If the entrepreneurial spirit is alive and well among millennials, can family businesses capitalize through intrapreneurial initiatives? Scott McCulloch investigates.
We hear a lot about entrepreneurship these days. It’s a concept closely linked to innovation as entrepreneurs are often industry game-changers.
As individuals who create new revenue, bear most of the risks, and enjoy most of the rewards, it stands to reason. After all, entrepreneurs are the source of new ideas and businesses.
But is there a bona fide lack of entrepreneurial spirit in next gens? Probably not.
What does exist is a new spirit of innovation in a very different world to, say, 30 years ago when parents had more influence on their children’s lives.
Today, there is more freedom in families. This has led to fragmentation in enterprising families’ purpose, energy and discipline say experts familiar with family-held firms.
John Davis, founder of Cambridge Family Enterprise Group, notes that today’s families are more prone to developing the individual talents of children rather than a focusing heavily on the collective aspirations of the family.
There is current research that indicates that more than half of millennials see entrepreneurship as an interesting career. Davis who teaches at the Massachusetts Institute of Technology’s Sloan School of Management says,
That doesn’t mean that they’ll do it. And it doesn’t mean they’ll be successful at it. But to have more than half of a generation saying that is interesting.
According to a 2016 Global Entrepreneur report from BNP Paribas, millennials have launched nearly twice the number of businesses as baby boomers.
Bentley University’s own market research found that 66% of millennials are interested in starting their own business and 37% would like to work on their own.
It is unclear what impact entrepreneurship will have on next gens in the family-firm preservation stakes. What is clear is that traditional succession planning is weak. Globally, 43% of families have no plan, according to PwC.
In its 2016 family business survey, the management consultancy describes next gens as open to change.
They want the business they hand on to be very different from the one they inherit.
Which may explain why PwC found that 47% of the next gens are looking to set up parallel ventures, alongside what their family business is doing. David says,
Entrepreneurship has become a much more interesting career path.
In the US alone, the number of on-campus entrepreneurship programs offered in universities spiked from 180 to more than 2,000 between 1990 and 2014.
It comes at a time when commerce is more globalized and industry lifecycles are shortening. The rate of change in business is accelerating.
Eduardo Gentil, partner at Cambridge Family Enterprise Group, argues that with the rising speed of disruption in globalized markets, family businesses need to be nimble. Yet they tend to be slower when making difficult decisions related to divestment and significant innovations. Gentil says,
Companies need more than ever to adapt to changes or even transform altogether.
We often encounter that family shareholders develop an attachment to companies or products because their history is intertwined with that of the family. This can get in the way of transformation.
Intrapreneurship, the act of behaving like an entrepreneur while working within an enterprise, can help. That means creating new self-financing opportunities towards new forms of value under the auspices of the existing family business. Gentil says,
Intrapreneurship can be a way of engaging younger generations in the family business while providing the opportunity to innovate, take risks and seek financial gains within a ‘safer’ environment.
It might also bolster longevity of the family firm as next gens get a taste for innovation and the entrepreneurial spirit of the company’s founders, who typically act as mentors in intrapreneurial initiatives. Gentil who is a facilitator in the Future Family Enterprise: Sustaining Multigenerational Success program at MIT’s Sloan School of Management says,
Promoting intrapreneurship can help companies diversify, regain customer focus, become more agile and change an outdated business culture to thrive in the current environment.
Yet there are pitfalls, such as lack of clarity as to the role of the intrapreneur within the organization.
Gentil says it is common for innovative projects to dwindle once brought inside company structures that were made to work with existing lines of business.
Still, if an innovative spirit exists, why not set it free?