Family Office

Family Business & The Need for Transformation

Imad Adileh
insight featured image
Family business is a key pillar of the Kingdom's economy and has played a significant role in its development. Saudi family businesses have evolved over the years, moving from traditional businesses to more modern and diversified enterprises. However, these businesses face challenges in terms of succession planning, governance, and technological transformation.

There is a need for family businesses to undergo a transformation in order to remain relevant and competitive in the current market. Operational realignment, improved governance, and increased investment in technology are some of the key elements of this transformation.

The Role Of Family Businesses In The Saudi Economy

Saudi family businesses have a long history and tradition of excellence. They have been instrumental in the development of the Kingdom's economy, and there’s no doubt that they will continue to play a significant role in its future. Family businesses are an important source of jobs, investment, and economic growth in Saudi Arabia. They account for 63% of all operating establishments within the Kingdom and contribute $216 Billion to the GDP.

Saudi family businesses are typically large and diversified. They often have interests in a variety of sectors, including oil and gas, banking and finance, healthcare, construction, and manufacturing. However, with the rapidly changing and increasingly competitive global marketplace, these businesses face significant challenges.

The Imperative To Transform

Digitalisation, globalisation, and demographic shifts are transforming the way businesses operate and compete. To keep pace with these changes, family businesses must undergo a transformation.

Operation Realignment

Family businesses typically operate differently than publicly-traded companies. They often have a more decentralised structure and are less reliant on formal processes and procedures. As a result, they can be more flexible and responsive to changes in the marketplace.

However, this flexibility can also lead to operational inefficiencies, which give rise to challenges to scale up and compete in the global marketplace. With the influx of foreign investors and businesses into Saudi Arabia, regulatory compliance has become more important than ever.

The Saudi government has made it a priority to create a welcoming environment for foreign investment, and this means businesses are required to adhere to international standards. There is now a greater requirement for transparency, accountability, and good governance. To meet these new standards, family businesses must realign their operations.


Good governance is essential for the success of any business, but it is especially important for family businesses. Because family businesses are often large and complex, they require a robust governance structure to ensure they’re running efficiently and effectively.

There are several key elements of good governance, including clear roles and responsibilities, separation of ownership and management, and independent board members. Family businesses in Saudi Arabia have traditionally been managed in a top-down manner, with family members making all the decisions.

However, as these businesses have grown and become more complex, it has become increasingly difficult for one person to handle so many responsibilities. As such, it is now essential for family businesses to have a clear and defined governance structure in place.

Technology Transformation

Digital transformation is inescapable. Businesses must embrace new technologies or face extinction. For family businesses, this can be a challenge. They often have legacy systems and processes that are no longer effective. For family businesses to succeed, they must begin investing in digital capabilities, such as data analytics and cloud computing.

The Saudi government is investing heavily in digital transformation as part of its Saudi Vision 2030. They have established several initiatives, such as the Saudi Data and Artificial Intelligence Authority to help the Kingdom establish a data-driven economy. During the global pandemic, the push for digital transformation only accelerated. Businesses were forced to adapt to the new reality and find ways to operate remotely. For family businesses, this has meant investing in digital tools and technologies to enable online commerce, remote work, and virtual customer service.

Today, cloud computing is essential for businesses of all sizes. It enables companies to store and access data in a secure and scalable way. For family businesses, cloud computing can help them overcome the challenges of legacy systems and processes while reducing costs and improving efficiency.

What Does The Future Hold For The Family Business?

Family businesses will remain a vital part of the Saudi economy. However, they must embrace change and adapt to the new reality to survive and thrive. They must invest in digital capabilities, such as data analytics and cloud computing, and establish a clear and defined governance structure. Through internal transformation as well, family businesses can drive innovation, growth, and further prosperity in the Kingdom.