Family offices are often structured around the nuances of wealth owners hence the belief that no two family offices, like the wealth owners they serve, are the same. Ralph Waldo Emerson once said, “Every great institution is the lengthened shadow of a single man (or woman).” While the services that are delivered for the family maintain a base-level of efficiency as time passes, inevitably the question arises: are these services as effective as they could be?
For family office managers and wealth owners, it’s tough to benchmark performance or best practices. There may be some standardised models to imitate in the initial phase of setting a family office up – but very quickly these services become the reflection of their founders. Unique, complex, and highly strategic.
The family office as a service
Although there may be some teething problems, as these organisations mature and the adopted processes become more streamlined, a family-centred set of standard operating procedures is drawn up. These standard operating procedures then go on to govern the workflow of the services delivered and the employee experience in delivering them. It’s at this point that incentives might then be devised to attract a suitable calibre of talent needed to support the initial core of trusted senior advisors.
In a single-family office, it may seem easier to ensure that the principal wealth owner’s needs are kept at the centre. But what about when family dynamics change or the office grows to become a multi-generational office? How does the servicing need to adapt? That’s not to mention multi-family offices, where there can be a more complex set of needs and priorities.
A service team might expand in response to these issues – but then too might the operational challenges. Whilst the family’s unique (and often conflicting) views of what long term value creation could and should remain centre stage, the methods of achieving this must pivot along with the team striving to secure it. Great managers know that that is a need for constant alignment and communication in order to effectively empower teams to deliver their best work.
However, anyone who has worked in a family office knows these organisations often become very hierarchical due to the sensitive nature and high stakes of the work. This hierarchy can quickly play out in the team’s culture.
As a result, a high-level of ambiguity or a general lack of transparency might arise. Some of the work might require silos and many tasks can even begin being carried out on a need-to-know basis by more junior or less experienced members of the team.
It’s at this point that many teams begin to fall out of sync and it is then the senior advisors who are left with the hefty responsibility of not only delivering high returns or operational perfection but also ensuring that the experience of the services offered is remarkable. A tough task, even for the most seasoned of executives. Especially as they have to navigate the ever-increasing complexity on the horizon.
But what if there was a constant and iterative way to ‘de-risk’ services, empower the teams that deliver them whilst ensuring multiple stakeholder’s needs are served and kept at the very centre of complex operations? There is, the process of achieving this is called: Service design.
But what is service design?
Service design is an established process that helps organisations to unpack operational opportunities and derisk effective new services.
An important point to realise is that all services are designed and that consciously or not there is a process that brings a new or improved service to life. Service design is a conscious approach to the process. Though originally based on methods from Stanford University’s Engineering department the D-School, service design is now being widely integrated into MBA programs as an effective method for problem-solving and innovation management.
Silicon Valley and the tech sector at large were the earlier adopters of Service design. Today service design is being implemented widely across more traditional sectors such as wealth management, venture capital and even magic circle law firms, as they all grapple with the increasing complexities of business.
As service-based economies emerged in the West, the leading innovation consultancy IDEO, pioneered early versions of the process under the name ‘design thinking’.The process rapidly evolved over the last decade, proving to be so highly effective that traditional management consultancies such as McKinsey, BCG, and Bain have scrambled to embed entire teams of service designers into their strategic suite of offerings.
Five key phases of service design
1. Conducting a service audit: The core value that drives this qualitative form of problem-solving is placing stakeholders’ needs at the centre of the process – a practice that is called being ‘human-centered’. The organisational structure and service is then dissected from end to end through a ‘service audit’ holistically analysing the capabilities and opportunities for a redesign.
2. Identifying a north star: Once the current situation becomes clear, a strategic North Star is crafted. This mission is then baked into guiding principles, which can later be used to inform aspects such as employee culture. As the formidable management consultant, Peter Drucker, famously stated – “Culture eats strategy for breakfast”.
3. Creating prototypes and experiments: With the mission clear, the team is then able to redesign how services are delivered and how the desired impact can be measured and ultimately incentivised. But before a service is timed and money is rolled, a series of measurable experiments or service ‘prototypes’ are simulated in order to analyse the effectiveness of the proposed solutions – a practice borrowed from service design’s roots in high-risk engineering projects.
4. Delivering a service blueprint: A key deliverable in this is the ‘service blueprint’. This operational tool is live and iterative, providing a modern alternative to static and often outdated practice of having standard operating procedures. It enables teams to anticipate potential stakeholder needs, and co-create a shared set of procedures. The result? Alignment, even in environments where there is an inherent need for high levels of discretion and privacy.
5. Practicing co-creation: This co-creational approach is another unique feature of Service design. It’s a decision-making process favoured by Google’s Eric Schmit that ensures all perspectives get heard and considered, but when needed delivers a clear direction. This is highly useful to generate collective buy-in and build a shared sense of responsibility from those delivering the service. And finally helps to build confidence and capability in the team left to run the service.
Taking a systems-level view and following a process of qualitative engineering is the key to service design’s transformational approach. It’s highly methodical and rich set of processes enable teams to pull apart an operational process and co-create services that are resilient and fit for purpose through the diverse insights gathered.
Family offices are unique, complex, and highly strategic – and unfortunately often steeped in palace politics. Service design makes an ideal bedfellow for family offices looking to re-engineer their practices to meet changing market needs.