The Singapore NextGen have always been keen to explore new ideas and technology while fighting against the traditional instincts of the earlier generation. However, each generation with its own capabilities have also continued to work towards securing their business and its legacy.
The survey revealed that the immediate priority for NextGen is achieving growth over the next two years. Other focus areas include talent management and expanding into new sectors or markets. It was observed that there is reasonable alignment between business priorities and where NextGen leaders are engaged.
Singapore NextGen are confident of adding value in terms of professionalising and modernising management practices while ensuring the existence of a clearly defined plan for international expansion. NextGen are generally positive about issues related to clarity of roles but less so about the existing governance structures and their companies’ digital capabilities.
This year’s Global NextGen Survey provides actionable insights across three critical areas - innovation, trust and succession, emphasising the importance of taking immediate next actions for sustained success.
Cautiously optimistic about the influence of Artificial Intelligence (AI)
Question: How personally interested would you say you are in generative AI?
Significant majority of NextGen in Singapore (83% versus 82% globally) are personally interested in generative AI (GenAI), however perceived knowledge levels demonstrate an opportunity to improve. Only a third of NextGen in Singapore are of the view that they are personally knowledgeable about GenAI.
Question: Are you actively engaged at present or likely to be engaged in the future in the area of generative AI?
Almost three out of five family businesses in Singapore are yet to focus on GenAI and only 3% have started to use GenAI operationally. Furthermore, only 3% of family businesses have an individual or team that is entrusted with direct responsibility for GenAI. Notwithstanding that a very low percentage of Singapore NextGen are currently engaged in GenAI, 30% have expressed the willingness to engage in the future.
Question: What, if any, do you think are the top three opportunities or benefits AI can/will bring to your family business?
Singapore NextGen are generally positive about AI but 67% of NextGen in Singapore admit that AI seems to be evolving so briskly that it is difficult to keep up. This view is consistent with the global NextGen, wherein 66% have shared identical thoughts. To Singapore NextGen, the key benefits of AI are expected in the areas of increased employee productivity, increased operational efficiencies and enhanced customer experience.
Question: To what extent do you agree or disagree with the following statements about generative AI?
Only 7% of NextGen in Singapore believe that GenAI will positively affect the profitability in the next 12 months compared to 21% globally. 43% of NextGen in Singapore feel GenAI has genuine potential to increase cybersecurity risk. A mere 3% have expressed interest in governance around responsible use of AI although a further 63% deem the necessity for doing so.
Trust issues - both external and internal
Question: How much trust would say there is between …
Compared to the global average, Singapore NextGen’s level of trust has left a lot to be desired. Only one in five family businesses are of the view that there exist high levels of trust between family members and non-family members within the business. Similarly, only 20% believe that there exist high levels of trust between NextGen family members and the current generation.
Question: How much do you think consumers trust businesses to responsibly use emerging technologies such as artificial intelligence, blockchain, internet of things (IoT) and, virtual reality?
Interestingly, it was noted that only 7% of NextGen in Singapore feel consumers trust businesses to responsibly use emerging technologies. There is no denying that family businesses, which are known to thrive on high levels of trust, there exist significant opportunity for raising the bar.
Succession – ambition of NextGen and readiness of the incumbent generation to pass the baton
Question: To what extent do you agree or disagree with the following statements regarding your role in your family business?
In Singapore, NextGen are generally optimistic about career opportunities and ambitions, however only half of them have clarity on the actions they need to take to be in readiness for their future role within the family business. This contrasts with the global NextGen, where 60% possess a clear understanding of the next steps.
Question: In your view, how easy or difficult are the following aspects of succession?
The willingness of the incumbent generation to retire poses challenges to succession planning, both in local and global contexts. Half of the incumbent generation are unable or unprepared for generational handover, and 40% of the NextGen think proving themselves as new leaders or board members would be tough.
Question: Are you aware of your family having a succession plan in place?
In conclusion, nearly half (46%) of NextGen in Singapore are aware of a formal succession plan while nearly a quarter (23%) remain unaware of such plan. There is a notable rise in terms of rigour of formalising the succession plan compared to the last survey.
Way forward – succession planning, building trust and embracing AI for success
It must be accepted that like anywhere else, the family businesses in Singapore are also under significant pressure to adapt to the ways of the ‘new’ world. For all family businesses, transforming their current business model on an urgent basis is unavoidable. The family businesses must also revisit their stakeholder relationships and assess how the business is able to create and deliver value to consumers, employees and business partners by utilising emerging technologies. In some situations, the networks need to pass on to the next generation through different channels, while in others, the same may need to be re-established among the NextGen.
Use of GenAI’s predictive capabilities to enhance customer experiences, informed decision making and driving operational efficiencies has to be considered a priority. Adoption of GenAI requires creation of new roles and responsibilities. Family businesses must invest in digital upskilling and reskilling to prepare their talent pool to learn how to utilise GenAI, and being fully aware of the risk exposure it brings to the company. To capitalise on the immense potential of GenAI, family businesses could:
- Leverage AI-driven solutions to streamline operations.
- Establish policies for GenAI use and utilise AI-enriched insights for more timely and accurate decision-making.
- Continuously upskill the employees leading the digital initiatives so that the business can continue to thrive in an era of repeated disruption.
While reinventing family businesses, due consideration must be given to formal succession plans. The current generation’s reluctance to retire and lack of focus on formal succession plans hinders an appropriate handover. This must be an area of focus given that 23% of the survey participants are not aware of the existence of any succession plan and 30% know there isn’t one. The incoming and outgoing generations must jointly develop a transition strategy prioritising business continuity. Integrating transformative technologies into revised business models can position the next generation for success while enabling them to sustain the family legacy.
