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By Samira Zakour, Managing Director and Head of Private Banking
Passion, vision, and leadership play critical roles in determining the success or failure of every family business. However, while passion and vision remain constant sources of inspiration across generations, leadership styles vary and yield diverse results. Often a product of their era, culture, and economic environment, successful business leaders also possess strong strategic compasses that enable them to balance current priorities with long-term objectives. In today’s business landscape, that means maintaining a global perspective while adapting to local contexts – and successful leaders must find the courage to navigate and take decisive action in both environments.
Constant shifts, geopolitical instability, technological disruptions, and economic uncertainty will shape leadership in the 21st century. The next generation of leaders will be defined by their ability to chart a course through turbulent periods and their readiness to adapt to the growing drivers of significant global change.
The Role Of Change
Family business leaders hoping to expand and improve their firm’s performance can’t merely be comfortable with change; they must actively embrace it. Having a flexible mindset that welcomes change, seeing it for its positive impact on decision-making processes, is often the distinguishing factor setting the most successful business leaders apart from their counterparts. Every family business that has launched an IPO or expanded globally has invariably embraced change. While business prosperity relies on many different internal and external factors, an enterprise’s approach to change ultimately determines its potential for success.
The last 20 years have yielded unprecedented disruption affecting family businesses across all industries and sectors. This has led to a new generation of family business leaders and significant shifts in governance frameworks. Once prevalent among first- and second-generation business-owning families, the family council leadership model has succumbed to the current advantages of strong corporate governance. This approach emphasises rigorous accountability, minimises negative business forces, and focuses on staying competitive in a constantly evolving industry landscape.
Today’s family business leaders are transforming, willingly supporting more demanding oversight standards while fostering increased collaboration levels. In contrast to the first-generation family business leaders of decades past, who might have resisted change or maintained a complicated relationship with it, today’s third and fourth-generation leaders are leveraging it to seize the opportunities it presents for their organisation.
Factors Driving The Success Of Next-Generation Leaders
The world today offers a seemingly endless torrent of resources aimed at circulating information and harnessing the power of knowledge. Access to advanced formal education has also reached unprecedented levels, notably evident in the academic achievements of today’s third- and fourth-generation family business leaders, which far exceed that of previous generations. Next-generation leaders benefit from exposure to different cultures and environments through these relatively new channels for acquiring knowledge. This interaction with new jurisdictions and regulations not only helps cement unique perspectives for today’s third- and fourth-generation family business leaders but also encourages a greater understanding of the significance of a global presence in the current business landscape.
While the importance of knowledge in developing effective leadership can’t be overstated, Abū Bakr put it best: “Without knowledge, action is useless, and knowledge without action is futile.” For family business leaders, knowledge alone is insufficient unless used to achieve tangible results. Recognising when additional knowledge is necessary before deploying a strategy is just as critical, and effectively deciding between the two approaches requires discipline. To respond successfully to the seemingly ceaseless disruptions that have become the hallmarks of the 21st century, next-generation leaders must possess both the knowledge to respond and the discipline to adapt and act in the face of inevitable shifts in the future. Preparing these new leaders for this will require empowerment, and their success or failure will hinge on their capacity to empower others.
In the MENA region and its global hub, the UAE, current and future next-generation leaders have access to an abundance of information and international experiences. This positions them to seize the opportunities that an increasingly culturally diverse region presents, generating growth for both their family businesses and their communities. Moreover, their engagement with other family firms will help to prepare them to confront the challenges inherent in rapidly evolving global markets and equip them with the understanding needed to excel in these dynamic environments.
The Growing Influence Of Women Leaders
Women continue to have a significant impact on family enterprises, playing crucial roles in shaping leadership paradigms. Globally, they are ascending to positions of leadership at an unprecedented rate. Women are also reshaping wealth ownership, with their economic influence predicted to increase markedly over the coming decades. Whether through regulatory requirements or corporate policy directives, they are gaining recognition for their unique leadership qualities in traditionally male-dominated industries and regions.
Women have always been key to the operational success of all enterprises, including family businesses. However, the current increased emphasis on their contributions will help shape new generations of women leaders and dismantle barriers in a way that will benefit everyone.