Study on family businesses: little digital competence on supervisory boards
Munich — OMMAX, a leading digital consultancy focusing on investment firms, mid-sized companies and corporations, presents the results of its latest study: 83 percent of the supervisory board members of German family-owned companies have no digital expertise — only a one percentage point improvement on 2020. Of the 13.5 percent of new members elected since 2020, only 24 percent are digitally literate.
The last two years of crisis and the tense economic situation are increasing the pressure on companies to reposition themselves digitally. This requires advisory boards to engage more actively with the topic of digital transformation in order to better steer companies and ensure the future viability of the business model and long-term value creation. This is only possible with the appropriate digital competence. But even in 2022, 83 percent of current supervisory board members do not have the necessary knowledge and experience.
On the occasion of the study, 919 profiles of German supervisory board members of the 150 family-owned companies with the highest turnover were analyzed and examined for digital competence, transformation experience in similar companies or a move from a leading technology company.
Conclusion: Change is happening too slowly
With an average age of 60, the supervisory boards of the companies examined for the study are not digital natives. This is also reflected in their digital presence, as a full 37 percent of supervisory board members have none at all. Without being active on platforms like LinkedIn or Xing, many lack insight into the digital world and exchange on current topics and trends. This risks the long-term viability of the companies and means that advisory boards are not fulfilling their role and responsibility.
A change therefore occurs primarily through the election of new Supervisory Board members. Since 2020, 13.5 percent new members have been elected to the supervisory boards of the family businesses analyzed. However, only 24 percent of them bring digital expertise or transformation experience in similar companies or have previous experience in a leading technology company. As a result, the total number of members with the necessary expertise will be 17 percent in 2022 — just one percentage point more than in 2020.
“The results are dramatic,” says Dr. Stefan Sambol, Partner and Co-Founder at OMMAX. “The change we have seen over the last two years is still happening far too slowly. Owner families must finally wake up and act. One reason for this is that supervisory board members are often selected less for their competencies than for how close they are to a company or the owners.”
Pioneers score with advanced generation change
Change is not progressing so slowly in all family businesses. OMMAX has compiled the top ten companies that have the greatest digital expertise. OTTO, Haniel, Bertelsmann, Vorwerk, Axel Springer, Giesecke & Devrient, VOITH, SCHWARZ, Bechtle and BMW made it into the ranking. Here, an average of four members on the supervisory boards have extensive digital expertise. This means that the proportion of members with digital expertise is above average at more than 20 percent. In addition, the next generation of owners is heavily involved in these companies and many of the supervisory board members have experience as entrepreneurs.
The world’s first professor of global family offices, Prof. Dr. Marc-Michael Bergfeld, sees the opportunities in the generational change. “Owners need to get the next generation on board now to help bridge the knowledge gaps between generations,” Bergfeld said. “This generation needs to drive the issue or they risk the viability of the business models.”
External expertise enables digital initiatives in the portfolio
Good examples of how family businesses are tackling digitization can be found in the private equity sector. Companies such as KKR or Advent International have hired individuals from Google, Amazon or Microsoft with more than five years of experience on the ownership side. In so-called digital value creation teams, they drive digital initiatives in the portfolio with external partners to sustainably increase the value of the companies. Owner families can take a cue from this and should restructure their family office and also bring in external digital expertise to professionalize funds in the area of digitization and better manage the portfolio companies.
About OMMAX — Building digital leaders
OMMAX is a fast-growing European consultancy specializing in digital M&A transactions, strategy consulting and sustainable digital value creation. In the last ten years, OMMAX has supported more than 200 M&A transactions with a transaction value of over €15 billion and more than 800 international value creation projects in the areas of digital strategy, operational excellence, advanced data analytics, tech and automation for leading private equity firms and mid-market companies. As a pioneer in holistic data-driven strategy consulting combined with end-to-end implementation of digital solutions, OMMAX is the leading consulting firm for the European private equity and mid-market sectors — both for building and on implementing digital solutions. www.ommax-digital.com