For most professionals, striking a strict work-life balance is key to a successful career. For many entrepreneurs, however, taking work back home with them is part and parcel of the job.
According to a recent study, roughly 85 percent of businesses in the Philippines are family-owned corporations, with a vast majority of these being small and medium-sized enterprises (SME). The study, PricewaterhouseCoopers (PwC)’s Global Family Business Survey 2018, pulls insights from 2,953 family-owned corporations across 53 countries. PwC found that Filipino family business are “conservative” on the global scale — sticking to a single sector and operating in a single country.
Innovation takes the backseat to tried-and-tested formulas for success. And that puts them at a disadvantage in the age of disruption.
Survive now, thrive later
PwC Philippines Assurance Partner Aldie P. Garcia notes that most family businesses in the country are still in the first-generation, entrepreneurs looking to build something to pass down to their children. For this reason, Garcia says many at this stage are on “survival mode”.
It’s only when these businesses are passed down that growth and innovation become priorities. These businesses see a “significant growth spurt”, with the succeeding generations more open to diversifying and adopting new technologies.
The PwC study found that family businesses in their second and third generations of succession are more likely to diversify into new sectors and practices. Companies in the third and fourth generations are more likely to expand into other countries.
“These [second-generation successors] were sent to business schools not only in the Philippines but also outside of the country,” Garcia said. “They were exposed to technology, they had a good feel and good adoption of what disruption and digital innovation is.”
Looking ahead, Garcia predicts that the prevalence and trajectory of these firms will lead to more conglomerates in the country. But that’s a future that hinges on not only a supportive environment, but a tightrope balancing act on the parts of today’s family businesses.
Something old, something new
PwC’s study found that 80 percent of respondents saw digitalization, innovation, and new technologies as immediate challenges. Many of these family businesses were built for short-term growth. Future-proofing, the study proposes, calls for a different strategy.
It’s crucial to note that innovation alone does not spell success, the study found.
Values like philanthropy, for example, are deeply rooted in a family businesses’ identity. And maintaining that identity is essential. PwC’s study found that 68 percent of family businesses have philanthropy embedded in their core values. 42 percent have this value coded into their company’s strategy. Another 34 percent have it incorporated in family governance.
“[I]f technological innovation and disruption is being adopted for the sake of being adopted without regard to the core values and without regard to the purpose of the organization, that’s when conflict would arise between your spirit and your values and your organization versus your tech-powered growth ambitions,” Garcia said.
In short, family values serve as the heart of the business, providing its direction. Innovation and the adoption of new technologies become the means to get there.
Garcia suggests that technology should be used to improve and strengthen the communication of values to the successors and the growing organization.
“Technology not only levels the playing field [for SMEs],” Garcia said. “it also amplifies the extent by which your are able to achieve your ambitions.”