By Pavlos Loizou
There is a typical cycle behind empires’ rises and declines. In the beginning, there is peace, prosperity, and productive debt growth.
As the economy expands, a debt bubble is created and the gap between rich and poor widens.
When the debt bubble bursts this leads to an economic downturn, increased tension and reaction against the established political norms and structures, and finally debt and political restructuring.
The result is a new world order, and the cycle begins again.
The parallels with Greece and Cyprus are evident, as it is clear that we are now entering a new stage where the established political norms and structures are being challenged.
As the system is challenged, it will be interesting to see how the establishment will try to maintain its grip on power.
Maintaining power is typically done by having a younger generation of family members being the “front” (maintaining control via the linage), rebranding their image (merely changing the skin), taking control of media outlets (control information), or by stifling competition through litigation, blocking access to resources.
These attempts are futile as longevity only comes by thinking about what the future holds and preparing and acting accordingly, rather than by trying to maintain what you have for as long as you can by avoiding change (which by implication means that at some point you will fail).
As we navigate the new economic and political norms that are unfolding around us, it is essential also to consider the regulatory pressures that are forcing change on financial institutions, insurance companies.
The decoupling of delivery of commerce and services from the need to be physically present, the impact of our choices which is changing our immediate physical environment, and the declining demographics which will result in a deterioration of state-provided pensions and immigration pressures.
Corporations and families should take stock of their assets, set out how they believe that the future will unfold and how they see their role in it, and then assess their corporate governance, family, and ownership structures.
This task can only be achieved by involving key decisionmakers/owners to discuss goals, opportunities, challenges, concerns, and their vision for the company and the family.
This will dictate the design of succession planning, including timing, future ownership and management shares, roles, and responsibilities of family members.
Where there is change, there are challenges but also opportunities.
Being open to accepting change as an opportunity option is what is challenging.
Pavlos Loizou is Managing Director, WiRE FS