Family businesses face a unique challenge. They must evolve to stay relevant, but they also carry a history that customers value. Change too little and the business risks falling behind. Change too much, and it risks becoming unrecognizable.
Few people understand that balance better than Said Abulafia. He helps lead a historic, Arab-family-owned bakery in Tel Aviv–Jaffa, founded in 1879. The bakery has operated through dramatic political, economic, and social changes while remaining a recognizable part of the community. That history gives him a practical perspective on what modernization actually means.
The challenge is more common than many people realize. According to the Family Firm Institute, family-owned businesses account for roughly two-thirds of companies worldwide and contribute between 70% and 90% of global GDP. Yet only about 30% successfully transition to the second generation, and far fewer survive into the third. Longevity is rare. Longevity while staying relevant is even rarer.
Modernization Is Not Reinvention
One of the biggest mistakes family businesses make is assuming modernization requires a complete transformation.
Many owners see competitors introducing new products, redesigning experiences, or changing their brand identity. The temptation is to follow the same path.
Abulafia believes that approach often creates unnecessary risk.
“People sometimes think modernization means replacing everything that came before,” he says. “In our case, customers come because of what has remained consistent over generations. If we changed that, we would be removing part of the reason they visit in the first place.”
A business that has survived for decades has already proven that some parts of its model work. The goal is not to replace those strengths. The goal is to strengthen them.
Identify What Should Never Change
Before making changes, family businesses need to understand what customers value most.
For some companies, it might be a product. For others, it might be service, reputation, or community connections.
At Abulafia Bakery, generations of customers have built relationships with the business. Some families have visited for decades. Others have introduced children and grandchildren to the bakery.
“We’ve had customers tell us they remember visiting with their grandparents when they were young,” he says. “Those conversations remind you that you’re responsible for something larger than a transaction.”
That trust is part of the business. It cannot be replaced by a new marketing strategy or a redesign.
Change the Systems, Not the Soul
Successful modernization often happens behind the scenes.
Customers may not notice improvements to inventory management, supplier relationships, production planning, or operational efficiency. Those changes still matter.
In fact, they often matter more than visible changes.
During periods of disruption, including COVID-19 and rising operational costs, Abulafia focused on strengthening systems rather than dramatically changing the customer experience.
“There were times when supplier costs were changing constantly, and customer behavior was less predictable,” he says. “The solution wasn’t to become a different business. It was to improve how we operated.”
This distinction is important. Modernization should help a business deliver its promise more effectively, not abandon the promise entirely.
Listen to Long-Term Customers
Many businesses spend enormous amounts of time studying market trends. Family businesses have another resource available to them: long-term customers.
Repeat customers often notice changes before management does.
They know what made the business special. They understand its role in the community. They can often identify problems long before sales reports reveal them.
“Some of the most useful feedback comes from customers who have been visiting for years,” says Abulafia. “They notice small changes immediately. Sometimes they help us see things we missed.”
That feedback can act as a guide during periods of change.
Don’t Confuse Growth With Progress
Family businesses often feel pressure to expand.
Growth is usually presented as the primary measure of success. More locations. More products. More visibility.
Yet growth creates complexity. Complexity creates risk.
Abulafia believes family businesses should focus on strengthening their foundations before pursuing expansion.
“A stable business can grow,” he says. “A business with unresolved problems usually carries those problems into every new opportunity.”
This approach may appear conservative, but history supports it. Many family businesses disappear because growth outpaces their ability to maintain quality and consistency.
Use History as an Advantage
Many companies spend years trying to create a compelling story.
Family businesses often already have one.
Customers increasingly value authenticity. They want to understand where products come from and who is behind them. A genuine history is difficult to replicate.
That does not mean relying on nostalgia. It means recognizing that heritage has value when paired with relevance.
A bakery founded in 1879 cannot compete by pretending to be the newest thing in town. It can compete by offering something many newer businesses cannot: continuity.
“History alone isn’t enough,” says Abulafia. “But history combined with quality and consistency creates something meaningful.”
Prepare the Next Generation Early
Modernization is also about succession.
Family businesses that survive for generations usually prepare future leaders long before transitions occur.
This process goes beyond teaching operational skills. It includes passing down values, relationships, and institutional knowledge.
The next generation needs to understand not only how the business works, but why customers trust it.
Without that understanding, modernization can become disconnected from identity.
The Real Goal
Many discussions about modernization focus on technology, growth, or market share.
Family businesses face a different question.
How do you make sure the business remains relevant without losing the qualities that made it successful in the first place?
The answer often comes from balance. Protect what customers value. Improve what customers do not see. Make changes carefully. Respect history without becoming trapped by it.
Said Abulafia sees that responsibility every day.
“When you’re part of a business that has been around for generations, you realize you’re not just making decisions for today,” he says. “You’re trying to leave something stronger for the people who come after you.”
That mindset may be the most important modernization strategy of all. Businesses that survive for generations understand that progress is not about becoming something different. It is about becoming a better version of what you already are.
