The Business Times reported that digital transformation is one of the main ways – if not the only way – to thrive in South-east Asia, which is set to become the fastest-growing digital economy in Asia-Pacific, with a pool of 350 million digital consumers and counting.
The business and wealth landscape have been drastically overhauled by the rapid shift towards digital adoption, and no more so than in South-east Asia. Customer needs have changed in the face of this overhaul, and businesses will have to adapt their products, processes and distribution channels to meet these needs, as well as to meet the challenges of this hybrid world.
It is no longer enough to introduce new digital tools into mere parts of the company. The approach needs to be holistic as rapid technological adoption now cuts across the way we bank and invest, make payments and conduct trade.
If businesses fail to keep up in this new economy and landscape, it is inevitable that they will be left behind. Businesses need to move past mere digitisation, and instead digitalise their entire operations to capture new digital business opportunities, which could be worth US$240 billion by 2025 in South-east Asia alone.
Handing over the reins
Keeping the business shift towards digital in mind, it may be surprising how family-run businesses – typically small and medium-sized enterpises (SMEs) – are approaching this in terms of leadership and succession planning.
Although 80 per cent of family businesses say that digitalisation and innovation are a top priority, only 19 per cent of these businesses say their digital transformation is complete. Furthermore, 29 per cent still report that they are lacking in digital capabilities and that developing these capabilities is not a high priority for them.
This indicates a substantial gap between awareness and the actions needed to build a sustainable, digitally-driven business equipped to keep up with the changing business and consumer landscape.
With many SMEs constrained by resources, the onus for change often falls more heavily on the leadership team – and with over 35 per cent of family businesses expecting their family members of later generations to be majority shareholders within the next 5 years, the next generation scions who will soon be at the helm must take on the leadership mantle to ensure their businesses stay resilient.
A 2021 PwC survey found that such "next-gens" have a greater role in 46 per cent of digitally strong businesses, which spells good news. The next-gen entrepreneurs are digital natives; for them, life does not exist without a cell phone.
They are also educated and armed with the knowledge of how digitalisation brings greater business and wealth opportunities, as well as the ability to transform their companies – whether this involves re-engineering long-held procurement and sales processes, or innovating and evolving technology across the business to drive benefits and convenience for their customers, and generate loyalty in the process.
These next-gen entrepreneurs are well positioned within succession plans. But, according to a PWC report, what they really yearn for is greater trust and support from their parents.
Nurturing tomorrow's entrepreneurs
Tomorrow's leaders need to be mentored and empowered to make changes. This should go beyond formal education and C-Suite coaching, to look at leveraging early opportunities to explore transformative changes or digital business models that will steer the business in the right direction and capture new value pools.
This can be done through nurturing transgenerational entrepreneurship, such as by establishing a side venture that can act as a test bed for new ideas. Another option is to create a separate business, independent of the original family endeavour, with the intention of encouraging new innovations that can then be applied to the family business model.
The practical experience drawn from these ventures will go a long way in helping future leaders develop their skills to take the family business to the next level.
Tapping on banking relationship to open doors
Next-gens can and should tap into their families' private banking relationships. And if their ambitions are to expand internationally, it is vital to make full use of the services provided by a universal bank with strong commercial and investment banking capabilities, to open up doors to support for their endeavours.
A universal bank with a global network like HSBC can help next-gens look beyond their private wealth needs and tap into the connections of its corporate and global banking arms to help them reshape their businesses – from expanding to new markets to seeking out win-win partnerships or collaborations to build new capabilities.
For example, tea company Lim Lam Thye turned to HSBC, their family bank, to expand and launch its subsidiaries, Gryphon Tea and Pryce Tea. The bank also supported the growth of their business with custom foreign exchange capabilities and digital transaction banking services.
Innovative ways of thinking and savviness in today's complex, digitalised world, coupled with the business acumen that generations of experience bring, will lead to greater wealth and growth opportunities, resiliency and continued prosperity for generations to come.
Source: The Business Times
Date: 27 April 2022
May 31, 2022