The next generation (NextGens) of African family business owners consider themselves agents of change for digital transformation and able to succeed in a digital world; however, they feel constrained by the current generation of leadership about their role in driving business forward.
NextGens want to be trusted by the current generation, says professional services firm PwC in its ‘Agents of Change: Earning your licence to operate 2019/20’ report.
The report, published on Tuesday, draws insight from a survey completed by about 100 NextGen family members in family businesses across Africa – South Africa, Nigeria, Djibouti, Benin, Kenya, Botswana, Ghana, Cameroon and Angola.
PwC South Africa family business associate director Jenni Kitching explains that NextGens in Africa are extremely confident that they understand the skills the family business needs most and that they believe they have what it takes to succeed at the top level.
About 49% of African NextGens say they would like to be an executive director by 2025, while 24% say they would like to be a majority shareholder within five years.
About 71% of NextGens are already deeply engaged in the family enterprise, with 39% reporting that they currently run significant internal operations.
PwC also notes that 34% of NextGens surveyed are already in executive director positions.
“NextGens’ powerful self-assurance may well be what is leading to disappointment and frustration among them as they struggle to convince the current generation of business leaders that they have what it takes to succeed at the top level,” Kitching says.
She highlights that advances in technology and innovation are disrupting businesses across all industries, which necessitates digital transformation and companies becoming agents of change – which NextGens are willing to take on.
Technology is one of the three most important drivers of change for the family business that NextGens identify, with 62% citing so and 13% saying it is in fact the number one choice.
PwC says the top technology areas mentioned in the survey were the Internet of Things, blockchain and artificial intelligence.
However, although African NextGens see themselves as agents of change, many of them do not believe they have a licence to operate.
PwC finds that one in six, or 16% of respondents, have suggested new ideas to their family businesses that were hardly considered. This while 14% of NextGens felt they needed to prove themselves before they could put forward any ideas of change.
Only 39% of African NextGens say they have been given the responsibility to lead a specific change project or initiative in their family business. Only 35% say they are used by businesses as a sounding board.
Kitching says NextGens want their voices heard on the issue of where they think they can add the most value, which they cite as developing a digital strategy, professionalising management, attracting talent and upskilling staff.
“They are clear on where they believe they can have the most impact. But they are also aware of the areas in which they need to gain experience. Unable yet to participate fully in the decision-making circle, NextGens point to a series of barriers that prevent them from achieving the licence to operate in the business.
“These barriers include level of experience within the family business, with 17% of respondents indicating this, while 16% mention a level of experience outside the family business as a barrier and 10% believe their level of expertise is a barrier.”
When asked what would help them add more value to their family business – and therefore help them achieve the elusive licence to operate – 59% of NextGens pointed to the broad area of skills development.
“For many, the current generation of family business leaders is not answering the call. Again, this suggests a reluctance on the part of current family business leaders to commit fully to a succession plan.
“This echoes the results of our 2018 Global Family Business Survey, which found that only 15% of family businesses had a formal succession plan in place, one-third had informal plans and 44% had none,” Kitching notes.
African NextGens are pursuing a range of options in their efforts to gain the skills they need, including 67% of the survey respondents attending conferences and seminars, 67% having some form of formal education, 64% networking with peers and 50% leveraging entrepreneurial or family networks.
Kitching explains that, in the survey, four key personas of NextGens were identified based on their skills, contributions and career goals: transformers, who are self-confident future leaders; stewards, who keep to tradition and existing networks; intrapreneurs, who prove themselves by running ventures under the family’s wing; and entrepreneurs, who follow their own path outside the family business.
The survey puts forward several recommendations for each of the NextGen personas to help them achieve their ambition to reach the top levels of their organisation.
It also offers recommendations for the current generation of business leaders to help ensure a smooth transition of each NextGen persona into the decision-making circle.
EDITED BY: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online
