Future Recoded … Reimagine your markets. Reimagine how you live. Reimagine how your business works. Reimagine how you succeed.
April 10, 2020
Change is relentless, innovation accelerates, crisis shakes everything up.
For business leaders, now is the time to reimagine. To explore, innovate and accelerate a shift to the future.
How are markets changing? What are the structural and economic changes, the attitudes and behaviours of consumers, that are shifting right now. In just a few weeks, for example, most of the world shifting from physical to online eduction, online working, online shopping, online entertainment.
95% of doctor consultations now take place by mobile phone. Will we go back to the old ways? As children embrace online classrooms, enhanced by peer to peer chat, will they find physical school slow and boring. As Zoom has come to dominate our locked-down home working and personal lives, will we want to need to travel and meet in the same ways as before?
Technological progress, environmental crisis and economic shock have now come together, to create a moment of potentially seismic change.
What new opportunities will come with tomorrow’s technological advancement, for both people and for business? Where does your organisation fit in? How will you respond to constant disruption? It is time to reimagine everything.
The current pandemic rolling across the world has accelerated a world which was heading for a meltdown, as the business status quo looked increasingly out of sync with the world.
Rapid technological developments created ever more strain on society and the environment. People reacted by rejecting progress. Brexit and Trump, nationalism and migration. The environment responded with ever more unpredictable and extreme weather, global warming, rising sea levels and diminishing biodiversity.
So how can we use this crisis as a turning point, to recognise that capitalism as we know it cannot go on, that business and society, technology and humanity need to work better together, to create a better world for all of us?
Over the last year I have worked on a huge RECODE project to understand how business can and needs to respond to a changing world. This include 49 new codes for business, built around a new DNA for business and leadership.
The project drove me to more deeply understand the drivers of change, the huge forces that are causing us to shift. My book comes out in September, but in advance here is a sneak view of the megatrends changing our world right now:
Five megatrends are shaping our future right, shifting the way we live and work. They fall into 5 categories:
- Megatrend 1: Aging World … the shift from young to old … People are living longer, healthier lives throughout the world, as healthcare, education and lifestyles improve.
- Megatrend 2: Booming Asia … the shift from west to east … Consumers are more affluent, particularly across Asia. So-called emerging markets will represent 6 of the 7 largest economies by 2050.
- Megatrend 3: Cognitive Tech … the shift from automation to intelligence … Technology unlocks new possibilities, and exponential progress. 125 billion connected devices by 2030.
- Megatrend 4: Dense Living … the shift from towns to megacities … 65% of the world will be concentrated in urban environments by 2050, today in the megacities of Asia, tomorrow in even larger cities of Africa.
- Megatrend 5: Eco Renewal … the shift from crisis to circularity … 50% of the world’s energy will be sustainable by 2050, as we seek ways to combat climate change, and also the stress on natural resources.
In his book Future Shock, Alvin Toffler identified the watershed of a new post-industrial age, pinpointing the enormous structural change afoot in the global economy, and the acceleration of technological advances towards a ‘super-industrial society’ in an information era. 50 years later we see much of what he predicted coming true.
Using a range of data sources, including UN and OECD, and most usefully Max Roser’s fantastic website, OurWorldinData.org, we explore these five trends and their implications for business:
Megatrend 1: Aging World … the shift from young to old
Socio-demographic changes, particularly the aging of populations throughout the world, will have a huge impact on every nation:
- Asian boom: Global population will likely increase to 8.5 billion by 2030, from 7.2 billion in 2020 – made up of 5bn Asians, 1.5bn Africans, 750m Europeans and Latin Americans, 400m North Americans, and 50m in Oceania.
- Declining youth: Birth rates are declining, particularly in wealthy nations, resulting in fewer young people, and 90% of the world’s population under 30 now living in emerging markets.
- Living longer: Most profound is a likely 45% increase in the world’s over 60s population by 2030, with 80% of them living in Asia by 2050 (Asia’s over 60s already outnumbers the entire USA population).
- Global citizens: 4% of the world’s population are migrants, not living in the country of their birth. Some individual countries are much higher – UAE 85% due to migrant workers, but also Australia 29%, Canada 22%, and USA 14%.
The implications for support include:
- Healthcare: As population’s age, demand for heathcare and home support will grow rapidly. US healthcare spending is set to rise by 8% of GDP each year for next two decades, around $3.4 trillion every year.
- Pensions: A $400 trillion gap in retirement funding will likely emerge by 2050, as pension funds prove insufficient, people live longer than expected, and need more support. Young people will find need to meet this shortfall, and be less well off.
- Robo workforce: As people of working age decline, we will turn to automation to do more, machines and robotics becoming a necessary rather than unwelcome substitution within the workforce, taking manual jobs, as humans add more value.
- Consumption: age and health will significantly shape markets from travel and entertainment, to food and fashion. In terms of food, we will demand products that are fresh and organic, functional and medical, convenient and delivered.
Megatrend 2: Booming Asia … the shift from west to east
From west to east … population growth drives a significant global shift in economic power, and the rise of a huge new middle class of consumers:
- Made in Asia for Asia: “Emerging” economies have shifted from being producers for developed countries, to becoming the primary consumers of the world. They now account for 80% of the world’s growth, and 85% of growth in consumption
- Chinese superpower: 15 years ago China’s economy was 10% of the US economy, but will surpass it by the late 2020s. China expects to have 200 cities with over a million people by 2025.
- ASEAN tigers: South East Asia’s growth will outpace China, in particular Vietnam and Thailand. India has world’s 10 fastest growing cities. Delhi will soon displace Tokyo as the world’s largest city, whilst the port of Surat grows fastest.
- New consumers: Asia’s new “middle class” has boomed in recent times, and will represent 66% of the world’s 5.3 billion mid-income consumers by 2030. 70% of Chinese will be in this group, a $10 trillion consumer market.
The implications for markets include:
- China’s economic power will be consolidated in coming years, despite being driven by high debt levels and property market valuations. China has also grown astute in developing “soft power” using culture and business for global influence.
- Chinese business growth is relentless with over 100 unicorns, and over 7500 new companies registered per year and more patent registrations than any other nation. It’s support to start-ups help them survive infancy and accelerate scale-up.
- Intra-Asian markets will dominate the global economy. 15 of the world’s 20 largest air travel routes are within Asia, led by KUL-SIN with over 30,000 travellers per year (compared to LHR-JFK with half as many, the 13th largest).
- The E7 (as Goldman Sachs termed the emerging economies of China, India, Brazil, Mexico, Russia, Indonesia and Turkey) will be larger than the G7 by 2030, and double their size by 2050 (E7 already outperforms G7 on purchasing power parity).
Megatrend 3: Cognitive Tech … the shift from automation to intelligence
The “fourth industrial revolution” sees a shift to connected and intelligent technologies that underpin every other trend:
- Exponential change, as digital platforms connect markets, IOT connects everything and network effects multiply the impacts, robotics displace manual workers, and artificial intelligence outthinks our minds.
- Merged reality. The concept of digital v physical is rapidly evolving into a fused state, in which every experience is both real and technically enhanced. Augmented reality and holographic 3D displays accelerate this, as does gaming and movies.
- Data is the new oil. 90% of the world’s data was connected in the last 2 years, with 1 trillion connected objects by 2025, over 90% of stock trading is now done by algorithm, and around 66% of the world’s population is “online” at any one time.
- Intelligent life. 60% of all occupations could see at least 30% of their component activities automated. Robotics and AI have can enhance are human capabilities, free us from repetitive tasks, enhance sporting prowess, and release our creativity.
The implications of fast tech progress include:
- Ideas unlimited. The speed of technological advancement accelerates beyond the shifting behaviours of consumers, or the needs of business. The creative challenge is not the technology development, but how to apply it most usefully.
- Beyond the singularity. Ray Kurzweil describes a hypothetical future point, around 2045, when intelligent machines is no longer controllable by humans. Elon Musk shares his fear, and is a critic of Alphabet’s Deepmind.
- Sustainable tech. Many of today’s environmental challenges will ultimately be addressed by technology, through new approaches to additive manufacturing and renewal, or the capture of carbon and conversion of waste.
- Ethics and security. The growing intelligence of machines pose many ethical dilemmas for business and society. Security and privacy issues will only be addressed by considering new approaches to authenticity and regulation.
Megatrend 4: Dense Living … the shift from towns to megacities
More than half of the world’s population now lives in towns and cities, and by 2030 this number will grow to about 5 billion, mostly in Asia and Africa.
- Megacities of 10 million. In 1990 there were only 10 such cities, by 2025 there will be 45, with 33 of them in Asia. Many large cities are building secondary overflow cities, like Xiongan New Area, which is 100km from Beijing.
- Migration to cities. Globally, more people live in urban than rural areas. In 1950, 30% of the world lived in cities, today it is 55%, growing to 66% by 2050. Cities disproportionately attract young people in search of work and prosperity.
- Life is better in the cities. Cities typically have better services, schools and hospitals, better access to sports and culture. People are healthier, better educated and wealthier. In China urban income per capita is triple that in rural areas.
- Smart cities. Cities are first to adopt new technological infrastructures, from free connectivity to driverless cars, intelligent homes and renewable energy. The “smart city” market will triple in 10 years to $1.2 trillion by 2030.
The implications of this urbanisation are
- Cities are driven by modern urban populations that demand advanced infrastructures, and quickly embrace technology and innovation. New cities are able to build from plan, whilst older cities have to adapt legacy structures.
- Health and safety will drive new levels of surveillance, as authorities seek to overcome crime and improve traffic flows, sanitation, and emergency response. Alibaba’s “CityBrain”, for example, is deployed in many Chinese cities.
- Consumer aspirations change, as traditional symbols of progress, like a car or larger house, are infeasible. Instead new priorities emerge such as fashion and entertainment, product miniturisation and personalisation of services.
- Virtual communities, replace the more traditional forms based on location and neighbours. Resources become increasingly shared, from energy suppliers to mobility solutions. Virtual, group behaviour dominates in new ways.
Megatrend 5: Eco Renewal … the shift from crisis to circularity
The impact of climate change is all around us. Rising temperatures and sea levels, forest fires and food prices,
- Population strain. Growing numbers of people drives huge demand for energy, water and food, testing the planet’s finite resources of the planet. The population of 2030 will demand 35% more food, 40% more water, and 50% more energy.
- Industrial strain. Food production has depleted the land and oceans of natural stocks, damaged ecology and reduced biodiversity. Technological products have stripped the earth of precious metals, and oil is increasingly a limited resources.
- Carbon emissions. Greenhouse gases, primarily carbon dioxide from fossil fuels, will drive warming above 2 degrees by 2036 at current rates. That could cause sea levels to rise by 2m by 2100, flooding the homes of 250 million people.
- Extreme weather. Global warming drives more unpredictable and extreme weather, hot summers driving desertification and loss of agricultural land, storms threatening cities. Extreme weather caused $148 billion damage in 2018.
The implications of these environmental impacts are
- More from less. Meeting the population demands, requires innovation to improve production with less resource. Detecting weeds with sensors and spot sprays could reduce herbicide usage by up to 95%.
- From oil to renewables. Converting to sustainable energy, particularly solar and wind, will accelerate as battery storage develops rapidly. Government policies and taxation will be key drivers of business, alongside consumer demand.
- Electric travel. The shift to non-carbon fuels in road vehicles will accelerate rapidly, seeing carbon-fuelled vehicles eliminated by 2040. The same shift is now required in all modes of transport. (Road drives 70% of emission, air and sea 14% each).
- Circular consumption. 66% of consumer would pay more for environmental-friendly products, rising to 73% for millennials. This will be the biggest driver of businesses adopting more sustainable, and circular economic models.