If you are a member of the second or third generation of a family business in Asia, you know that technology and innovation can be used to develop new solutions to old problems and make positive changes. However, you also know that one of the biggest challenges you face in doing this is the older generation. If you are finding yourself being met with the response, "this is the way we have always done it," read on for more information about how you can be an agent of change for your family's business.
Family businesses tend to have a complicated leadership that includes not only multiple generations, but also in-laws and non-family professionals. This often creates friction between those involved in the managerial aspects of the business and those who are involved in the long-term vision, community engagement, and legacy of the business.
The two sides of the business each have to understand the viewpoints of the other in order for innovation to take place. Design thinking is the process of finding the right problem to solve. Here is a look at each of the steps of design thinking:
- Empathize: Once you and your family members are able to see each other's viewpoints and discuss the importance of a cohesive approach to change, you will find that you are better able to sense the needs of your customers, as well. You can define the part that legacy and tradition play in your customers' loyalty for you and how a positive change will not only allow that loyalty to continue but will provide you with an opportunity to better serve them.
- Define: Remember that design thinking is a matter of discovering which problem to solve. There may be several issues that need to be addressed. Which problem should take priority?
- Ideate: At this point, the stakeholders in your family business are likely beginning to formulate ideas designed around meeting the customers' defined needs. You can study alternative solutions and even challenge the assumptions that you have made in terms of need.
- Prototype: This is the point in the process when you have done enough talking and now it is time to start converting your ideas to actions. Remember, it is fine to implement changes slowly and a little bit at a time. What is important though is that the family is able to move together in a unified way to determine what works and what doesn't.
- Test: Are your solutions going to work? The only way you will know is if you try them. Although this marks the last step of the design thinking method, it is important to remember that this is a process. You will often find other areas of need to address during the test phase and you may even find that your solution isn't the right one for the problem you're addressing. This will require you to go back through the phases and make some iterations so transformation can happen.
Success Factors in Digital Transformation
Digital transformation in the family business is one of the most challenging aspects of change. If done successfully, your company's transformation will provide the following:
- Continuity: The reason your business has existed for generations is the continuity of the services you provide. In a successful digital transformation, you are able to keep the aspects of the business on the customer's side as good or even better as they have always been while making the provision of services and products easier and even more productive than ever.
- The transformation comes from the owners: By implementing a strategy that ensures the transformation and yet retains your company's place in the market, the process not only impacts your customers, but your internal structure as well. Your society of change is one of competency, vigor, and the ability for everyone in the organization to understand the change that is taking place, and why.
- Speed of implementation: The ability to implement your transformation as quickly as possible and with little disruption to the customers or staff has always been important. It is even more important in the new global economy, where competition for your customers may come from places you've never even heard of before. If your implementation is disorganized or it creates hassles, you may find the loyalty you spend so long garnering is on shaky ground.
- Profitability and value: This is perhaps the most striking factor of all. A successful digital transformation is one that brings profit from your business and value to your customers. If it doesn't do that, you might need to redesign your plan using new solutions.
Generally, family businesses that exist for generations have the common features of an innovative spirit that helps them to embrace new opportunities. Here is a look at two family businesses that have thrived in situations that would have seen other companies fold.
- United Overseas Bank in Singapore: Wee Cho Yaw's father founded UOB in 1935 as United Chinese Bank and Wee followed in his footsteps. Over six decades with Wee at the helm, the bank became the country's third-largest lender and thrived in spite of regulatory constraints. Wee stepped down from his position as board chairman in 2013, and as director in 2018. His two sons remain active in the leadership, with the oldest serving as CEO and the younger son holding a seat on the board. In addition to the bank, the family also owns 45 luxury apartments. During Wee's time at the helm of UOB, he transformed it from a single-branch bank to one that features more than 500 offices in 19 countries and led the organization through a number of financial and economic crises while maintaining the bank's culture of value, thrift, and prudence.
- Garment Co.: Started by a refugee in China, the company saw great success during the 1960s by selling quality jeans at a reasonable price to the UK market. Due to western import quota systems, the company relocated to Singapore, where it ultimately branched into three major industries: clothing, construction, and property development. The founder's children eventually took over the business, transforming it into a successful, modern venture that had a global network of more than 35 offices spanning three continents. The strength of the company was its ability to adapt to the changing culture around it, capitalizing on the export industry of the 60s and 70s, and continuing to utilize the low-cost labor of Singapore while keeping an eye on opportunities to expand into other lucrative opportunities.
Change is inevitable, even for the family business. By embracing innovation and using it as your guide, you can prepare your business to last for many generations to come. Learn how you can be the innovative change agent for your family business at Asia's largest experiential conference, Corporate Innovation Summit 2020.