Family-owned businesses often demonstrate excellence in innovation and performance, but they often struggle to embrace significant changes within their organizations, such as digital transformation. They face unique challenges when it comes to embracing digital transformation. As a crucial aspect of modern business, digital transformation requires family-run companies to adapt and modernize to stay relevant.
Although many leaders of family-owned businesses acknowledge the need for change, they often report that their companies and families are not sufficiently prepared. To succeed in digital transformation, these companies must not only automate processes and digitize work but also foster innovation and empower employees to experiment with creating engaging digital offerings for customers.
One of the essential strategies for family-owned companies to succeed in their digital transformation journey is to strike the right balance between efficiency and innovation. Businesses must simultaneously maximize efficiency while encouraging innovation, involving not only the automation of processes and digitization of work but also enabling employees to experiment with creating engaging digital offerings for customers.
In addition, companies should avoid creating “silos and spaghetti,” a situation where new processes are developed from scratch for each idea. Instead, they should identify and use plug-and-play or no-code products and services to perform tasks efficiently and effectively. This approach prevents the formation of isolated business units and overly complex processes, streamlining the path to digital transformation.
Selecting the appropriate pathway for digital transformation is also critical for success. Four common pathways include:
- Focusing on operational transformation and industrialization first.
- Emphasizing the enhancement of customer experience as a priority.
- Undertaking an incremental transformation, alternating between operational efficiency and customer experience.
- Establishing an entirely new entity.
Before considering any reorganization, businesses should identify the appropriate pathway and adopt a platform mindset. Family business owners should take responsibility for guiding and supporting the necessary changes for success.
Another crucial aspect of successful digital transformation is cultivating an agile board culture. Boards of future-ready companies should actively engage with owners and management to bring about change in the company. These boards should work closely with management to build a change-ready culture that encourages experimentation, learning, and growth.
Moreover, by establishing a high-trust culture, family businesses can promote experimentation, learning, and the understanding that technology serves as a tool to enhance efficiency and thoughtfulness within the organization. This encourages a growth mindset and fosters a strong foundation for long-term success in the digital age.
Family-owned businesses can succeed in their digital transformation journey by prioritizing efficiency and innovation, avoiding the creation of “silos and spaghetti,” selecting the right pathway for digital transformation, developing a digital thesis, and fostering an agile board culture. By embracing these guidelines, family-owned companies can adapt and thrive in today’s competitive business landscape.