Family-run businesses need the right digital transformation to keep Philippine dominance
"Right digital transformation" and not just tech usage or upgrade is what family-owned companies need to achieve in order to keep their dominance of the Philippine business landscape.
Also called DX, digital transformation is a tech-enabled business strategy recommended to companies especially in traditional industries so they can keep up or outdo business disruptions and innovations mostly committed by startups and other incumbent but digitally-enabled competitors who are driven by consumers embracing digital means to interact and transact with companies.
In a recent report by Credit Suisse Research Institute, that analyzed around 1,000 family-owned and publicly listed companies across the globe, the Philippines ranked 11th globally in terms of number of family-run firms.
The study showed that the average growth of family businesses has been 3.9 per cent annually since 2006 across every region and sector. In the Asia Pacific region alone, excluding Japan, the average growth of family businesses is 3.1 per cent faster as compared to non-family-owned firms.
Also, family-run businesses have been performing better than non-family-owned firms in terms of generating revenues where sales growth is recorded on a 10-year and 5-year basis, the research firm noted.
Willing but challenged
In a 2017 survey by professional services firm PriceWaterhouseCoopers (PWC) which spoke to almost 120 family businesses in Singapore, it showed that family firms do realize the need to innovate and be open to change but are struggling to make this a reality as they face multiple challenges in a rapidly changing business landscape, namely "globalization, technological disruption, shortage of talent, and intensifying competition". They are simply unsure of how to take the first step and may find difficulties in developing a viable roadmap for sustainable change.
Two of the top three challenges that companies in the survey revealed when venturing overseas were: unfamiliar with rules and regulations (20.8 per cent), and identifying the right business partner (18.3 per cent).
Professionalism and finding right business partner
PwC suggested that in managing transformation, professionalizing the business and family is important. This means that family and business goals need to be aligned and under right governance. In this way, running the business more professionally can create value as well as ensure the longevity of the business.
However, collaboration is insufficient. Family business owners are advised to find the appropriate business partners they can work with for mutual benefit.
According to Billionaires Insights 2017, a joint report by UBS and PwC, high net-worth individuals are increasingly turning to their personal or business networks to seek out opportunities or to address business issues. Tapping into informal and formal networks can be an avenue to orchestrate deals and investments.
BlastAsia has been constantly reminding companies that true digital transformation is not about buying random technologies and hope that they will, in silos, create value. Rather, it's about having a singular digital strategy that seamlessly weaves these technologies together.
It is truly a great thing to find a business strategy and technology solution partner that addresses synergy challenges in business through the creation of a DX strategy that enables companies develop a holistic ability in achieving effective business integration, collaboration, and customer satisfaction. This partner not only understands technology but is also well-versed on business strategy, lean startup/new business development, and is set up for agile software development. Organizations should be assisted to gain a customer-centric perspective, define business model and exploring new ones, develop a customer journey map and service blueprint, and identify areas of digital intervention.
Brilliant strategy and advanced technology are like a pair of shoes. You don't choose one over the other but should use both. This means the DX strategy services should involve not only rethinking of business model and strategy but empowers these with game-changing digital solutions.
It is highly recommended that a DX approach includes workshops led by key consultants that bring years of experience in working with startups, clients, and hundreds of those that were mentored in the industry, to adapt the proven innovation frameworks from the startup world to the enterprise world.
Family companies, however, are reminded not to lose focus on their business goals while innovating. This can be well achieved by having a partner who also provides empowering DX solutions that boost backend processes by connecting new back stage systems to a company's existing core systems without disruptions.