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