Generative AI is a catalyst for family business transformation

Large corporations have been at the forefront of adopting artificial intelligence (AI) to optimize operations and drive innovation. Generative AI, a specific type that creates new content like text, images, or code, is gaining traction.

But what about family-owned businesses?

A recent PwC report explores how generative AI can empower these businesses to compete in increasingly digital workspace.

NextGen perspective

According to PwC’s Global NextGen Survey 2024, the next generation of family business leaders, known as NextGen, holds the key to this transformation. Their global survey of over 900 NextGen individuals revealed that this group is not only more optimistic about generative AI than the incumbent generation, but they also recognize the urgent need to integrate AI across their businesses.

NextGen’s sentiment aligns with that of global chief executives as per the 2024 PwC Global CEO Survey. Seventy percent of business leaders believe that generative AI will significantly impact how their businesses create, deliver, and capture value. Furthermore, there’s acknowledgment of the importance of developing an early generative AI strategy to be used at work to stay ahead of accelerating existential crises.

The undeniable economic impact

Family businesses are significant contributors to the global economy, representing approximately 70% of global GDP and employing 60% of the world’s workforce. Thus, adopting generative AI isn’t just about individual firms staying competitive; it’s about shaping the global economic landscape.

As future business owners and inheritors of considerable wealth transfers, NextGen individuals have a unique responsibility towards their businesses, employees, families, society, and the environment. This responsibility includes navigating the hype, hopes, and fears surrounding generative AI.

While the potential of Generative AI is understood by small businesses, few are actively using this technology (Image credit) Survey shows strong belief in generative AI

The report strengthens its argument by highlighting a key finding. A significant portion (73%) of leaders from the next generation involved in family businesses (NextGen leaders) acknowledged generative AI as a powerful force for transformation.

Yet, while over 70% of NextGen see AI as a powerful force for business transformation, there are concerns about their family businesses’ readiness to capitalize on its opportunities. Family businesses tend to approach innovation cautiously, with almost half having either prohibited or not yet explored AI.

Only 7% have implemented it, compared to 32% of all CEOs who have already done so.

One reason for this cautious approach is the limited access to capital typically faced by family businesses. However, the investment landscape is evolving, with private equity becoming an increasingly attractive option for family businesses seeking capital injection, strategic partnerships, or rapid exits.

Keeping pace with technological advancements

The report concludes by stating that generative AI has the potential to be a game-changer for family businesses. However, it is important for these businesses to stay informed about the latest advancements in AI and develop a strategy for integrating this technology into their operations.

By doing so, family businesses can leverage the power of generative AI to maintain a competitive edge in the digital age.

Featured image credit: Vecstock/Freepik