Family businesses must bridge the strategy gap says PwC global survey

Bridging the gap between short-term and long-term strategy was one of the key insights emerging from the PwC 2016 Global Family Business Survey which was launched this week.

The PwC report found that family firms were comfortable in the short-term and planning for the longer term but were unsure of how to bridge the gap — what they refer to as “the missing middle”.

“It’s about taking the firm from the short term and the technical to the middle term and the strategic” stated Peter Bartels, Global Family Business Leader, PwC Germany.

Many businesses hope to diversify yet one in three family firms are still working in one sector and only in their home market.

In order for family firms to realise their ambitions for growth, diversification and internationalisation, they must engage in strategic planning. As part of this strategic shift, family businesses should engage in succession planning and professionalization. The survey shows that succession still remains a low priority for firms, with only 15% having addressed it in any meaningful sense.

Dr. Eric Clinton, Director of DCU Centre for Family Business, spoke at the official survey launch in London. In relation to succession, he said the following:

“Succession is not an event, for a family business it’s a process. Globally, and I think reflective of what the survey is showing, a lot of family businesses formalise the business but the family professionalization is often left unknown. My advice for families is to think of the succession process as two spheres, it’s the business but equally it’s the family as well.”

Dr. Eric Clinton speaking at the official launch. 

Another key finding was in relation to next generation involvement. The survey found that 39% plan to pass management to next gen. Moreover, over half plan to establish new entrepreneurial ventures. Regarding governance, only half of businesses below $20 million have non-family on the board.

The eighth global survey was the largest and most comprehensive yet with 2,802 senior executives from 50 countries surveyed.

A webcast of the survey launch can be viewed here. The full survey can be downloaded here.