Asia’s growing economic power, growing consumer base, and digital innovations are redefining the region’s relationship with the rest of the world. While rising economic prosperity creates market opportunities for Asian businesses, new technologies have emerged with the power to change not just products and services but also entire organizations and value chains. In Southeast Asia alone, technology-driven opportunities could be worth US$200 billion by 2025.
With these opportunities comes competition. If the region’s incumbent firms are to match the well-funded multinationals and agile startups with whom they now vie, they must prepare to reinvent themselves. In a fast-changing environment, that takes wisdom and courage. At Accenture, we advocate making a “wise pivot.” Companies should transform core businesses in order to increase investment capacity, make strategic bets on growth to fuel the core businesses sustainably, then identify and harness opportunities for accelerated growth and continued market relevance outside core businesses or markets.
This process is particularly important for family-owned organizations—many of which oversee successful legacy businesses facing new types of competition. These organizations make a momentous contribution to Asian economies: The top 15 family businesses in Singapore have assets equivalent to 48 percent of GDP; in the Philippines that figure is 47 percent. To maintain positions of dominance, family firms across the continent must now bring emerging technologies into their legacy businesses to challenge and overhaul traditional ways of operating.
Family-owned businesses have a unique set of strategic considerations. A lot of them came of age within fairly closed economies. Their competitive advantage was the ability to nurture strong, long-lasting relationships with suppliers, partners, employees, and customers. Today, relationship building requires a new kind of trust that is rooted in organizational transparency, regulatory compliance, and strong governance.
As family-owned businesses scale up and diversify, leaders will have to delegate more decision-making responsibility to appropriately empowered employees. Firms might also seek investors, who place increasing weight on environmental, social, and corporate governance factors. Meanwhile, end consumers demand a personalized service, but they also want to know exactly what businesses do with their data.
Relationships with suppliers and partners are also changing. Small, close-knit networks of trusted advisors and partners are being superseded by much broader business ecosystems. These rely on new forms of collaboration that require a shared understanding and commitment to trust among all stakeholders. To avoid obsolescence and ensure a leadership role in their ecosystem, family businesses should open themselves up to new interactions, especially with technological ground-breakers who hold the expertise to complement their core competencies. For example, Chinese e-commerce giant JD.com has deployed artificial intelligence-driven robotic solutions from Japanese startup Mujin to create the world’s first fully automated e-commerce warehouse.
Finally, there is the issue of legacy. Family businesses do not just pass down value to the next generation; they pass down values. Hong Kong’s LKK Group even has a 1,000-year plan for making this happen. Growing value while staying true to family principles requires a careful hand. Like any transition, a move away from a founder-centric model towards more decentralized operations can be difficult, but this is when a strong commitment to a shared vision or purpose can be an advantage.
The wise pivot is not an easy trick to land. Right now, not enough Asian companies—family-owned or otherwise—are even taking it on. An Accenture survey of C-level executives recently found 40 percent thought their firm was investing enough to pursue growth activities in its existing businesses. Only around 20 percent felt their firm was strategically innovating to unlock value in existing businesses.
The wise pivot is not a one-size-fits-all solution. Family firms that adapt their general principles to their special situation will have the foundation to make an organizational transformation. They will turn an existential threat into an opportunity for renewal. Because these firms play important roles in Asia’s communities—not just as employers but also as leaders in driving societal change in the markets they operate in—the benefits of their wise pivot will be felt across the region.