. Prior to helping co-found and lead FlutterWave, Iyin co-founded Andela, Africa's largest engineering organization with over one thousand software engineers which has received investments from Max Zuckerberg and Google Ventures, amongst others.
Iyin holds a Bachelor's Degree in Legal Studies from the University of Waterloo and he sits on the board of several institutions including Paris's Share Africa Project, Rainbow Educational Services Limited and Fillmore Realty. He is a World Economic Forum Young Global Leader, the Forbes 30 under 30 Honoree and a member of Nigeria's Industrial Policy and Competitiveness Advisory Council.
Welcome, Iyin, and thank you very much for coming on NextGen Talks.
Iyin: Thank you very much for inviting me.
PwC: Fantastic. So we'll just go right into it. You heard our NextGen Talks nugget for this episode and I would just like you to share your thoughts on this part of the nugget which is, “you should also recognize that digital transformation must be a part of a cultural shift that is supported by highly engaged leaders.” What say you?
Iyin: Yeah. I mean I couldn't agree more, Chinasa. The reality is, when we think about digital transformation, there's always an attempt to make it look like, “what is required for the business to become another business?”
PwC: Right.
Iyin: But that's not the idea. The idea really is that a business is transforming itself, recognizing that there are changes in society led by technology that it has to adapt its business to. And that's what the big idea is when it comes to digital transformation. But for that to happen, the groundwork has to be first of all, an understanding of your users and their changing needs. That's why the engagement is actually the most important.
Secondarily, it then has to be backed up with a workforce that has an understanding of the changing needs of your customers, and one that has a grasp of new ideas, of new thinking, of new paradigms and for solving the problems that they have. The solutions that their parents would never have considered, to problems that we face today. But because we're young and we have a certain way of doing things or thinking about things, we're willing to consider these solutions which sometimes very much happen to work. You do need those young people that are going to suggest the ideas of time as solutions.
PwC: Fantastic. And it's interesting that you talk about not seeing it as a new business but in truth, maybe making it even better, making it more efficient, enabling the business, and that's maybe the narrative that needs to be sold to the older generation. And maybe that's their fear. You do realize that the topic we're discussing today is ‘Digitizing the family business: Getting the buy-ins,’ understanding that the older generation are a little bit reluctant to embrace these sorts of technological changes or innovations as they were. And the NextGens who are digital natives so to speak, are more eager to tow this path. But COVID-19 has shown us that we don't really have a choice, right? So before I go into more questions, I would just like for you to share your experience with us as an entrepreneur and your views on digital transformation.
Iyin: So what I've learned in my time in business is that the biggest focus has to be the customer regardless of what kind of business you have. You really just have to be extremely intuned with the needs of the customer, with the changing needs of the customer, and with where the customer needs to be to be able to even generate more revenue to continue to be grateful to you for the service and to continue being a bigger customer. I mean, realizing that, I think whatever kind of business you are, there are different kinds of advantages and disadvantages. So, with many family businesses, there are things that make them excel, and sometimes things can also meet them at tricky places. You have on one hand, the length of service, lots of generations of acquired skill and capabilities, you know, understanding how things work, building things well, etc. These things are very important.
But the other side of the house, to be very honest, is that it’s tough to retain talent, there’s nowhere for them to go. You know, it’s a family business so that's where the family stays. It is sometimes very conservative because it's the entire family, e.g., you can’t be a part of this because you’ll be in someone else’s business.
PwC: Right, okay.
Iyin: And I think what really helps on the journey of digital transformation is really understanding that things happen at your own pace, right?
PwC: Right.
Iyin: And they rush you, and introduce you to a digital transformation journey. However, you can take baby steps in advancing toward digital transformation. Sometimes it's investing in an adjacent business of the family, that is, what young people are up to. Sometimes it's working with a small company, a startup, to improve your processes in some way or the other. These are things you can do to add up to this family business. My experience is really that. I focus on ‘the customer has to be at the center.’ Where they are, where they need to go, what needs to get done?
The people around that are very important, particularly the family, and would they be able to push for more for the customer. And then most importantly, the idea generally should just be small experiments and then scale up what works. The willingness to do that is to be able to digitally transform.
PwC: Fantastic. I mean, you're sharing your perspective and your experiences as an entrepreneur and you did mention that in your time, you have had the opportunity of working or being exposed to family businesses. I think one question I'd like to ask is, in that experience, have you seen that challenge where one generation is trying to digitize the business and where the older generation is reluctant to accept it and looking from the outside, what did you think could have been done differently? You did talk about taking baby steps, right?
But some people would argue that, in the times that we're in, you just need to move very quickly because you don't want to be left behind.
Iyin: Yeah. I mean, I've seen things like that and what I've learned is, one you have to create a framework for digital transformation within your firm. You know what I mean? There are parts of your business that are friendly to digital transformation and they're parts of the business that perhaps do not require as much innovation.
PwC: That’s true.
Iyin: To be very Frank.
PwC: Fair enough.
Iyin: I'll give you a good example. I mean, if you're your business that sells a certain kind of service to high networth individuals. You can't just tell your people to go to E-commerce. You're selling a product of millions of dollars to high networth families. Part of the benefit is that they know you and you know them. You know what I mean?
PwC: True, that personal touch.
Iyin: There's a service element to that. Nah, I wouldn’t advise that you take that. You should transform that department. You know What I mean?
PwC: Absolutely.
Iyin: But, there are probably things about where you saw us, how you saw us, what do you do, how do you build products, how do you appeal to the design, etc, that you can subject to a digital transformation. You can build new units that appeal to a different segment of the market. Perhaps not the high networth, that can leverage the digital transformation. What I suggest usually is, create a lab. Just build a lab. When I say lab, I don't mean a physical lab. I mean, just an area of the company where the NextGen can experiment.
PwC: Right. That makes sense.
Iyin: But make sure that as you send them into that lab, they have context about what the business actually is. I think the worst ideas have come from people who have an idea of what the business is but don't really understand what makes the business tick. They haven't really had the opportunity to have the knowledge fully transferred to them. I don't know if you get what I’m saying.
PwC: I do, yeah.
Iyin: And this changes everything.
PwC: It does. It will stifle the entire process.
Iyin: Yeah, you’ll spend all your time pushing, pushing, pushing but you don't get very far that way.
PwC: Yeah, because you don't have the buy-ins, because people don't understand.
Iyin: Because you don’t really understand the business, yeah. So I think my advice usually is “pull a lab.” At the very least, they will learn the business, they will learn to understand the business.
PwC: But when you create a lab, would this also be beneficial to the older generation, right? Because this again, may look like something that's peculiar to the younger generation. Do you think that's like one of, I mean, so maybe it's not a sure-fire way to get their buy-in but are you suggesting that it's one of the ways to at least get their buy-in? So that way you're testing and showing. So it's almost like a show and tell,
Iyin: I think, definitely. What I've seen some really good families do is really dig deeper into generational solidarity, e.g, regular meetups of the family to talk about the business at work and different perspectives. And I find that when the older generation and younger generation get together to share ideas and so on and so forth; I don't want to call names, but I worked with this one family that we used to organize Demo Days for and basically, the older guys in the family would sit down and the younger people would sit down in this really nice room in Southern Sun and they'll tell us, “bring businesses in our area, we want to talk to them together.”
And so after each company comes and pitches, they may give money but sometimes they just ask themselves questions, e.g, what do you think about that? There's so much knowledge about what has been tried before and failed, and what is new that is shared in that conversation. You get what I'm trying to say?
PwC: Yes, yes.
Iyin: And that family has managed to stay relevant because of that intergenerational interaction. I don't know if you get my point.
PwC: I absolutely do. And you know why? I get it because this sounds to me like what is referred to as Digital Openness which is basically the openness of the family business to digital transformation. And one question I was going to ask you is, do you think there's an African factor? Because what you've described to me sounds almost foreign where the older generation are actually happy to sit in that room and hear those pitches.
So I think that definitely, that openness needs to happen first for them to be interested to even understand and see how these things work across generations.
Iyin: Yeah, this is a Nigerian family by the way.
PwC: Fantastic. Good to know.
Iyin: But I think that there's something to be said for power distance within families. So if you have a patriarch who is thundering, “you must do my will,” you know, it’s very hard to have that conversation.
PwC: Yeah.
Iyin: But I feel like the nature of families are changing such that this is not the 1970s. You know what I mean?
PwC: Absolutely.
Iyin: I think you have a new generation of parents who are much closer to their kids, much more willing to listen to their perspective on issues.
PwC: Very true.
Iyin: And I think for those who are not following that up, you have to, right? Because your kids are your eyes and ears into the world, you know?
PwC: That's right.
Iyin: Getting them into the family business is not a function of just giving them the MD title the day you feel like you need to retire.
PwC: Yeah, that’s fair.
Iyin: You have you ease them into the business, help them understand what are the deeper secrets of doing the business? The families I've worked with who are amazing and it's not just one, two or three families.
PwC: Okay.
Iyin: It's several, right? I've worked with ones where they are into this intergenerational solidarity where the daughter can talk to the father and say, “I don't agree and this is how I think we can run it and this would give us better results.” I mean, these are critical. These are very important.
PwC: Fantastic. So it's refreshing to hear that you've worked with a lot of Nigerian family businesses and you see that intergenerational connection and conversation going on. So that suggests to me that there's some level of openness going on. So from the PwC survey, we found that 40% of the NextGen family members from 31 countries say that they feel frustrated because they can't communicate their ideas on digitalization to the family members. I think that we’ve sort of touched on this, on how best to engage the older generation.
Are there any other tips or ideas from your experience interacting with these family businesses and the best way to communicate their ideas and digitization to the senior family members?
Iyin: I think torun a family business, you’ve got to be very curious about what you call the business, however mundane it sounds. Some of my best friends who are family business owners will tell me that...
PwC: Okay, or NextGens?
Iyin: Sorry?
PwC: So are they the family business owners or are they the next generation?
Iyin: They're the next generation. I mean, I don't have older friends who are best friends. They tell me about how they started in the family business and what I find admiring about the approach they took, was even though they come from very heavy technology backgrounds and they had all this knowledge about how the world works, they still humble themselves to understand at the very granular level, what is the work that delivers proper education?
PwC: Fantastic.
Iyin: And I find that, to be very fair, I’ve found a lot more receptiveness to doing that kind of grunt work from the Lebanese and Indian families. And they can speak intelligently about the business. you know what I mean?
PwC: Right.
Iyin: And you know that they're not BS’ing in terms of like, they're not trying to make their business a US business or UK business, right? They're just trying to deal with, “this is the business we have,” right? Now that makes them a lot smarter about where technology can actually play the role, because it's not just a window, trust me. The knowledge of where technology can help comes from a deep place of understanding, you understand what I’m saying?
PwC: The core of the business and what makes it tick.
Iyin: I was saying that what makes these guys exceptional is that they have a very deep business of the core of the business, right? They have absorbed the historical knowledge of what has been tried before and failed. They have an understanding of, you know, what the leverage points of the business are. They know the flaw. A lot of these guys are in manufacturing, piping. I mean, you can imagine, I have a friend who worked for a global multinational tech company, comes back to Nigeria and he’s in a pipe business.
PwC: How do you want to bring Tech into that?
Iyin: Exactly. But you see, he's thinking about how he could charge into that but in very different ways from a consultant who's never been in the business or somebody who has a cursory understanding of his family business. I don’t know if you get what I’m saying.
PwC: I totally do.
Iyin: And that's the difference, I think, oftentimes. You're dealing with somebody on the other side of the table who understands this business just as well as the OlderGen and at the same time, understands where technology and innovation can help them achieve the right kind of competitive advantage whether it’s cost reduction, or value addition or retention, right?
PwC: Yeah.
Iyin: So they're not talking to somebody who has all these fairytale ideas. The guy knows the business and what we need to move, and he’s focused on that.
PwC: Fantastic. I mean, in a nutshell, what you're essentially saying is it's easier to get the buy-in of the older generation when they have the comfort that you understand the business and what's critical to the success of that business, and then they can be more open to whatever technological innovative ideas that you have. Makes perfect sense.
But you did mention the Lebanese family, and I'm thinking, okay, is that the same? Would that be the same? Would IT hold true for the Nigerian business businesses that you've interacted with?
Iyin: Yeah. I guess the difference with the Nigerian businesses, I think what I've noticed is that the Nigerian businesses maybe bring their kids in a little later than the Lebanese and Indian families do. And there isn't perhaps as much dinner table conversation around what the business is and what kind of challenges. You know what I mean?
PwC: Yes.
Iyin: And also when they bring them in, they kind of bring them in at a very high level. They don't give them an opportunity to work their way up. But I find that those are the more deliberate about bringing their members in to work the floor and kind of grow. They're able to install a much sounder understanding of the business into their young ones. And this helps when they suggest technology innovation.
I mean, they have friends, they have peers. They have people like me, they’ll ask me about stuff and I'll tell them whatever I can. And it's a lot easier for me to have that conversation with the NextGen than it is for me to have the conversation with their parents, right?
PwC: Of course.
Iyin: Because I can challenge their thinking and I can suggest things. I wouldn't be able to do that with the older generation, a 60-year-old and so on.
PwC: But you see, so in a sense, there is the African factor. Even you are thinking of the challenge of interacting with the older generation and giving them ideas and knowing that there's a potential of them not being as receptive. So for me, it's that our patriarchal norm of, ‘I'm the founder and I'm the owner, and I know what's best and not necessarily open to any new ideas because if I'm the vision holder, I know where this is going and I know what's best to get us there.’
On the other hand, I do hear you when you say that if I'm able to also then demonstrate, hopefully, the other party or the older generation is a bit more open, if I'm able to demonstrate deeper understanding and communicate to you, you know, convincingly that your business isn't changing and this, in fact, is going to take it where you're going to, then it should be easier to sell for them.
Okay. So thank you for that. I'll just have you answer one more question before we end this episode. And it's just for you to share your thoughts. So from our survey right, there's been a suggestion that an optimal approach is to have a digital advisory board in the family business that comprises both external and internal parties that are digitally savvy. What is your opinion on this? Is this indeed an optimal approach?
Iyin: So my opinion is, there are many good reasons to have a digital advisory board, you know. But the danger that people who go this approach face is basically, you're going to create a schism between the cooperative entity and the digital advisory entity and it's dangerous primarily because you can create a challenge for yourself where the people in the cooperative entity look at that digital advisory board as a bunch of people just saying their stuff, and it becomes a self fulfilling prophecy because they don't have any understanding of the priorities of the company and everything, right?
PwC: Yeah.
Iyin: This can be challenging but I think that a better way to do it in my opinion is to have a respected digital, somebody with an understanding of digital, a little bit of understanding of your business, on the actual board. Just one young person that you trust and that your family trusts. You know, give your NextGen one Board seat on the Board. Have the NextGen themselves on the board so that way they're in a better position to kind of gear the core operating company into the new average, right?
Because everybody knows that the NextGen is leading the company, they wouldn’t naturally question, you understand, in the way that people usually will. Also, information would likely travel to you as the patriarch, as a chairman of the patriarch, or the owner, faster. I don't know if you get what I'm trying to say.
PwC: Absolutely.
Iyin: But they can tell you over dinner. You know, so kind of do that to keep an eye on things. But my advice is, I worry about creating a separate, standalone institution, right? You're going to get into trouble.
PwC: Right. So, essentially what you're saying is to have experts incorporated into the existing board and maybe of a younger generation as well, to be able to represent that younger generational view, correct?
Iyin: Yes.
PwC: Fantastic. Thank you.
Iyin: On the actual Board.
PwC: On the actual Board, yes. As in, not as a separate standalone. Absolutely.
PwC: That makes sense so thank you very much for that, Iyin.
We're going to end the episode with you sharing your two top recommendations for business continuity or succession planning in Africa with your experience working with different family businesses. So what would you recommend?
Iyin: So I think the first recommendation, if you don't mind me making that phrase.
PwC: Absolutely.
Iyin: My first recommendation is to clarify who you serve, clarify who you want to serve, and where you want to take them with your product.
It's very important that everybody understands beyond what you do day to day, why you do what you do, especially when you're thinking about digital transformation. This is the part that gets lost oftentimes. People just know that and then you start doing digital transformation for the sake of it and then nothing happens, right?
The second thing, get your younger people involved in the actual business, right? So that you can build trust with them to be able to give you suggestions about how you can optimize or you can add value, or you can retain customers in your business or build a relationship with customers in your business.
That's what digital transformation enables you to do. It enables you to either reduce the cost, increase value or retain customers.
PwC: Right, absolutely.
Iyin: Anything else? Digital transmission cannot do it. You go talk to your banker or your governor or your politicians. Digital transformation cannot do more than those three.
PwC: Right, okay.
Iyin: So start to get your kids involved in the business so they can start giving you ideas and over time, build an interaction with them where you can shut down the idea in a friendly way and you give them an opportunity to build out some, which needs me to my third point.
Create a lab. Assign a budget to a lab, right? It can be a different brand of your business and you say, ‘hey, kids, this is your own side of the business,’ right?
PwC: Right. Experiment.
Iyin: Say ‘this is your side of the business. Experiment here, I'll give you 200 million, 100 million or 50 million to experiment on. Anything that works really well here, bring it to my side.
PwC: That makes a lot of sense.
Iyin: That's what I advise.
PwC: Yeah. Fantastic. And I know I did say that this is the last bit of the episode, but I'm just curious to know, do you see yourself being a family business owner and basically inviting your next generation into the family business and what will you do differently?
Iyin: To be very honest, I have a two year old, right? I want to see what she's interested in. I'm not emotional enough about businesses to want to hold on to them forever. I see them as vehicles for God's work. I love them and leave them. I don't know if I'm a family business type of guy.
PwC: Well, thank you for sharing.
Iyin: If my daughter wants to get into the business, then sure, why not? But I'm the kind of guy who's just going to find investors.
PwC: So you just build, operate and transfer.
PwC: Well, fantastic. Fantastic. Thank you very much, Iyin. It's been an absolute pleasure having you on the show and it's been a very engaging conversation.
Iyin: Alright, thank you very much. Absolutely a pleasure.
PwC: Fantastic.
Iyin: Talk to you soon. Byebye.
PwC: Bye.
We have come to the end of this episode of NextGen Talks. Thank you for listening, as always.
Voice-over: NextGen Talks is an initiative of PwC Nigeria's NextGen Club featuring family business owners, NextGens, successful entrepreneurs, and professionals. NextGen Talks: Shaping the African family business narrative.
