Innovation needs to be more pervasive amongst all levels of staff in family businesses, according to professional services firm KPMG Singapore. Recent research by the firm shows that innovation is currently mostly limited to founders and senior people in a family business when it is important for every worker to be empowered to innovate.
In an age where disruptive change has become more of a norm, family businesses should also consider how they can be disruptors in their industry. “With the rapid march of digitalisation and global competition, local enterprises have to regard continuous innovation as necessary,” said Chiu Wu Hong, partner and head of enterprise services at KPMG in Singapore.
In a recent KPMG report, Family Businesses in a Digital Economy, two-thirds of respondents said that innovation takes place within the management team. This suggests that in many family businesses, there is a “closed” ecosystem where idea generation is centralised amongst key individuals.
Ms Lisa Liew, managing partner of public accounting firm and family business Philip Liew & Co, agrees that many family businesses are still relatively conservative when it comes to innovation. Typically, she said, the founders or patriarch will provide the direction for the company and call the shots. “It is not uncommon for staff of such family businesses to take a back seat and just follow instructions,” said Ms Liew. “This is especially apparent in those companies with long-serving staff; the culture has been reinforced over the years,” she added.
“Tone from the top is important – founders and senior management must be prepared for a mindset change,” said Ms Lo Wei Min, managing partner of Lo Hock Ling & Co, a public accounting firm that is family-owned and operated.
Business owners and staff will also need to accept a decentralised decision-making model. “Companies that effectively involve their entire organisation in innovation and coordinate their innovation with a strategic globally-driven approach to marketing can realise real revenue growth and value creation,” said Mr Chiu.
KPMG feels that there is no magic bullet to success through innovation but good ideas can breed further good ideas or refine existing ones. “The larger the pool of people called to ideate and improve the business, the higher probability that new ideas are more innovative, and existing businesses can be ‘reinvented’ for future success,” said Mr Chiu.
Source: Yong, Melvin, August 1, 2017, http://www.businesstimes.com.sg/hub/strategy-spotlight/family-businesses-need-to-innovate-through-the-ranks