At the Forefront of Reinvention - Family Business Insights from PwC's CEO Survey

With CEOs of public family businesses leading the charge of reinvention, the challenge now is to increase the scope and speed by capitalising on their inherent competitive advantages. 

Below is a high-level overview of the main findings from the family business cut of the CEO Survey, and you can also access the full report here.

In the words of fiction author William Gibson, "The future is already here—it’s just not evenly distributed." This sentiment is vividly echoed in the findings of the 28th Annual Global CEO Survey conducted by PwC. Gathering insights from 4,701 chief executives spanning diverse sectors and regions across the global economy, the survey includes a compelling subset of family businesses. These findings, highlighting the unique position and challenges of family enterprises, offer a roadmap for leveraging inherent strengths while navigating future uncertainties.

Out of the total respondents, 1,457 CEOs, or 31%, helm family businesses. These are almost equally split between public and private family concerns. Public family businesses, dominated by a single family but publicly traded, stand out as large enterprises. 44% of these businesses report turnovers exceeding US$1 billion, with 7% surpassing the US$25 billion mark. In contrast, non-family businesses show lower percentages in these high-revenue brackets. Private family businesses tend to be the smaller businesses in the sample. Furthermore, public family businesses are notable employers, with 15% having a workforce exceeding 25,000 people.

Our report synthesizes significant disparities and similarities between family and non-family businesses. While some challenges and actions are universally shared, family businesses, particularly public ones, often demonstrate a proactive approach, setting them apart as pioneers in several domains.

1. Harnessing Generative AI (GenAI): Public family businesses lead in leveraging GenAI for revenue and profitability, with 47% reporting increased profits, compared to 32% of non-family corporations. However, private family firms are trailing, with only 27% citing similar gains. Looking ahead, public family enterprises maintain high expectations, with 54% anticipating further profitability boosts from GenAI.
2. Investments in Sustainability: Climate-conscious investments have notably benefited public family businesses, with nearly half (46%) experiencing revenue growth from such initiatives, outstripping the one-third of all CEOs who reported similar gains. Private family businesses align with non-family firms, with 27% acknowledging increased revenues from sustainability ventures.
3. Deploying Patient Capital: Deploying patient capital seems the way forward for many CEOs of public family businesses when it comes to investing in sustainability. About 44% of public family business CEOs made climate-friendly investments at a lower return rate acceptable for other investments, more than twice their non-family business counterparts at 21%. This could be attributed to longer-term horizons and the deployment of patient capital in view of bigger gains further down the line.
4. Sectoral Fluidity: As sector boundaries blur, 38% of non-family CEOs have expanded into new industries—a trend reflected by both public and private family firms. Despite this diversification, a consistent concern echoes across leadership: four in ten CEOs fear their companies will no longer be viable in ten years if they fail to adjust their current paths.
5. Reinvention and New Revenue Sources: The overall pace of transformation is slow, yet public family businesses show a slight edge. While non-family and private family firms report 7% of revenues from recent ventures, this rises to 9% for public family businesses. This suggests a slightly more active approach to exploring new business opportunities.
6. Optimism Amidst Longevity Concerns: Despite worries about business longevity, with many fearing obsolescence, optimism about near-term growth prevails. Sixty percent of all CEOs anticipate global economic growth will increase over the next year, a significant rise from previous years. Family businesses share this optimism but are more cautious about domestic growth, with only half expecting national economic expansion.

Given these findings, these are our main takeaways when it comes to family businesses. 

• Innovation and Stability: Public family enterprises seem to blend effectively innovation with dominant family ownership stability. This synergy offers a blueprint for others, demonstrating how strategic foresight can align with long-term horizons and values of a family controlled business.
• Agility: The slightly more pronounced agility of family businesses, especially the public ones, enables them to transcend industries, quickly adapting to emerging trends and exploring new market opportunities more effectively.
• Long-term Sustainability Focus: Family businesses' long-term commitment and deployment of 'patient capital' helps align wealth generation with responsible stewardship, crafting sustainable models that resonate also with modern consumers.
• Collaborative Ventures: To unlock market potential, family businesses should pursue alliances and partnerships, ensuring alignment with core family values to reinforce business identity.
• Decision-Making Enhancements: Family businesses must cultivate robust, data-driven decision frameworks that minimize emotional biases and emphasize strategic objectivity, crucial for navigating complex challenges.
• Longer Leadership Tenures: Longer CEO tenures in family businesses present an opportunity for strategic reinvention, fostering long-term vision and continuity, supporting coherent transformation efforts.

In conclusion, family businesses, both public and private, stand at a unique crossroads where they can leverage their intrinsic strengths while addressing areas that require strategic enhancements. Public family businesses exemplify how innovation can be seamlessly integrated with the stability of family ownership, seeing tangible benefits in revenue and profitability from emerging technologies like GenAI. This blend of innovation and family control presents a valuable blueprint for other family enterprises aiming to enhance their competitive edge.

Private family businesses, on the other hand, have demonstrated remarkable agility, often leading the charge in venturing beyond traditional sector boundaries. The nimble decision-making and inherent trust among family members position these businesses to capitalize on new opportunities swiftly. However, to fully harness their potential in a rapidly evolving landscape, family businesses must overcome their hesitation towards forming alliances. Embracing partnerships with a shared alignment of family values can unlock new avenues for growth and adaptation in a changing market.

Moreover, the current economic climate underscores the necessity for robust, fact-based decision-making processes. For family businesses, this means fostering an environment where strategic deliberations are informed by data and foresight rather than emotion, especially in areas fraught with uncertainty such as climate change and technological adoption. The elongated CEO tenures seen in family businesses further reinforce the opportunity for impactful reinvention. By nurturing a culture that supports long-term vision and consistent leadership, family enterprises are well-equipped to innovate and evolve their business models, enabling sustained profitability and relevance.

Ultimately, the path forward for family businesses involves balancing tradition with transformation. By building on their foundational advantages while strategically addressing areas for growth, family businesses can secure their legacies and thrive in the future.