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MEDIA / Blog / Middle East Family Businesses Well Prepared For Disruptions - 24 MAY 2017
Dubai: Nearly half (46) per cent of next generation of leaders of family-owned businesses expect that the market in which they operate will face disruption in the next two to three years, according to Deloitte’s NextGen Survey.
 
Deloitte talked to 268 family-owned businesses and discussed specific challenges such as succession, in addition to talking about growth, strategy and the speed with which markets change nowadays.
 
“We find that family businesses have a special ability to evolve and adapt to changing circumstances. Their willingness to innovate, their long-term focus, and their attitude to risk explain why they survive in times of fundamental change. The next generation is ready to innovate, adapt and not just survive, but prosper,” said Mennolt Beelen, Deloitte’s Family Business leader for Europe, the Middle East and Africa (EMEA).
 
While a significant number claim to be well-equipped to anticipate disruption, as well as having a clear view about the direction of their industry, market and business, and an understanding of the nature of disruptive change, 27 per cent also expect to lose market share to new entrants.
 
The next generation of family business leaders expect disruption in their markets to occur within the next two-three years. About a quarter of family companies do not expect to lose market share to new entrants.
 
The biggest perceived challenges are internal rather than external, as they affect not only the business but also the family system: they are about internal organisation, such as changing family relationships and leadership succession, more than about the markets in which the companies operate.
 
The next generation of family business leaders is more aware than the previous generation of the meaning and impact of disruption. The shows that they have a clear picture of the direction in which their industry is moving and that they understand the nature of the disruptive forces in the market and in their company.
 
They do indicate that they face two big challenges: the structure of leadership revolves too much around the family/management and there’s a lack of skills among staff to optimally perform in a disruptive environment. While 17 think they do not have the skill to meet the new challenges, 35 per cent said they only are partly skilled.
 
“The global economy is changing rapidly and fundamentally, due to the exponential speed of transformation in digital infrastructure, among other things. Quicker than ever, the past is being left behind — a tendency that in the perception of many goes against the tradition of family-owned businesses,” said Walid Chiniara, partner and head of Family Enterprise Consulting practice at Deloitte Middle East.
 
According to the next generation, the biggest disrupting factor for family-owned businesses is not market disruption (20 per cent), but the changes in family relationships (24 per cent).
Succession is seen as the biggest disrupting factor by 14 per cent of the interviewees. The majority (73 per cent) said succession is a natural moment of disruption.
 
The study showed that the region’s next generation is more aware of the meaning and effect of disruption than the previous generation.
 
Interviewees indicate that the biggest advantage family-owned businesses have in times of disruption is that they are “fast” and “agile” when compared to other organisations

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