As artificial intelligence reshapes industries at unprecedented speed, family businesses face a distinct challenge: how to embrace innovation without compromising the legacy, trust, and long-term stewardship that define them. In this Q&A, Patrick Abouchalache, Lecturer of Strategy and Innovation draws on intergenerational perspectives and emerging use cases to explore how family enterprises are beginning to adopt AI—from governance and decision-making frameworks to early experimentation in operations and finance. The discussion highlights the evolving balance between continuity and disruption, and what it means for the next generation of leaders navigating technological change within closely held firms.
How do family businesses ensure proper intergenerational governance and alignment when making strategic decisions like expansion or technology adoption?
Family businesses are based on heightened legacy, effort, compromise, and trust. Explicit governance is paramount always. Frameworks (e.g., Three Circle Model, Owner Strategy Triangle, communications and conflict management strategies) and structures (e.g., family constitutions or protocols, family assemblies, family councils, boards of directors) facilitate understanding, decision making, earned succession planning, and overall stewardship in the family, in the business, and in its investment, philanthropic, and community work.
Adhering to my Plan Early Speak Often (PESO) principle is often exponentially more complex as more family members across multiple generations become involved – each contributing different experiences, skillsets, managerial capabilities, and strategic visions regarding growth and technology adoption.
I encourage my family business students, alumni, and practitioners to weigh the pros and cons as well as immediate vs. long-term impact of any idea or innovation, including generative AI and agentic AI. Through the juxtaposition of the teachings of notable scholars such as Karl Marx and Joseph Schumpeter and contemporary socially conscious founders such as Yves Chouinard (Patagonia) and Dave Gilboa (Warby Parker), we embrace innovation as the key feature of capitalism, while responsibly assessing any resulting temporary and longer lasting negative “destructive” impacts on society.
A Gen 3 former student from a leading European retailer captured the importance of proper intergenerational governance and alignment, “As families get bigger, it gets harder and harder to lead a family business. The more people involved, the more opinions and personalities one has to manage…The world is changing at an amazingly rapid rate thanks to the technological revolution we are going through, and the office supply business is highly affected by it. Platforms such as Amazon have made people order anything in almost no time and have it at their front doors. This means retail needs rapid updating to keep up with the technological advancements happening continuously.”
A Gen 2 alum of a South Asia-based real estate developer similarly expounded, “As a family business, leadership focuses on long-term growth and protecting the company for future generations. Decisions are made carefully, with stability and reputation in mind. However, family firms can sometimes become too traditional and slow to adapt. While we have successfully expanded across the region, we could improve our adoption of new technology and modern construction methods. To stay competitive in these advanced markets, we should invest more in digital systems, updated construction technology, and sustainable building practices. This will help balance long-term thinking with innovation.”
How does long-term thinking influence decision-making in family businesses, especially for next-generation leaders?
Family businesses have to balance the fact that many of them prioritize long-term planning, making sure they have something sustainable to pass down to their children, nephews, and nieces, employees, and broader community, while also often holding on to the past (i.e., that’s the way my mom and dad did it) and sometimes feeling naturally resistant to hyper-fast change.
While today’s next-generational leaders are progressively technology savvy, they need to thoughtfully balance traditions and legacy with technological innovation.
A May 2025 Family Firm Institute report, AI Adoption in Family Enterprises: Balancing Innovation with Values bluntly asserts, “Business families with AI are going to replace business families without AI.” I similarly would like to emphasize a key tradeoff whereby family businesses are balancing continuity or legacy with technological innovation.
A more recent PwC 2025 Global Family Business Survey highlighted similar respondent priorities:
– Safeguarding the business (78%) and preserving the family’s legacy (77%) rank as the top long-term goals for family business leaders.
– The AI opportunity: 60% see AI as a growth opportunity – with technological advancements (65%) and digital transformation (64%) top of their growth priorities.
Can you share examples – including your own family business / office(s) – of family businesses or family offices experimenting with AI today?
In my own family consultancy, I occasionally use ChatGPT to create quick visuals as well as Microsoft 365 Copilot early on in secondary research (e.g., identifying market size and growth, competitors, challenges and opportunities, underlying private vs. public investment landscapes).
A Gen 2 diversified New England real estate family is currently researching the potential use of AI digital signage to show property listings in their offices or public areas, while also tracking viewer footfall and real time engagement.
Meanwhile, a global family office managed by a technologically-savvy Questrom School of Business alum is starting to use Anthropic’s Claude Cowork to make their systems and processes better. Analysts use Claude for Financial Services to turbocharge and streamline preliminary financial modeling and valuation tasks. One analyst shared, “I asked Claude to perform a first pass DCF (Discounted Cash Flow) valuation on Apple.” The analyst further cautioned, “While invaluable, I still have to fundamentally understand what I am asking it to do and subsequently verify both inputs and outputs…Reminds me of a well-known IBM mantra that a computer should never be held accountable for management decisions.”
More permanent early adopters, shifting from occasional to regular usage, include a Gen 3 member of a prominent European general contractor proudly explaining how their family business has been employing AI to automate project documentation, streamline design through construction processes, and enhance collaboration for their construction teams.
What early proof-of-concept or pilot AI projects have you observed in family businesses, and what lessons emerge from them?
When Paris-based LVMH Moët Hennessy Louis Vuitton – the largest global luxury conglomerate controlled by the Arnault family – revealed in 2021 that it was partnering with Google Cloud to ramp up its AI capabilities, few could have predicted just how quickly the technology would revolutionize every aspect of its business.
Though it likes to refer to itself as a “quiet tech” company, LVMH continues to work with Google to develop new applications for AI and generative AI, and – increasingly – agentic AI where AI agents can make decisions, plan, and adapt to achieve predefined goals – with little human intervention or completely autonomously. Franck Le Moal, IT and technology director at LVMH, cited internal – rather than external client-facing – examples of a retail agent at fashion brand Celine, capable of answering complex queries from sales associates, and a client outreach agent for jeweler Tiffany & Co. that helps them craft more personalized messages.
Furthermore, Moët Hennessy – the group’s wine and spirits division – utilizes AI across the value chain. Everything from a real-time fermentation monitoring system to the launch of an interactive customer facing sommelier dubbed ‘Divine’.
Similarly, at younger Napa Valley-based Clos du Val, Gen 3 members employ a flow meter to help reduce water waste and improve fruit quality. Italy’s prosecco – one of the world’s most imitated wines – is now protected by an AI-powered authentication system developed in partnership with Microsoft and Italy’s State Mint.
Are there gaps in publicly available data on AI adoption in family businesses that, if filled, could help research or practice?
Absolutely. Family businesses are increasingly private and reticent to provide data or participate in research studies. Researchers and practitioners should work to sustainably build trust with different kinds of family businesses – old and new; big and small; for-profits through nonprofits. Such trust facilitates the sharing of qualitative and quantitative data and KPIs that could assist in research to support and sustain family businesses.
How do trust, governance, and intergenerational thinking affect the adoption of new technologies like AI?
Objective evaluation, ethical judgment, and accountability are key. This starts with communication among all family members and proceeds to encompass alignment of family owners, employees, and overseers. Stakeholders should always lead with well-defined bottom-up use case or problem and then follow with the cost-benefit analysis of using recombined software and hardware tools.
What advice would you give family business leaders preparing their next generation for technological disruption and innovation?
Frame innovation as organization- and family-wide; don’t silo it off. Make literacy, observation, testing, implementation, and monitoring part of the daily routine of all stakeholders – family elders through Gen Alpha as well as non-family managers and employees.
Intrinsically embrace communication and collaboration through regular and informal meetings, classes, seminars, and primary and secondary research. Leverage data management technologies to foster communication, experimentation, and collaboration. Create an environment where it is acceptable to try new challenges and make mistakes so that all stakeholders can learn and grow.
Promote meaningful purpose and a clear long-term vision. Foster ethical, creative leaders who can effectively identify and implement innovation opportunities amid an ever fast-moving and competitive landscape.
Never compromise on your values. Define what matters most to you and all your stakeholders. Set your own incremental timeline and goals. Assess immediate and recurring pros and cons of any innovation or disruption. Remember that not all innovation is good.
