Preparing to Embrace New Technologies in the Modern World
New technologies abound in our modern world. Here Dr. Peter Boumgarden, Professor of Practice Strategy & Organization at Washington University in St. Louis, shares insights around innovation and technology as relevant to the family office.
Boumgarden believes that we cannot separate technology and innovation from human dynamics. As we embrace new technologies, we must leverage family continuity in order to move forward.
As an example, Boumgarden explores the early vision of Disney, the founders of which wrote their original business strategy on a napkin sketch. As Disney drives it’s business forward and the enterprise grows, Boumgarden asserts there must be continuity from that original napkin sketch into the current model. The vision must hold true, and the components must be related.
The same is true for the family office business. At the core is an undeniable need for innovation. Yet we have vision, history and people to consider as well. This is the tension we wrestle with – strategic innovation balanced with continuity.
When we have balance, these four components lead to the bright side of family capital:
- Tribe – Closeness to family and togetherness as an organization.
- Family Identity – Identification with the family business, image and culture.
- Trust – There is typically a high trust in the family environment.
- Stewardship – Solid family values and commitment to business interests coming first.
Boumgarden says, armed with a long-term vision and less subject to market pressure, family offices can undertake innovative strategies that publicly owned companies may resist. And yet, as family enterprises grow through generations, barriers to innovation creep in.
Over 60% of family leaders and board members say they don’t take risks unless a situation can be controlled. Yet we know the world can’t be controlled, so we must innovate despite uncertainty.
Within the family office space:
- 24% of family offices say it’s easy to make investment decisions.
- 12% say it’s easy to make capital-allocation decisions.
- 6% say it is easy to make both of the above decisions quickly.
Here is the contrast between the two sides of the story – on the one hand there is deep potential through technology and innovation in the family office, yet in practice, 94% said it’s tough to make those decisions. This can be due to different attitudes toward risk and growth and a long pattern of specific control and involvement. All of this can radically slow down decision making around technology and strategic innovation.
Indeed we can can learn from other sectors to help move the family office ahead. Many corporations have an orientation toward the future and are willing to take more significant risks as a part of their growth trajectory. In the family office, varying attitudes toward risk and growth can make choices around both small things and larger things difficult to balance.
Boumgarden offers the family enterprise three tips to strategically balance continuity with innovation:
- Pursue technological innovation as a way to align ownership expectations. Even a small movement in innovation and tech moves the needle. These smaller decisions build muscle for larger choices and increased forward movement.
- Develop family and non-family talent by strategically aligning people to opportunities. This drives talent development and enhances satisfaction.
- Assess technology in terms of its ability to cultivate family and family office competency.
The family office needs to ensure that innovation is driven first by strategy and then by human interest, but never one without the other.
 | Kent Lawson is the Director of Technology Integration Services for FOX and leads endeavors focused on technology among other important deliverables to members of FOX. Kent has spent over 25 years serving the wealth management community in a variety of roles. Areas of Expertise: Technology Integration |