RECAP: 2018 FOX Fall Enterprise Forum

Preparing for the Great Transformation in the Global Macro Environment

Speaker:
Austin Kimson, Co-Founder and Senior Economist, Bain Macro Trends Group, Bain and Company

Session Description: 

Family Enterprises will be transformed by a shifting macro environment. Geopolitics, demographics, and technology are colliding to unleash a massive new boom-to-bust cycle in the coming decade. The Bain Macro Trends Group research predicts a new set of winners and losers. Trends of regionalism and populism will be profound as risk premiums rise, global institutions lose trust, and tech innovations change the way things work. This confluence of emerging trends must be understood in order to position the complex moving parts of the family enterprise to remain at the leading edge.


"I’d rather have a great business in a bad industry any day, than a bad business in a great industry. The key to remember is that macro trends can either serve as headwinds or tailwinds."

"You are going to get things wrong so it’s important to build resilience. You need to survive the steps along the way and build options and hedges into your business.
- Austin Kimson
Key Takeaways: 
  1. Fading US hegemony over other global powers and new technologies breaching the Great Wall of America (a.k.a. oceans) are impacting the global power structure that supported turbo-charged globalization since the end of the Cold War. 
  2. Post globalization may fundamentally reshape how businesses and investors need to think about their international strategies. This period may bring greater geopolitical fragmentation into smaller, focused trade-security zones, increased instability across Eurasia versus relative stability in Americas, and a decline in the ambient security level and increased social priority on defense. 
  3. Since 1980, U.S. inequality has risen to levels last seen in the pre-WW2 era. The impact of automation will continue this trend – high wage workers will receive early gains from automation, while low wage workers will experience increased unemployment due to automation gains.
  4. With interest rates likely on the rise heading into the 2020’s, look to invest in inputs/commodities, value-added transformation, and experiential delivery. 
  5. Ask the following questions of any future potential investments:
    • Does it solve the problem of scarce labor and talent?
    • Will it do well in a higher interest rate environment?
    • Will it thrive without needing global scale?
    • Does it rely on demand from the big “middle class”?
    • Is there explicit or hidden option value embedded in the business?
    • Does the industry risk being a social/political lightening rod?
       

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(FOX Members only)