The banking group has released a wide-ranging survey of the challenges facing Asian family businesses - from tech disruptions to generational diversity to embracing outside talent and capital.

Asia’s family-owned firms are braced for technological disruption but fewer than half are ready to use such tech in their business models, a study issued by Lombard Odier says.

The report, titled Where Technological Disruptors Meet Asian Family Businesses: Rethinking Next-Generation Leadership and Career, was commissioned by Lombard Odier in partnership with The Hong Kong University of Science and Technology (HKUST). It canvassed 119 next-generation members of family businesses across China, Hong Kong, Indonesia, Japan, the Philippines, Singapore and Thailand.

The abiding theme and concern for families was the disruptive force of tech and how to deal with it. All the family businesses polled said they had experienced or were bracing for at least one technological disruption, but less than half were ready to integrate disruptive technologies into their business models. Only a third had a clear picture of where their industry or businesses were headed amid the disruption.

When tech challenges did arise, 12 per cent took no action at all, while less than 30 per cent said they had integrated disruptions into their business in a transformative way.

The Swiss bank's report is an example of how such wealth management houses see Asian family-owned businesses not just as clients in their own right but also a breeding ground for entities such as family offices in future - still a relatively young market compared with those in other regions.

Leading the charge 
The top five disruptors were seen as big data (60.5 per cent), artificial intelligence or AI (52.1 per cent), Internet of Things or IoT (48.7 per cent), renewable energy (42.0 per cent), and robotics (40.3 per cent).
On average, it took over two years for Asian family businesses to identify and respond to a tech disruption.

So what’s getting in the way?
A rigid mindset and emotional ties to loyal staff and assets were leading obstacles holding back tech innovation, along with a general reluctance to formalise business practices. Asian family businesses are protective about ownership dilution, which translates to a low dependence on outside capital.

The report suggests families should rethink their controlling mentality.  

“Today’s owners of Asian family businesses need to open up, embrace technological disruptions and rethink their businesses,” said the survey’s author Roger King, a professor at the Tanoto Center for Asian Family Business and Entrepreneurship Studies at HKUST. King co-wrote the study with fellow HKUST professor Jeremy Cheng.

Taking external advice and investment could be just the impetus for embracing technical change, but the survey showed only a quarter of family businesses in Asia had engaged outside expertise to manage tech disruption. “Such entrenchment could be an expensive lesson to a family business facing abrupt environmental changes,” the authors said.

Asian tech challenge
Nearly all of the family businesses said they could see at least one troubling tech disruptor in their sights – a concern not shared in other regions, with more than half of family businesses similarly surveyed in Europe, the Middle East, and Africa saying they didn’t experience any market disruptions from new tech uptake. 

Staying flexible and agile and responding to disruption in a timely way is a big challenge “when a family business grows in size and is passed down across generations,” said Vincent Magnenat, limited partner, and CEO Asia Pacific at Lombard Odier.

My generation
The study found that Generation X took longer to recognise disruptive technologies than Generation Y, and suggested families should consider how to capitalise on Gen Y’s digital diversities and absorb homegrown digital natives in their response to technological disruption; but be mindful of other potential generational differences.

For example, Gen Y/Z cohorts are far more motivated by “being my own boss” than their Gen X counterparts. A third of the next-gen said they wanted to lead or work in their family businesses while creating their own ventures.

Encourage them! 
“The study has highlighted Generation Y’s ability to add value by identifying disruptive technologies quicker than prior generations, but an increasing number want to create their own ventures. Families should look to embrace the next generation’s digital savviness within the family business, or alternatively grab opportunities to turn next generation start-ups or spinoffs into a disruptor,” Magnenat concluded.

Lombard Odier has three offices in Asia providing wealth management solutions, including DPM and family services, to entrepreneurs and family businesses and to the clients of its banking partners around the region.