The German family businesses are described as the engine of the domestic economy, some hidden champions enjoy a worldwide reputation.
So far, new developments and innovations have mostly been driven internally in order to meet the general cost pressure and the changing, increasingly individual customer requirements.
Nowadays, the speed of change and the disruptive business models brought about by digitalization pose particular challenges, which suddenly make it necessary to change the direction of your own strategy. If you don't take these new competitors seriously or ignore them, you are making a serious strategic mistake. It is important to develop awareness and build a network of external experts.
How do you identify these supposed threats, how do you counter them and are they even an opportunity for your own company, for example to open up new business areas and optimize efficiencies?
Young innovative technology companies (start-ups) have the advantage that they quickly develop different types of ideas and thus offer SMEs and corporations additional innovative strength, without this being possible through internal innovation management and its capacities. This can be done through cooperations or through strategic acquisitions (M&A) that have to be checked carefully.
Experience shows that in addition to trade fairs, lectures, the well-known databases, contact with international technology hubs and VC companies, there is also an increasingly discreet, worthwhile, loose exchange between companies to identify and address best-in-practice technology providers to involve them.
In addition to the aforementioned networks, particularly forward-looking family offices and companies also use rapidly developing, partially automated AI-based research providers to proactively screen relevant technologies and potential targets worldwide before the competition. An AI is able to determine correlations between a wide variety of variables in order to support an investment decision after a thorough analysis. The art of this data-based method lies in deriving relevance for your own strategy from the amount of data generated in this way.
Furthermore, the author sees through his network of strategically fitting M&A experts the tendency that innovative companies can separate from possibly future obsolete units through sales and strongly expand promising digital models.
Traditional family businesses are increasingly recognizing the importance of these strategic partnerships and are using their liquidity reserves for M&A transactions and external innovations to learn from these holdings "culturally" in addition to securing growth and to survive in global competition.
It is necessary that these fundamental changes are initiated and closely monitored at the shareholder level or top management level. This in collaboration with holistic M&A and innovation experts who are rooted in established companies and in the start-up area and can act as an interface or sparring partner.