Generative AI (GenAI) can act as a catalyst for the transformation of small and medium-sized family businesses (NextGen)
Many big companies have been early adopters of artificial intelligence (AI) to improve their operations and promote innovation. Among various types of AI, generative AI (GenAI), which is capable of creating new content such as text, images, or code, is becoming increasingly popular. However, what about small and medium-sized family businesses?
A recent survey conducted by PwC’s Global NextGen in 2024 explores how generative AI can benefit small and medium-sized family businesses to compete in an increasingly digital workspace. The survey focuses on the next generation of family business leaders, known as NextGen, who are members of a business-owning family between ages 18 and early 40s and are aiming to become responsible owners, influential board members, or visionary leaders. This survey of over 900 NextGen individuals revealed that this group is not only more optimistic about generative AI than the incumbent generation, but they also recognize the urgent need to integrate AI across their businesses.
According to the 2024 PwC Global CEO Survey, NextGen’s view aligns with that of global chief executives. The survey reveals that 70% of business leaders believe that generative AI will significantly impact how their businesses create, deliver, and capture value. It is important to note that developing an early generative AI strategy is crucial to stay ahead of accelerating existential crises.
Family businesses play a significant role in the global economy, contributing to approximately 70% of global GDP and employing 60% of the world’s workforce. Therefore, the adoption of generative AI is not only essential for individual companies to stay competitive but also to shape the global economic landscape.
As future business owners and inheritors of considerable wealth transfers, NextGen individuals have a unique responsibility towards their businesses, employees, families, society, and the environment. This responsibility includes navigating the hype, hopes, and fears surrounding generative AI.
Survey shows a strong belief in generative AI: The report presents a significant finding that strengthens its argument. According to the report, 73% of NextGen leaders involved in family businesses consider generative AI as a powerful force for transformation in business.
However, the report also indicates that family businesses are not yet ready to capitalize on the opportunities presented by AI. Over 70% of NextGen leaders see AI as a transformational tool, but almost half of family businesses have either prohibited or not yet explored AI. Only 7% of family businesses have implemented AI, compared to 32% of all CEOs who have already done so.
One of the reasons why family businesses are cautious about adopting AI is because of their limited access to capital. However, the investment landscape is evolving, and private equity is increasingly becoming an attractive option for family businesses seeking capital injection, strategic partnerships, or rapid exits.
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