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The challenge of innovation in family businesses

When you talk about the innovation in family businesses, it is generally believed that they do not face it in the best way. However, the difference with non-family businesses It is not much, since they face these processes almost equally.

Innovation in companies in the agri-food industry or any other sector is always essential. Today they bring with them a large number of advantages that will help systematize processes and improve productivity. Although it must be clear that there are some companies that prefer to continue in the traditional methods used by past generations.

Some studies, such as the Business Family Center and the one of Center for Innovation and Entrepreneurship, assert that there are gaps between generations. However, in a more global plane, this difference can change, since family businesses accept with difference a technological change in their processes.

Innovation in family businesses depends on generations

According to the generations that are living in each family, the innovation in family businesses can play an important role. Both centers already mentioned were in charge of making a study of 143 companies between the years 2021 and 2022. Of these, 103 are family businesses and that they threw an interesting change according to the generations that are living.

Among them there may be major changebetween the first and third generation. Usually the founding generation it is more open to innovation, risks and everything necessary to gain a foothold in the market. However, this does not happen in the second, but the third generation can influence implement technologies new to the business.

To see more clearly why the second generation does not act the sameWe can mention three important aspects. These factors determine why in the second generation of these companies it is not possible to move to a groundbreaking blueprint.

· Business management involves more people

From the moment that the second generation takes over management company, there are usually more people involved. The property becomes in the hands of brothers or more members who usually make decisions more slowly.

Many times agreements are not reached and taking risks is not the first option to be able to continue with the company. They usually stay in traditional methods que se venían usando por la generación fundadora y que en su momento logró el éxito.

·      Uso de un externo

If the second generation not fully involved, a CEO is usually hired to take the reins. Despite being an experienced person, in many cases, he does not finish look for interests to be achieved in the long term. In general, you think about what happens while you are running the companies and the interests are short term.

In this sense, the decisions regarding innovation they are not usually the most successful or are never even taken. This seriously affects the business that need constant changes to increase productivity.

·      The process of adaptation and organization can be slow

Many times the generational changes they can take time in terms of professionalization and effort to take. The organization of the members and the distribution of tasks slow down actions, including making innovative decisions. The restructuring can take months and even years, clearly affecting the situation within the company.

change is not an option

How does this happen in a more global way?

On the other hand, the IE Center for Families and the EY Insights they have been in charge of doing a more global study between 2006 and 2017. In this study, more than 2000 companies within the industrial sector were studied, including companies in the agri-food industry. The results of these studies showed that the innovation factor is largely driven by families.

66% of family businesses bet more on innovation than non-family businesses. This improves the management of innovation in family businesses, 23% against the 16% that occurs in companies that are not managed by a family.

On the other hand, the investment Eurostat dataIt depends on the size of the company. A company with more than 500 employees usually invests more than half of the innovation spending, approximately 54.4%. It also tends to influence that family businesses, when compared with similar ones, take into account the innovation to try to stand out within the market.

The socio-emotional balance faced by family businesses

An important factor in the family businesses is the balance that they have to create to stay balanced. This is split between the digitization of the company for higher growth, profitability, and even productivity and profit benefits. On the other hand, there is conserving that wealth left by the first founding generations of the company. So it is also necessary to bear in mind that legacy, reputation and good control that has led the company to be successful in the market.

It is important that in family businesses goals are set that are not only focused on the financial. beyond the digitization of companies, it is necessary to maintain the family desire and the social emotional control. In this way, not only can the legacy that has been passed down for generations be maintained, but it can also continue to be transmitted in the future.

So that a company can better manage innovation Within family businesses it is important to take into account the following:

  • The vision of these implementations must be long-term
  • It is important to have an entrepreneurial mindset
  • Decision making is very important so that they can be quick and effective

How can family businesses in the agri-food industry improve with innovation?

In the case of food industry, family businesses often face challenges in relation to innovation. In general, this is a sector that is subject to different changes throughout the year. It is necessary for them to face the different challenges that usually arise, such as the following:

  • There are changes in demand depending on the seasons in which it is
  • Restrictions, regulations and others can be constantly modified, so the reaction must be immediate
  • Improvements in production planning, it is becoming more complex and competition continues to grow.

With the digitization of companies of this type you can have tools that are essential for achieve better processes. In this way, the action of adopt technologies It will directly benefit each of the processes that are carried out to have a final product.

It is necessary to have good work models that beyond a good product offers workers stability. In addition, the family business will be given better solutions within the scope technological and structural.

There are many advantages that a company can achieve from the moment it faces the innovation in a positive way. Currently, there is a large number of available technology tools that are being wasted within the farming industry. Among them we can mention the following:

  • A better management of the programs and cycles that the products treated in the companies have
  • A more elaborate design, aided by process technology
  • Optimizing production so you can increase and maintain good quality
  • Better connection and use of operations within the plant
  • Better data, reports and statistical information completely accurate and in real time

The best way to win the challenge of innovation is with these keys

There are some keys that can help the innovation challenge be much easier to run by family businesses. So if you want implement technologies It is important to take into account these actions that are of great help.

  • The main actors for take action on innovation They are members of the business family. So it is necessary to understand what are the best options and create a good strategy so that the digitization of companies be effective. In addition, that they can guarantee to continue with the legacy that has been marked and that is very important.
  • The innovation process must be followed at all times, so they can make better decisions and set goals to meet. Measuring or monitoring these processes is essential for resources are managed The best way possible.
  • Strengthen ties with suppliers or new forms of collaboration with clients highlighted through innovative tools.

Betting on the future with innovation in family businesses

Without a doubt, the innovation in family businesses It involves preserving the legacy and being able to link it to digitization in the best possible way. Is a fusion between tradition and innovation that many times is usually a complicated challenge, but that undoubtedly ends up being efficient. El relevo de las empresas familiares no siempre es fácil, aunque el resultado de la mano con la innovación es siempre positivo y de gran impacto.

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