Looking forward to 2022: Global trends examined through a family office lens

1. The end of globalisation as we know it?

Lack of confidence in the current state of globalisation has reverberated through leading economists, new populist politics, and the shifting geopolitical terrain during an era of increasing great power showdowns. Pandemic-related travel restrictions increased the significance of borders, especially for people accustomed to easy passage, and constant supply chain disruptions only furthered the urgency of concern. These strains upon globalisation’s connective tissue heighten the awareness of the fragile character of our interdependence.

A Simple take

Our current trajectory seems likely to result in shifting trade patterns based on ideology, human rights laws, and climate mandates. The spillover effects of these multifaceted trade barriers have the potential to reconfigure globalisation as we know it today. Demand, political concerns, and supply chain disruptions are already leading to new investments to localise the production of sought after items such as microchips and batteries. Rethinking just-in-time production could push further local investments as the new reality shifts cost analyses.

Think about: What happens when uncertainty becomes the norm? What will the new paradigm of a globalised economy look like?

2. The rise of Web3

After the mainstreaming of Bitcoin, NFTs (Non-fungible tokens) captured news headlines in 2021 for the eye-watering prices investors paid for digital art and digital artefacts as mundane as a Tweet! This hyperbolic attention obscured the greater social importance of the rise of blockchain and the other distributed ledgers facilitating NFTs, cryptocurrencies, smart contracts, and decentralised finance (DeFi). Interlocking technologies and interests are pushing us toward Web3, understood as a decentralised internet infrastructure reliant on blockchain technologies to facilitate interactions and exchanges. The future envisioned by Web3 proponents imagines all online interactions (from sharing photographs with friends to online commerce) powered by distributed ledgers, with the large consolidated technology firms of today pushed to the sidelines. The potential impact is far-reaching.

NFTs are illustrative of the potential for change. The ownership and display of objects have long signified status, cultural meaning, and community membership. The value of many of the world’s top consumer brands capitalises on the usefulness of their products and the customer’s emotional, intangible attraction to their brand, which is often fed by the perceived status they generate and project. The ownership of NFTs has the potential to shift people’s online and offline presences as they become keys to virtual and IRL communities. In contrast to people cultivating their social media presences, the front stage of their lives, an NFT can serve as a clear indicator of group membership that can be objectively verified. NFTs signify belonging and have large, influential communities behind them.

A Simple take

The rise of NFTs in the last year signals just how fast other digital assets can be adopted and is, perhaps, a beacon in the broader shift to Web3. One reason for the speed is that verifiable proof of ownership of digital art is an easier idea to understand than other digital assets. NFTs are a strong driver for investors to expand into digital assets beyond cryptocurrencies. Bitcoin billionaires are already familiar with this technology and are driving much of the activity in this space, but the mainstreaming of these two blockchain technologies is emblematic of broader changes in the internet and finance.

Think about: What does the rise of NFTs tell us about the broader role of intangible assets (crypto, etc.) in the global economy and the shift to Web3 going forward?

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3. Energy impact of the internet

The energy requirements of connected technologies have risen significantly through our increasing reliance upon them. It is projected that the internet will draw one-fifth of the world’s electricity by mid-decade. Power use is spread across end-users and concentrated in large data centres. The growth of blockchain technologies, such as cryptocurrencies and NFTs, with high computational demands, has led crypto-mining (the computational process that maintains blockchain ledgers and mints coins as a reward for doing so) operations to gravitate to locations with cheap and often dirty power. The energy impact of the internet is cause for concern, investment, and adaptation.

A Simple take

There are exciting opportunities to create solutions. Large data centres are already investing in renewable energy to power and cool power-heavy and critical internet infrastructure. An encouraging signal is that this is a problem well-aligned with the capital and knowledge to solve it. Many of the companies operating data centres have the resources and interest to invest in solutions. Additionally, there are both software and hardware innovations to make computing more efficient. Blockchains developers can modify algorithms to reduce computational power and hardware developers can focus their efforts on maximizing the energy efficiency of their products.

Think about: How will the awareness of the internet’s carbon impact change internet use generally and in the specific use-cases of cryptocurrencies and NFT’s?

4. Economy: New generation workforce

As a new generation of workers moves into the workforce, older generations exit. Generation Z enters to join Millennials, a generation marked by the 2008 economic crisis, in the present new reality of pandemic labour. On the other side of the spectrum, the last of the Boomers are moving toward retirement and Generation X are becoming the most experienced workers. While generational distinctions have limits on their explanatory power, they can help us identify changes in culture and expectations. Gen Z now enters the workforce in a highly dynamic time with a changing labouring landscape and they are expected to make up the largest segment of the workforce by mid-decade. Younger workers and women are leading the push for pay equality and improvements in workplace behaviour. They also experienced the brunt of the pandemic’s economic downturn because of their overrepresentation in the service sector.

A Simple take

Gen Z workers expect their employers to be good global citizens and feel confident calling out their employers actions on social or moral grounds. Employers can expect these workers to have more knowledge about the economy, technology, and the world than previous generations. Generation Z’s technological ease will demand that workplaces keep up, while their interest in work-life balance suggests that they will reap some of the benefits from workplace efficiency and flexibility. Many would trade increased pay for more meaningful work.

Think about: How will Gen Z reshape the labour market?

5. The YOLO economy

You only live once! The pandemic led to a grand realisation by many workers of their position and the possibilities that life holds. The YOLO economy is reaching across most of the productive workforce as people seize opportunities across a variety of their interests, re-evaluating where they are and where they want to be. This can include ‘YOLO-ing’ their life savings into a meme stock, minting NFTs, or trading cryptocurrency. It can also be a challenge to the pursuit of wealth with people leaving corporate jobs, with great advancement opportunities, for more meaningful pursuits. The YOLO ethic centres on the individual while being happy to collaborate with peers sharing their goals, in entrepreneurial pursuit to improve their lives.

A Simple take

The shift in values (even if just regional) could signal a larger change in workplace, consumer, and lifestyle behaviour that extends far into the future. YOLO is a cultural touchstone signalling an era of people seeking greater rewards in their life and labours, and the confidence to take risks to reap them. The YOLO economy also includes the bubbling undercurrent of the anti-work movement. Across the workforce, but particularly younger labourers in the service sector are willing to quit their job, knowing that the current economy is in their favour to quickly find another. Flexible work schedules, taking back the time wasted commuting, and following one’s passions are all part of the game.

Think about: How will organisations adapt to the new values and behaviours of the YOLO ethic?

6. Environment: Regenerative everything

It is evermore clear that climate change is now a climate emergency. The global political process to meet the Paris Climate Accords has been slow and grinding, but citizens are pushing governments and corporations to act. The public and private sectors, while not always in sync, are nonetheless working to meet the new demands of consumers for more sustainable products, services and practices. There is a push toward creating circular economies in all industries and sectors. A linear economy transforms natural resources into products and largely ignores the waste created in manufacturing and at the end of their useful lives. A circular economy is built on extensive life cycle analysis of the raw materials, manufacturing process, and through to the end of the product’s life. The goal is to create economies that eliminate waste and pollution by circulating products and materials.

A Simple take

Sustainability and circularity can be big business even as they address vital environmental and social needs. While some companies run into limits in their ability to act in subcontracted production processes, others are investing in solutions. Cities are also pushing important changes in their local economies. Amsterdam, Copenhagen, Barcelona, and Brussels are moving toward establishing doughnut economies aimed at sustainability and human welfare. Another related signal is the right to repair movement’s momentum and visibility. There is a global increase toward realigning values toward the economics of sustainability.

Think about: How will the circular economy redefine how we do business and investments?

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7. A new health focus

Society is centred around health now more than ever. A convergence of technological and social factors have enabled people to take control of their lives. Outdoor recreation areas are more popular than ever as people explore socially-distanced activities. Mental health is becoming a crucial issue in private and professional contexts. There is also both a growing backlash against technology addiction and an increased reliance on technology to help give people even more information about their personal health. The development of self bio-tracking culture gives people insight into sleep, exercise, diet, and even their current glucose level. New evidence is linking sleep quality and quantity to the ageing process and a number of chronic diseases.

A Simple take

Products and services to improve peoples’ health are on the rise. These include technology such as apps and body sensors and lifestyle-altering experiences. New food types are being developed, including lab-grown meats that promise environmental and health benefits, as well as investment opportunities. The outdoor industry also continues to see record sales as people buy equipment to pursue their lifestyle changes.

Think about: How do people find the right balance between drawing the benefits from new health technologies and reducing their screen time?

8. Politics: The rise of all voices

The convulsions of activism and protests across many levels of society and governments have been institutionalised in the private sector. The fight for climate, gender equality, and social justice has far-reaching reverberations. The rising tide of activism is often organised through social media, which gives people a public voice like never before. It has also drawn attention to the impact of “Big Tech” on the political landscape.

A Simple take

If everything is activism, then calls for a turn towards conscious capitalism point toward the future. Companies need to adapt their business models and internal practices to the demands of such a diverse set of causes. Failing to do so will leave firms in an ever-reactive state, unable to move forward,  with little regard to how innovative their products may be.

Think about: What is the impact of technology in the current political climate?