Family businesses must balance tradition with future-proof legacy

10 June 2024 Consultancy-me.com 2 min. read
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Successful family businesses must harness tradition, experience, and innovation to achieve a new dynamic form of legacy. That is according to a new report from global professional services firm KPMG, in collaboration with STEP Project Global Consortium.

Key theme of the report is how family businesses can continue to be successful and build a lasting legacy. More than 2,600 family businesses from 80+ countries were surveyed for the study.

The importance of legacy is according to the researchers clear-cut: of the 45% of family business leaders surveyed said that they have strong legacies, the same cohort also reported strong business performance, and an even higher 53% reported high sustainability scores.

Family businesses must balance tradition with future-proof legacy

The report highlights the importance of transgenerational entrepreneurship as a key driver of sustained performance in family businesses. Legacy alone is not enough to guarantee long-term success from generation to generation.

“Differing perspectives and priorities can shape how different generations perceive the importance of their legacy and the strategies they employ to build and sustain it,” said Fuad Chapra, Head of Private Enterprise & Family Business at KPMG in Saudi Arabia.

“These generational differences can also enrich the family business’s legacy by incorporating diverse perspectives and approaches that reflect the evolving dynamics of the business and broader society.”

Another major conclusion made by the authors is that family businesses must embrace their legacy, a crucial component to future successes. In this regard, older leadership must give subsequent generations the freedom to create their own legacy.

“Family businesses have been a significant force in the marketplace across the region for decades, and some of the major family businesses have even transitioned across four generations successfully,” said Harish Gopinath, partner and head of KPMG Enterprises for the Middle East, South Asia and the Caspian region.

“Given the rapidly evolving landscape in relation to emerging risks, and digital transformation, leaders within family businesses must engage with the future generation to be able to rethink and redesign their growth strategies.”

ESG is considered a classic common example of transgenerational differences at family businesses. Chapra: “With the increased focus on environmental, social and governance priorities across the world, younger generations will likely be more concerned with the social and entrepreneurial legacies of their family businesses. History doesn’t necessarily repeat, but it rhymes. It is imperative for founders to establish the ‘beat’ for subsequent generations to follow.”