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We define this change as a significant shift in how an organization operates; whether through changes to its core business, new products or services, expansion into new business models or markets, or an integration of new technologies, like AI, that transform operations and challenge legacy processes. While these transformations are usually led by senior management, in family enterprises, it’s often the family itself that drives this change—meaning legacy and relationships weigh as heavily on decisions as strategy does.
Our Transformational Leadership study found that while family enterprises feel similar pressures to transform as their non-family counterparts (72% for family enterprises vs 74% total leaders), they contend with a unique set of circumstances that make delivering change more complex.
Justus O’Brien
Leader of Russell Reynolds Associates’ Family Enterprise Advisory practice
Family enterprises operate with inherent advantages, including deep cultural roots, long-term strategic thinking, and values-driven leadership—qualities that have historically enabled them to thrive across generations. But ironically, these very strengths can become barriers when trying to undergo a dramatic transformation. The weight of a legacy, sustained company longevity, and an established culture can create organizational inertia, making even necessary change feel disruptive or unneeded.
Specifically, these traits often translate into “insight inertia,” a lack of urgency or awareness around the need for change. Among companies that have not undergone or are not currently undergoing a transformation, 37% of family enterprise leaders see no compelling need for transformation (vs. 26% total leaders), while 33% believe that their current operations already meet performance expectations (vs. 28% total leaders). Furthermore, family enterprises report limited external pressure to change at more than twice the rate of the overall total (41% versus 20%) – further evidence of this inertia.
Figure 1: Reasons for not undergoing a transformation
Source: Russell Reynolds Associates 2025 Transformational Leadership Survey
While it can be tempting for family enterprise leaders to play to their strengths, the rapidly changing business environment and uncertain world spares no organization. Every leader faces the same challenge in this regard: driving fundamental transformation while sustaining performance and cohesion.
To understand how these dynamics play out in practice, it’s helpful to compare family enterprises against broader industry standards. Benchmarking performance across key dimensions reveals both areas of strength and potential opportunities for change.
To help leaders of family enterprises understand where transformation opportunities might exist, we compared a number of company attributes across three main categories: Marketing & Competitive Position, Operational & Financial Performance, and Culture & People. Within these three themes, we found family enterprises to be similar to their non-family counterparts when it comes to Operational & Financial Performance and Culture & People, while the Market & Competitive Position topic had a higher degree of variance.
In our Transformational Leadership Study, we examined how family enterprises viewed their organizational performance, compared to their non-family enterprise counterparts (Figure 2). Across key performance indicators, family enterprise leaders rated their organizations similarly to the overall average:
However, gaps exist in critical areas:
Figure 2: Org Performance KPIs
Considering the macro context in which your organization operates, to what extent do you agree or disagree that your organization…(Strongly agree/agree)
Source: Russell Reynolds Associates 2025 Transformational Leadership Survey, n = 195
While family enterprises demonstrate strong fundamentals and cultural cohesion on par with their peers, their relative lag in innovation and market leadership highlights where transformation efforts could yield the greatest impact. Fortunately, the same long-term orientation and values-driven culture that can slow transformation also provide a powerful foundation for innovation–helping families close the gap and position the enterprise for sustained growth.
Yet, the data reveals a deeper disconnect. Despite showing lower performance in areas like market leadership and innovation, a significant share of family enterprise leaders still see little need to transform (higher than the overall average). This suggests that perceived stability may be masking emerging vulnerabilities. In other words, you may feel confident in your organization’s performance today, but without greater urgency to evolve, that confidence may not hold for long.
Family enterprises possess a distinct advantage: a built-in, multi-generational perspective that non-family companies often struggle to achieve and covet. Their outlook extends beyond quarterly results to stewardship and a culture of honoring past generations while preparing the next. This long-term view can serve as a transformation superpower, enabling these businesses to make bold moves with confidence rooted in continuity.
Their family legacy also brings additional benefits during change. Deep trust among employees and stakeholders provides stability in uncertain times. A shared purpose and family values act as a compass for decision-making, helping leaders pursue transformation without losing authenticity. And, because family enterprises are accustomed to thinking in generations, not quarters, they often have the patience, stability, and resilience to see complex change through.
Therefore, preparing the next generation of family enterprise leaders becomes central to sustaining this advantage. Often times successors already see themselves as stewards of a legacy, they naturally extend the long-term mindset into future strategy and growth. This ensures that transformation strengthens, rather than erodes, what makes the enterprise so unique.
Successful transformation is never a solo endeavor; it depends on the collective strength of the leadership team. In family enterprises, this means going beyond individual leaders to focus on how the team evolves together over time. Our research shows that leaders who lead lasting transformations do four things well: they build the right team for the journey, develop that team as the business and family change, actively manage how it works together, and extend it into the next generation.
Pillars of transformational leadership
The core requirements for effective reinvention remain consistent across any organization: clear vision, decisive execution, engaged teams, and robust, deep relationships. In family enterprises, these fundamentals must also be complemented by an expertise in the family dynamics and any unique governance structures that come with family ownership.
The fundamental requirements for effective reinvention remain consistent across any organization: clear vision, decisive execution, engaged teams, and robust, deep relationships. In family enterprises, these fundamentals must also be complemented by an expertise in the family dynamics and any unique governance structures that come with family ownership.
For family leaders, transformation means channeling their generational perspective into action. The most effective family leaders read the marketplace through two lenses, identifying which legacy practices create advantage and which hold the organization back. The best leaders disrupt the status quo while maintaining trust, bridge generations, and align change with long-term goals.
Leaders of family enterprises understand that it’s not only the business at stake, but the family and legacy are on the line. The path forward requires applying the same generational perspective that built these enterprises in the first place—leveraging the strengths of legacy while adapting to meet tomorrow's demands.
Family enterprises that embrace transformation are not merely surviving but are honoring their past while securing the future. Competitors across all ownership models are already moving, making the question not whether to transform, but how swiftly and effectively it can be achieved.
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