Family Business Insights
Family Enterprises Brace For Volatility, Digital Upheavals: White Paper

The world of the 2020s appears to be a turbulent place, so how can family enterprises adapt and seize opportunities? A White Paper from the US bank and business school examines the terrain.
A report by Citi Private
Bank and
Cambridge Institute for Family Enterprise finds that the
majority of families running businesses are moderately to
extremely concerned about turbulence ahead.
The 57-page report delves into the issues, such as digital
transformation and volatile economics that are shaping how
family-owned businesses are run.
The report examined the top five external factors affecting
family firms. The largest force, covering those saying it had a
“transformative” impact and “significant” impact, was “digital
advances and disruptions, pace of tech change, and
cybersecurity." In second place overall was “volatile
economics,” followed by “political issues,” then
“diseases, viruses, pandemics,” and finally “changes in your
industry that impact your business model.”
As family-run firms are an important source of high net worth
clients, and can also spawn family offices, organisations such as
Citi Private Bank are keen to find out what makes them work. (The
US bank has produced a number of white papers about areas which
are relevant to family offices, such as private aviation and
cybersecurity.)
The study, called The Future of Family Enterprise: Turbulence
and Transformation in the 2020s, said that 34 per cent of
respondents expect “high and extremely high turbulence”
during the 2020s, and a further 46 per cent foresee “moderate
turbulence.” (This news service has asked Citigroup to state
the number of respondents, and may update in due course. A number
of named families were interviewed for case studies within the
report.)
Some 59 per cent of respondents are “very or extremely
optimistic” about success through the 2020s, versus 45 per cent
for next-generation success, the report said. In all, 84 per cent
of respondents said moderate to radical changes are needed in
their firms.
Digital impact
The report said 74 per cent of survey respondents expect that
digitalisation, the pace of technological change and
cybersecurity will have a “moderate” to “transformative” impact
on their family enterprises.
E-commerce, cloud computing and software as a service, and
fintech are expected to be significant to transformative factors
by about half of respondents.
Bracing for turbulence
The report also found that 34 per cent of respondents expect
“high and extremely high turbulence” during the 2020s, and a
further 46 per cent foresee “moderate turbulence.”
Some 59 per cent of respondents are “very or extremely
optimistic” about success through the 2020s, versus 45 per cent
for next-generation success. In all, 84 per cent of
respondents said moderate to radical changes are needed in their
firms.
“It’s clear that most businesses and industries will be disrupted
or at least seriously impacted by the turbulence of the 2020s,”
the report said. “In today’s complex and hyper-connected world,
the pace of change has accelerated, disruptions occur more
frequently, and a crisis anywhere can have a butterfly effect
with global ramifications.”
“Family-owned businesses and family offices will be affected, and
those that aren’t prepared to address new threats and
opportunities will be left behind,” it said.
“This study identifies a unique blueprint especially for
enterprising families to prosper through today’s highs and lows,”
Ida Liu, global head of Citi Private Bank, said. “From having
difficult conversations around transfer in leadership to
investing in new technology, this report can be used to spark
important multigenerational conversations within families about
how to proactively adapt to upcoming challenges as well as
opportunities.”
The study is the culmination of a year-long research and writing
project led by Professor John Davis, founder and chairman of the
Cambridge Family Enterprise Group (CFEG) and professor of family
enterprise at the MIT Sloan School of Management.