The original article was published by PwC. You can find the article here.

As the reins of family businesses are set to pass into the hands of a new generation of leaders, a profound transformation is underway—one fuelled by the catalytic force of generative AI (GenAI). This moment marks not only a change in leadership, but a strategic shift towards harnessing a fundamentally new technology within family-run and -owned businesses.

For those that get it right, generative AI will shape future success. And we believe that the next generation of family business leaders (a group we call NextGen, which refers to members of the next generation of a business-owning family who are between ages 18 and early 40s and are aiming to become responsible owners, influential board members or visionary leaders) hold the key to this transformation. Our global survey of more than 900 NextGen suggests not only that they are more optimistic about generative AI than the incumbent generation, but that they understand the urgent need to shift responsibility for AI out of discrete silos and to deploy it to support enterprise-wide adoption in their companies.

73% of NextGen believe that generative AI is a powerful force for transformation, but many question the ability of their family business to capitalise on it.

NextGen show remarkable alignment with the sentiment of global chief executives regarding the transformative powers of generative AI. According to the 2024 PwC Global CEO Survey, 70% of business leaders believe that generative AI will significantly change the way their business creates, delivers and captures value. We also see broad acknowledgment of the importance of developing an “early days” generative AI strategy to get ahead of an accelerating existential crisis. Fully half of all bosses of privately owned companies—of which family businesses are an important subset—say that their company will cease to be viable within ten years if they stay on the current path.

We cannot afford for family businesses to ignore this transition. Family businesses are a substantial part of the economy, contributing approximately 70% of global GDP and employing 60% of the world’s workforce. Thus, harnessing the potential of generative AI isn’t only about any one firm staying competitive; it’s about shaping the global economic landscape. NextGen as future business owners—and important inheritors of the largest wealth transfer in history—have a unique responsibility towards their business, its employees, their families, society and the environment. This includes an outsized interest in the business’s ability to responsibly navigate the hype, hopes and fears surrounding generative AI.

Our survey findings and the important actions we outline below across three critical areas—innovation, trust and succession—show that these changes cannot be delayed until the next natural transition of generational ownership. They must begin now.

The willingness of NextGen to explore new ideas and technology while feeling that they are fighting against the more traditional instincts of the current leadership is a long-standing trend in family businesses. The reality is that each generation has its own capabilities and is working towards the same goal: to secure the business and its legacy.

‘The hardest part of digital transformation is changing the culture of the business to align with new challenges—and that’s even more difficult in a family-owned and -operated enterprise.’ – Enrique Hinojosa,fourth generation, Welldex Logistics, Mexico

More than 70% of NextGen believe that AI is a powerful force for business transformation, but they are rightly concerned about the ability of their family business to withstand the disruption of generative AI and to capitalise on its opportunities. They are significantly less optimistic than the current generation of leaders about the business’s readiness and doubt that the current generation grasps the full potential of AI. The upsides encompass ‘unlocking a range of opportunities, including improved products and services, faster time to market, improved decision-making and higher profits,’ according to Scott Likens, Global AI and Innovation Technology Leader, PwC US.