A few weeks ago, my brother, who leads clinical transformation at a healthcare AI company, showed our leadership team and owners how artificial intelligence can create a market analysis, including using AI to predict how it may disrupt our business. The results were impressive and fast. The older generation marveled at the outcome, but felt a twinge of discomfort: Was the family business moving too quickly, too far from the “way we’ve always done it”?
That moment captured four realities family businesses must confront about AI: the tension between honoring tradition and embracing innovation; the need for boards to uplevel conversations about how AI could reshape industries, not just how it can improve efficiency; the opportunity to engage next-generation family members who are often closest to emerging technologies; and the obligation to think carefully about how AI will transform work and how companies can support employees through the change.
The tension between preserving tradition and embracing innovation is familiar to every family business. The difference today is that AI is advancing at a speed that punishes those who wait. For family businesses, the question is no longer whether AI will affect them, but how quickly they will adapt.
Family businesses are uniquely positioned to succeed in this moment. They excel at long-term thinking and can make bold investments without pressure for quarterly results. But legacy can also become a trap. Too often, families hold on to practices because “that’s how we’ve always done it,” even as competitors push ahead. AI is moving too fast for that mindset.
But at the same time, it’s that tradition and legacy that differentiates family businesses and should not be lost. For example, in some industries, future customers may value a human touch. This can benefit family businesses, many of whom have an increased emphasis on customer service and who have values-driven cultures. The family businesses that thrive will honor tradition while embracing AI and recognizing, and responding to, ways it may transform their business and industry.
However, at too many board meetings, the conversation about AI stops at efficiency. Someone mentions using AI to draft marketing copy or summarize meeting notes. Perhaps there is a recommendation to form an AI task force to look into ways to better optimize certain internal processes and the discussion quickly moves on.
But that narrow view, while important, misses a larger issue: AI isn’t just a productivity tool; it’s a market disruptor. It will change industries, upend competitive landscapes and transform how people work. Boards of family businesses must raise the conversation beyond, “What tools should we try?” to the bigger questions, such as: How could AI completely reshape our industry in the next five years? How will it impact our customers and suppliers? Which parts of our business face an existential threat from AI and what new opportunities, including whole new business lines or models, will the technology open up?
These are strategic questions and they belong in the boardroom. A board’s role is not to micromanage which tools the company uses, but to ensure management is thinking broadly about how AI could alter the whole industry itself. For some companies, AI will create opportunities to grow. For others, it may render entire business models obsolete.
I’ve also seen how a family business’s exploration of AI can be a moment to engage and lean on the next generation. Rising family members tend to be the most attuned to emerging technologies and are far more comfortable experimenting with them. Their insight can help senior leaders understand both the promise and the risks. Inviting them to present use cases, lead pilot projects or serve on innovation committees not only accelerates learning, but also deepens their connection to the business. Engaging NextGens in this way can be a powerful step toward preparing them for future ownership, leadership and governance roles.
But AI’s impact isn’t limited to strategy and innovation. It will also transform work. It will make some roles more productive, create new opportunities and eliminate certain jobs altogether. That reality raises a values-based question that family businesses are uniquely positioned to answer: How will we take care of our employees as AI reshapes their work?
Family companies often pride themselves on treating employees like family, not just like headcount. They can bring that same long-term, people-first mindset to AI adoption by reskilling workers, creating new pathways for growth and communicating openly about change. Done thoughtfully, AI can enhance human capital by automating repetitive tasks and freeing employees to do more meaningful work. Done carelessly, it can erode trust and loyalty that may have taken generations to build.
Boards and leaders of family businesses must ensure these conversations are happening. It’s not enough to ask how AI can make the business more productive. They must ask: How will AI transform our industry and how must we evolve to stay ahead? How will we prepare the next generation to lead in this environment? And how will we protect our culture by supporting employees through change?
Family businesses thrive when they think in generations, not quarters. The choices we make about AI today, whether to lead, to follow or to ignore, will shape not just our competitiveness, but the legacy we leave to those who come after us.
Editor’s Note: This column originally appeared in Family Business Magazine.