GCC Family Businesses Face New Challenges
8th September 2013 Paul Andrews
Great insight into the challenges faced by GCC family firms from booz&co
Family businesses in the Gulf Cooperation Council (GCC) region face the dual challenges of operating in a difficult global economic environment and managing the transition of the business to a third generation of family control.
In order to survive, grow, and take their places among the many family-run firms that have achieved enduring success in the global economy, firms must tame the “restless entrepreneur” syndrome, and develop and enact a long-term strategy to manage both the family and the business.
Concrete steps families can take to achieve lasting success for their firms begin with a stringent reevaluation of their existing portfolio of businesses. This process may involve the divestment of original businesses that no longer fit into a long-term growth strategy, even though families may retain an emotional attachment to those businesses. The same discipline required to prune business portfolios needs to be applied to the evaluation of new investments, and may call for individual family member investments to be separated from the firm’s activities.
Creating a formal governance structure to oversee both family and business activities is another crucial step families must take to ensure long-term success. Families also need to recruit outside talent and accommodate their development, relinquishing control when necessary. The appointment of a change agent, whose interests are closely aligned with that of the family, to implement these needed changes over time is the best way to ensure that changes are achieved.
This report from booz&co clearly identifies some of the key challenges that are faced by family businesses in the GCC region.