73% of NextGen Hail AI’s Impact but Doubt Family Business Adaptation: Study

Family businesses, the backbone of the global economy, face a critical decision: embrace the transformative power of generative AI or risk falling behind.  

Family businesses are monumental pillars within the global economy, contributing 70% of the worldwide GDP and employing 60% of the workforce. These numbers, derived from PwC’s Global NextGen Survey 2024, underscore the significant role these enterprises play in shaping economic landscapes worldwide.

Generational divide- embracing AI vs. preserving tradition  

A striking revelation from the PwC survey is the generational divide within family businesses regarding the adoption of generative AI. While more than 70% of NextGen leaders acknowledge the transformative potential of AI, there’s a palpable concern about their companies’ preparedness and the existing leadership’s reluctance to embrace this technology.

NextGen leaders- the forefront of innovation

The survey highlights the proactive stance of NextGen leaders towards AI, showcasing their commitment to steering their family businesses into the future. 

Nearly half of family-run companies lag in AI adoption, with only 7% implementing the technology. This starkly contrasts with 32% of CEOs across all businesses embracing AI and 31% revamping their tech strategies in response.

This group is not just optimistic about AI’s potential; they’re actively engaged in sustainability and research and development (R&D) efforts, reflecting a broader vision for their enterprises that integrates innovation with traditional values.

The AI challenge- balancing potential with prudence

Despite their significant economic influence, family businesses face hurdles in adopting AI, including limited capital and a conservative mindset. However, the landscape is evolving, with many businesses experiencing robust growth and a newfound openness to private equity investment. 40% of employees report that their companies haven’t started exploring AI, while 9% work for firms that have outright banned its use. This shift indicates a readiness among family businesses to overcome traditional barriers and embrace the opportunities AI presents.

Strategic recommendations for AI adoption  

The PwC survey suggests a balanced approach to AI integration, emphasizing strategic investments, workforce upskilling, and the inclusion of NextGen leaders in strategic planning. This approach aims to leverage the younger generation’s unique perspectives and tech-savvy nature to drive innovation while maintaining the core values of family businesses.

The future of family businesses in the AI era

Integrating AI within family businesses marks a pivotal shift towards a new era of growth and innovation. The findings from PwC’s Global NextGen Survey 2024 highlight the critical role of NextGen leaders in bridging the gap between tradition and technology. Just 12% of NextGen leaders are engaged in AI, with 58% expecting to be involved later, highlighting a significant oversight in leveraging their potential, affecting business, governance, and family dynamics. Their forward-thinking approach and active engagement in strategic planning are essential for family businesses to navigate the complexities of AI adoption and secure their legacy in the digital age.

Final thoughts

The PwC Global NextGen Survey 2024 offers a comprehensive overview of the challenges and opportunities facing family businesses as they consider integrating AI. With the NextGen leaders at the helm, these enterprises are poised to embark on a transformative journey that balances the benefits of technological innovation with the preservation of traditional business values. This collaborative effort between generations promises to redefine the future of family businesses, ensuring their continued success and relevance in a rapidly evolving global economy.

Image Source: Freepik

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