The greatest challenge for any family office today is making the right long-term decisions, in the midst of rapid change, and evolving family priorities.
Sadly, billions of dollars a year are wasted every year, placing huge bets on a future that no longer exists, or a future that never quite arrives, or a future that arrives too late.
So how do we make the right calls? It is often said that no one can predict what is going to happen, but fortunately, forecasting can be far easier than you may think. This is particularly the case when we focus on major trends in a big industry. It’s been my job to do this, for over 20 years, working with many of the world’s largest corporations, as well as with many family offices.
The secret of reliable long-range forecasting is that many things change more slowly than people imagine, despite the constant frenzy of news. I’m not talking about share prices, commodity prices or currency rates. Anything to do with markets is as difficult to predict two months ahead as the British weather.
That is why most boardroom or family office debates about the future are not usually about existence or direction of a trend, which tends to be fairly obvious, but about importance, timing and speed of that trend.
For example, I gave a keynote recently to the Research and Development team at General Motors on the future of the auto industry. There was no debate about the future dominance of auto-drive electric cars. The key issue was when most new cars in New York will be electric, or how soon most Uber journeys in London will be driven by robots?
Yes of course, there are mega-shocks, but so-called defining moments often turn out to have rather less impact than many expect at the time. The truth is that they are very rare. Where was the immediate financial crisis in the weeks after Brexit - so widely forecast? President Trump was a dramatic choice, but was rapidly neutralised politically, and from the markets point of view. In both cases I correctly predicted that the short-term impact would be much smaller than hysterical headlines suggested.
Many Megatrends driving the world today are over twenty years ago
The same 30-50 year megatrends I described in previous books over 20 years ago, are continuing to shape and transform our world. Even the most rapidly evolving trends are continuing in surprisingly predictable ways. Take the rise of China and India, ageing of Europe, fall of telco and IT costs, rapid growth in interconnectivity, growth of global trade (despite protectionism), improvements in life expectancy and so on.
Every now and again in history there is a genuine step-change, for example the collapse of communism, or a global war, or the creation of the web, but such things are rare.
Imagine waking someone from a coma after 20 years. What would shock him? Walk him down the streets of London, Paris or New York. You will struggle to show him anything extraordinary – apart from people using mobile devices more often.
Perhaps the only shock will be how little change he can find. Many bank branches still exist, and more cash is used across America and the EU than ever, despite predictions of a cashless society. Most people still commute to work, sit in offices, complain about email overload, and pure home-working is still rare. Most things at home like taps, cookers, washing machines and vacuum cleaners are almost identical – despite the hype about smart homes.
Focus on what really matters
What this all points to is one of the greatest delusions in human history, one which often delays decisions, kills sound investment and stifles innovation.
The answer is to focus on the right balance of mega trends: ones which really will impact the longer-term future of your family office, which really are likely to disrupt your own companies or investments, paying special attention to the changing needs of customers, and how to meet them more effectively.
\*Patrick Dixon is Chairman of Global Change Ltd, author of 17 books including The Future of Almost Everything and has been ranked as one of the twenty most influential business thinkers alive today. His website has been visited by 15 million people with 6 million video views:
He will be speaking at the GPFO event in London on October 18.
