Redefiners
Leadership Lounge: How can family enterprise leaders stay ahead in a fast-changing world?
Wed, 12 Feb 2025
We explore how family enterprise leaders can strike the right balance between preserving their organization's legacy and adapting to an evolving business landscape. How can family enterprise leaders stay ahead in a fast-changing world? Family enterprises are the backbone of economies worldwide, but their leaders face an increasingly critical challenge: how to preserve their organizations' legacies in a fast-changing world. What makes some family enterprises thrive across generations while others struggle to adapt? How can leaders maintain what made their organization successful while meeting the demands of a new business landscape? And what skills will the next generation of family enterprise leaders need to navigate an increasingly complex future? In this episode of Leadership Lounge, we talk to some of our trusted advisors—Justus O'Brien, Anupama Puranik, Diego Esteban, and Peter Gramkov—who share their perspectives on: How successful family enterprises maintain their core values while adapting to market changes Why engaging the next generation is critical for innovation and growth How to navigate tension during periods of transformation What skills future family enterprise leaders will need to thrive "One key skill that leaders need is emotional intelligence. You need to understand what is going on in the family. You need to understand the values. But it's super important not only to understand potentially one generation, but several generations.” Peter Gramkov, Leadership Advisor, Russell Reynolds Associates. Four things you'll learn from this episode Values and traditions are the heart of every family enterprise. Next-generation leaders must understand the importance of carrying them forward. Keeping pace with transformation can be the difference between whether a family enterprise can endure across generations—or not. The most successful family enterprises approach succession proactively rather than in reaction to a leadership departure or crisis. Exceptional family enterprise leaders combine strong business acumen with emotional intelligence, active listening, and the confidence to challenge constructively. In this 17-minute episode, we will cover: (00:01:31) How successful family enterprises balance preservation and progress (00:06:06) The role of independent board directors in driving change (00:09:23) How to create personalized development paths for future leaders (00:12:20) Why active listening skills are critical for transformation (00:13:47) What the future holds for family enterprises globally A closer look at the research from this episode: Family Enterprise Advisory Global Leadership Monitor H1 2024 Listen now on Apple, Spotify, and YouTube.
Chapter 1: What challenges do family enterprises face in a fast-changing world?
Welcome to the Leadership Lounge, a place to kick back and listen as our experts dissect some of the biggest questions leaders face today. I'm Emma Coombe, Leadership Advisor in our London office. Today, we're talking about family enterprise leadership. These businesses are the backbone of economies around the world,
But their leaders face an increasingly critical challenge, how to preserve their organization's legacies in a fast-changing world. So in today's episode, I'm excited that we're exploring how family enterprise leaders can successfully balance preservation and progress. How can leaders maintain what made their organization successful while adapting to a new business landscape?
And what are the top issues that leaders will need to think about if they are to continue to thrive across generations? Before we dive in, remember to share any burning questions you want our experts to answer by emailing redefiners at russellreynolds.com. We look forward to hearing from you and we'd love your feedback on these episodes.
If you enjoy listening, please leave us a five-star review on Apple or Spotify. So let's dive into the topic. Our first guest in the Leadership Lounge today is Justice O'Brien, Leadership Advisor in Russell Reynolds Associates' Stanford office and global leader of RRA's Family Enterprise Advisory Practice. Justice, welcome to the Leadership Lounge. It's great to have you back.
Thanks, Emma. It's great to be here.
So Justice, how do successful family enterprises maintain their core values while adapting to market changes?
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Chapter 2: How can family enterprises maintain core values while adapting?
What we've observed with family businesses that have flourished over generations is how central the value system is to those businesses. Our view is that companies that focus on the values as opposed to a set of rules tend to thrive and tend to be able to pass on those values from one generation to the next.
Good companies engage the next generation and engage them in the strategy and strategy development. They make them participate in that. That's a way in which
you know family-owned businesses can strike the right balance between continuity enduring values and refreshing their strategy and refreshing their thinking by bringing in the next generation you bring in new thinking which in a sense helps bring that business into the present tense and into the eventually into the future as opposed to being firmly rooted in the past of the business
I think that's a great point, Justice, about family enterprise. It's key to strike the right balance between protecting the family's values, what makes it a really special way to work and somewhere that has been delivering value over many, many years, whilst also having permission to evolve, to transform, to not have to stick to a set of rules that it's always been done in a certain way.
It's fascinating to advise on these kind of topics and how the right balance can be struck. I'd now like to introduce our second guest into the lounge, Anu Paranik. She's a leadership advisor in Russell Reynolds Associates Singapore office and advises family enterprises throughout Asia. Anu, welcome to the Leadership Lounge.
Thank you, Emma. It's a pleasure to be here. Thanks for having me.
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Chapter 3: What tension arises when engaging the next generation?
Annie, Justice just highlighted the importance of engaging the next generation to ensure family enterprises continue to thrive and evolve. But this isn't always easy and can cause tension to bubble to the surface of family enterprises. Can you talk a bit about this tension and why it arises?
We are at a very important time in the evolution of family businesses around the world, especially here in Asia. And as we all know, any change management that happens creates a lot of tension within organizations, and that's no different for family businesses. So we often see a lot of strife happening at the time when families are either going through a generational shift.
So the next generation is stepping in as the leaders are perhaps planning their journey out, but haven't necessarily gotten there. We could have a situation where new family members, cousins, in-laws, et cetera, are getting added to the business. Or we have a whole bunch of new professional managers coming in with absolutely new ideas. And you put all of this together,
In an environment that's rapidly changing because of digitalization, because of sustainability issues, because of environmental factors, it starts creating a lot of different opinions within the organizations. And you start seeing that tension coming up within the families themselves as well.
I completely agree, Annie. A family enterprise isn't just a company, but a family legacy that often spans generation. When the market demands change, the thought of transforming what's been carefully crafted over decades can sometimes feel incredibly hard for family leaders. But change they must.
Keeping pace with transformation can be the difference between whether a family enterprise can endure across generations or not. Interestingly, our research has found that just 43% of family enterprise leaders globally say their organization is ahead of their competitors on innovation.
And only a further 43% say their leadership team feels prepared to address the threat of technological change at their family enterprise in the coming year. So Annie, what advice would you give to family enterprise leaders who are struggling with transformation?
Emma, I think as organizations are going through this transformation, especially family businesses, it is extremely important for them to reflect on whether this is a transformation on their grants and the family values, or is it really about the business context? And often when the older generation and the younger generation sit together to discuss this, the lines get blurred.
So the important part is have that very open and honest conversation. When the shift is about adapting to the new business context, to the environment, to the new ways of doing business, and de-alienating that from the original brand and value proposition of the organization, those conversations get a lot easier.
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Chapter 4: How can family enterprises navigate transformation?
So the key is finding that distinction between what is needed to transform. When leaders can separate strategic business changes from the fundamental identity of the family enterprise, it often removes a lot of the emotional barriers to progress.
For family enterprises struggling with transformation, in my experience, having an independent chair or independent non-executive directors can really make the world of difference. particularly if there's a non-family member as CEO. It means that a CEO isn't so isolated.
There's a conduit, a sounding board, a trusted independent advisor between them and the family members, and it can be a very effective construct. Justice, I'd like to turn back to you. Aside from innovation and transformation, what are the other critical leadership challenges that family enterprise leaders will need to confront to thrive across generations?
I mean, the one thing we hear consistently as we talk to family businesses around the world is the importance of thinking about succession. And it doesn't matter whether it's first generation, second generation, or even more evolved family businesses that have professional management in place. It's critically important not to delay CEO succession.
It's not something people generally want to deal with unless they're in a crisis mode. And if there's good leadership in place, there's a tendency, a natural tendency to sort of put that off. You need to start this work early. And only by starting early can you think through what the needs of the business are going to be in terms of your leadership requirements.
And really start thinking about who you've got internally. Start to plan, put together development plans for those individuals with enough time for them to really realize their full potential, and through those activities be ready for that eventuality of having to switch out a CEO.
And so that's one of the things we try to do with our generation and our family enterprise advisory work is help clients through each of those steps. And, you know, it's not complicated in design, but it's extremely nuanced in execution.
It's a critical part, Justice, of the service that we offer to clients. And it's understanding how to run a really thoughtful process where everybody feels considered, developed, listened to, that things can go smoothly. And when it comes to family enterprises, we know that each of them operates in a very unique way with unique relationships.
Independent advisors such as my brilliant colleagues can help these relationships and family harmony across generations while ensuring that businesses continue to thrive. I'd now like to introduce another guest into the Leadership Lounge to talk on this topic. Diego Esteban is a leadership advisor in Russell Reynolds Associates' Barcelona office. Diego, welcome to the Leadership Lounge.
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Chapter 5: Why is succession planning critical for family enterprises?
Thank you very much for having me.
Peter, what skills and mindsets will the next generation of family enterprise leaders need?
So one key skill that I think leaders need is a strong emotional intelligence, EQ. So you need to understand what is going on in the family. You need to understand the values. And this also spans several generations. So this can actually be that you work with the older siblings and the next generation is coming in.
So really try to understand the different requirements, the different needs that a family wants.
I think getting to the heart of what makes a family tick is indeed critical, Peter. In every family, there will naturally be a complex web of relationships, traditions and emotional connections to get to grips with. And larger family enterprises will have different setups in terms of boards of trustees, family boards, different delegated sets of responsibilities.
And understanding the interplay between these is also really important. Annie, I know you wanted to talk about another skill, the importance of being an active listener in a family enterprise.
A lot of times people react the way they do because they feel like they haven't been heard. And if this next generation can spend that little extra time listening to their stakeholders, understanding where they're coming from, and then using those guidelines to decide what that business context goes, where it goes from here, they will find it a lot easier.
to bring that change which they want to bring within the business.
And this point, Annie, ties really nicely to Diego's point about the importance of thoughtful career planning and development.
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Chapter 6: What skills do future family enterprise leaders need?
I think what you have all stressed here with these skills and mindsets is that it's a careful balancing act. Successful family leaders will know when to be bold and challenge the status quo and when to stand back and listen. I also think it's critical that a leader can be adaptive and can pivot, especially given how volatile the business landscape is today.
This will help your family enterprise remain competitive and resilient. This has already been a really insightful session, but before I let you go, I'd like to close this episode with your thoughts on what the future holds for family enterprise leadership, either globally or in the regions each of you advise in. Justice, over to you first.
Family businesses afford the opportunity for leaders to think through the long-term benefits of a strategy and deploy the resources as needed without those pressures of short-term gains or results. So I think family-owned businesses will continue to attract top-level talent who find that to be a very favorable environment in which to lead.
Chapter 7: How can independent advisors support family enterprises?
So Emma, the Asian family enterprises are now coming of age and they're making their mark in their world as they grow out of their local markets.
While they are younger families compared to the US and European families, probably in their second or third generation at best, these families are growing in a world that is rapidly digitizing and so their growth trajectory and the speed of growth is way faster than what you might have seen in other families from other parts of the world.
With family enterprises, we're going to see best-in-class corporate governance. What they require from the boards is not only for approval, but it's much more consultative. People that provide advice and helping and coaching members of the family. So we believe that you're going to see the best. evolution in corporate governance and new trends coming from family enterprises?
The future of family enterprises is bright. I think we are seeing a professionalization taking place already now. I see the families becoming more digital savvy. I see them becoming more global in their mindset. I see them becoming more proactive in the way they're handling, among others, succession planning. And then sustainability and ESG is also playing an increasing part.
Thank you so much to each of you for sharing your perspectives today. I hope it's given our listeners an insight into life as a family enterprise leader and the obstacles they may face. In 30 seconds, this is what we've learned. First, successful family enterprises thrive by focusing on enduring values over fixed rules or managing the status quo.
Creating a foundation that allows both stability and evolution across generations is the way forward. Having a clear distinction between business transformation and core family values enables leaders to drive necessary change while preserving meaningful legacy. Proactive succession planning is critical.
The most successful family enterprises develop their next generation of leaders systematically and early, including their family members, not in response to crisis. Exceptional family enterprise leaders combine strong business acumen with emotional intelligence, active listening and the confidence to challenge constructively. If you work for a family enterprise, we'd love to hear your thoughts.
And likewise, if you have any topics or burning questions you'd like us to cover in future episodes of Leadership Lounge, then get in touch. Email your questions to redefiners at russellreynolds.com. And if you've enjoyed listening to this episode, leave us a five-star review on Apple or Spotify. You can find us on LinkedIn and follow us on X at RRA on Leadership.
You can also find us on Instagram at Redefiners Podcast, and you can now subscribe to our YouTube channel. Until next time, goodbye.
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