Deloitte Survey Highlights AI and Governance Priorities for Family Businesses

Recently, Deloitte Private conducted a survey targeting family enterprise leaders, shedding light on their strategic direction for the coming year. The findings indicate that family-owned businesses are pivoting towards increased adoption of artificial intelligence (AI) and investments in technology as their foremost priorities.

Key Survey Insights

According to the survey, a significant 42% of family business leaders expressed the intent to augment their AI strategies, while 37% plan to enhance their technology investments. This shift reflects a broader trend among family-owned enterprises recognizing the necessity of digital transformation in sustaining competitiveness in an ever-evolving market environment.

Operationally, these leaders are focused on profitability as they aim to boost cost efficiency (49%), enhance productivity (48%), and mitigate risks (48%). Such operational strategies are critical as businesses navigate economic challenges and strive for long-term sustainability.

Board Governance and Succession Planning

The survey also addressed the governance structures of these enterprises, revealing that many family businesses are increasingly prioritizing the inclusion of technology-savvy board members. Approximately 66% of participants reported either currently having or planning to recruit individuals with expertise in technological and emerging fields. However, challenges remain, with 46% citing the difficulty of finding suitable candidates and 42% highlighting a limited understanding of emerging technologies among existing board members.

Succession planning emerged as another significant theme, with 49% of leaders expressing confidence in their preparatory measures for future leadership. Despite this optimism, several barriers hinder effective succession. A notable 37% pointed to a lack of interest among the next generation, while 31% reported ambiguous selection criteria and skill gaps in leadership. To remedy this, enterprises are investing in educational resources (52%), on-the-job training programs (48%), and mentorship opportunities (45%) to better equip emerging leaders.

Mergers and Acquisitions Trends

Interestingly, smaller family businesses are increasingly considering mergers and acquisitions as a means to fortify their supply chains and broaden market reach. Approximately half of the surveyed leaders indicated intentions to utilize M&A strategies, with a particular inclination towards public markets for funding. Notably, family enterprises generating annual revenues between $100 million and $500 million showed a greater propensity (57%) for M&A activities aimed at supply chain enhancement compared to those with revenues exceeding $500 million (43%).

Structured Governance Approach

An overwhelming majority of family enterprises show commitment to formalizing governance structures, with 73% employing family councils and 83% establishing governance frameworks. This trend highlights a concerted effort to align business operations with family values, ensuring both governance clarity and operational effectiveness.

Laura Pearson, the US Family Enterprise Leader at Deloitte Private, commented on these findings, stating, "Family enterprises are navigating a pivotal moment – balancing the need to prepare the next generation of leaders with the imperative to invest in transformative technologies to keep their organizations competitive now and in the future." She emphasized the shift from informal decision-making to adopting formal governance frameworks that synchronize family values with business objectives.

Conclusion

The insights gleaned from Deloitte’s survey underscore the complex landscape in which family-owned businesses operate today. As these enterprises seek to evolve, the strategic focus on AI, operational improvements, and robust governance structures will be crucial in navigating future complexities and ensuring generational success. These initiatives not only empower family businesses to thrive but also help secure a legacy of growth and innovation.

For more comprehensive insights on family enterprise priorities, explore the complete survey at Deloitte’s official page.