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NextGens will take Africa’s family businesses digital

The next generation (NextGens) of African family business owners see themselves as agents of change for digital transformation in businesses and believe they have what it takes to succeed in a digital world.

Despite their ambitions and commitment, NextGens feel constrained by the current generation of leadership about their role in driving the business forward. They want the current generation of leadership to trust them with this responsibility.

The challenge for the current generation of business leaders is to find more effective ways to help the NextGens make the transition to a leadership position.

This is according to a report issued today by PwC Africa on the next generation of family business leaders in Africa. The report, “Agents of Change: Earning your licence to operate 2019/2020”, draws insights from a survey completed by almost 100 members of the next generation in family businesses across Africa (South Africa, Nigeria, Djibouti, Benin, Kenya, Botswana, Ghana, Cameroon, and Angola).

The report explores what is holding African NextGens back and looks at what they think they need to succeed.

Jenni Kitching, associate director in PwC South Africa’s family business division, says: “NextGens in Africa are extremely confident – they understand the skills the family business most needs and believe they have what it takes to succeed at the top level. This powerful self-assurance may well be what is leading to disappointment and frustration among NextGens as they struggle to convince the current generation of business leaders that they have what it takes to succeed at the top level.

“Advances in technology and innovation are disrupting businesses across all industries, with the result that digital transformation has become necessary. All companies will need agents of change. Based on our survey findings NextGens are prepared to take on this challenge.”

African NextGens’ ambitions to lead business are extremely high with 49% indicating that they would like an executive director role by 2025, and 24% stating they would like to be a majority shareholder within five years.

The majority (71%) of African NextGens are already deeply engaged in the family enterprise, with 39% reporting that they currently run significant internal operations. It is also notable that over a third (34%) are already in an executive director position.

Although African NextGens see themselves as agents of change, a significant minority do not believe they have a licence to operate. One in six (16%) stated that they suggested new ideas to businesses but that these were hardly considered, and 14% felt they needed to prove themselves before they could put forward any ideas for change.

Only 39% of African NextGens say they have been given the responsibility to lead a specific change project or initiative. Furthermore, only 35% say they are used by businesses as a sounding board.

The digital divide

Technology is one of the three most important drivers of change for the family business that NextGens identify (62%), and for 13% it is the number one choice. NextGens stated that the three most important technology areas were the Internet of things, followed by blockchain and artificial intelligence (AI).

Earning a licence to operate

NextGens want their voices heard on the issue where they think they can add most value: developing a digital strategy (66%), professionalising management (67%), attracting talent (53%) and upskilling staff (50%).

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 pointed to a series of barriers that prevent them from achieving the licence to operate in the business: level of experience within the family business (17%), level of experience outside the family business (16%), and level of expertise (10%).

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.

Kitching comments: “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.”

African NextGens are pursuing a range of options in their efforts to gain the skills they need: attending conferences and seminars (67%), formal education (67%), networking with peers (64%), and entrepreneurial or family networks (50%).

Personas of NextGens

In the 2019 global survey, four key personas of NextGens were identified based on the views of their skills, contributions and career goals: Transformers (self-confident future leaders); Stewards (keeping to tradition and existing networks); Intrapreneurs (proving themselves by running ventures under the family’s wing); and Entrepreneurs (following 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.

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