In my book, Future Files, I highlighted 5 trends as being among the major drivers of change for the foreseeable future. In this post I’d like to re-visit these 5 trends to highlight a few ways in which our world is changing. I should stress right away that these forces are relatively well known. It’s the implications that are so often missed, so what I’d like to concentrate on here is the “and so?” bit.
Fact #1: Of all the people aged 65+ that have ever lived, 50% are alive right now
Not only is the world becoming more crowded (the global population will hit 7 billion this year), it is also a world where people are living longer, less people are being born, more people are living alone and the nuclear family is becoming the exception not the rule. Population growth (largely created by a health care revolution) has significant implications in terms of infrastructure and natural resources. The global population is expected to go into freefall around 2050, but until then, and unless something dramatic happens, demand (and prices) for almost everything is expected to rise.
The most significant demographic change is ageing, which has serious implications for everything from health care and pensions provision to the world of work. Increasing longevity – along with declining fertility – will be key features of life in the 21st Century and both will have critical implications for everything from innovation (largely driven by young people that are not ‘invested’ in the current system), to societal risk aversion and politics.
Expect to see a global war for talent due to a lack of skilled workers, a power shift from employers to employees (unless the economy tanks), a shift in focus by business towards seniors and a growth in nostalgic products and pursuits.
In terms of workforce size, China, India, Bangladesh and Pakistan will together be responsible for almost 50% of the increase. Interestingly, the greatest decline in young manpower will occur in China but India is also vulnerable because most population growth will occur in the north, away from the economic centres in the south. Japan and Russia face startling declines whilst Western Europe will tread water. The exception is the US. The U.S. is almost unique amongst OECD nations in that it will experience an increase in the size of its working population between now and 2030. Key consequence? The U.S. economy is more resilient than many people imagine.
Fact #2: China has 21% of the world’s population but only 1.8% of the world’s oil
If population changes are the most certain of the five forces then the environment is, in my view, the least certain. Thanks to climate change and anxiety about resources (e.g. peak oil, but also copper, lithium etc) green and environmental issues are no longer fringe thinking. Much of the debate around the impacts of climate change is speculative, but this hasn’t prevented governments from creating radical new forms of regulation and bureaucracy. Indeed, the only thing I’d say will anything approaching confidence is that where the bar is set currently in terms of environmental regulation is not where it will remain. I’d expect the bar to be raised in the future and companies will need zero impact or offset strategies for everything from products to supply chains. Companies should also make plans for a world where a whole range of low-cost inputs start to evaporate and individuals and institutions in some parts of the world will have to get used to living with less.
Regarding oil, I think that much of the debate surrounding peak oil is misleading. The amount of oil that’s left depends on the price that people are willing to pay for it. The more expensive it gets the more there is. Moreover, the history of the energy industry is one of technological innovation. For example, the high cost of wood (used for building and heating) in Britain in the 1700s resulted in the development of deep seam coal mining. I’m sure we will invent practical and cost effective (and scaleable) alternatives to fossil fuels, but not in my view until prices (or taxes) reach a certain point. Meanwhile, expect a global scramble for fossil fuels, food, water and other commodities with China at the head of the queue.
Fact #3: There are now 4.1 billion cell-phones on the planet, 75% of which reside in developing regions
Thanks to the Internet, individuals and organizations are now much more connected. A generation or so ago half the world had never made a phone call. Now three-quarters of the planet owns a cell-phone and globally smart-phones will outsell PCs by the middle of next year. In addition to 4 billion mobiles there are also 2 billion Internet users, ½ billion Facebook accounts and a goggle- zillion texts, tweets, searches, status updates and pokes. What does this all mean?
First we are witnessing a movement of power away from companies and governments towards individuals. There is now a much greater transparency around information and it is becoming very difficult indeed to keep information – or actions – secret. The speed at which information circulates also means that response times have declined and that privacy is no longer a default setting. Forgetting, like privacy, is also becoming a rather quaint concept because digital memory is immortal. In theory this should result in more honest organizations and more open government.
A second implication is an erosion of industry barriers. For example, in media there is now less distinction between creators and consumers. Consumers are creating, filtering and distributing content and there is a symbiotic relationship developing between social and professional media. The collapse of barriers can also be seen in the growth of outsourcing and open innovation through to the impact of social media on politics (e.g. Micro-donations for the elect Obama campaign to political developments in Africa & Middle East).
A third implication is attention. The ease with which information can be created and distributed means that we are now receiving too much information and it’s becoming much harder to distinguish between what is important and what is not. Mobile devices in particular mean that we are creating too many opportunities for distraction and our subsequent lack of sustained concentration is impacting learning and decision-making. Too much choice and complexity is also leading to the demand for simplicity and edited consumption in markets as diverse as retail and consumer electronics.
Expect a rise in co-created products and services, a rise in personalization, an increase in online activism, more real-time data, a boom in location-based services and the continued growth of online, including mobile payments.
Fact #4. China consumes 40% of the world’s steel , 30% of the world’s coal, and 25% of the world’s aluminum and copper. The country also accounts for 40% of the increase in demand for oil since 2001
A fourth force shaping the foreseeable future is the shift of money, power, influence and ideas Eastwards. We all know about the economic rise of the BRICs (Brazil Russia India China), but to my mind it’s not the number of people or how much money they’ve got relative to the West that’s most interesting, but the political views of this new middle class. Most people in the West have always assumed that ‘they’ will eventually become like ‘us’–that people in developing nations will adopt broadly Western attitudes and behaviours. Recent events in North Africa and the Middle East would appear to support this view. But what if this is wrong? What if China, for example, doesn’t favour liberalisation, free speech and democracy?
Early indications are that the new middle classes in China favour protectionism alongside globalisation and support authoritarian government and restrictions on free speech just so long as the economy (and personal wealth) keeps growing. There is also the thought that perhaps things will shift in the opposite direction–that the West will move towards a Chinese-style system in which individual rights are traded for greater long-term stability or prosperity.
For me the really big question is whether or not China can shift its economy towards internal consumption and whether it can move from a ‘Made in China’ label to an ‘Invented in China’ tag in the sense of moving from low-cost manufacturing to upstream innovation. In the meantime, expect emerging markets to fuel growth in most consumer and industrial markets, expect more low-cost local competition (at least until wage inflation shifts such activity to other areas), more BRIC investment in Western markets, more BRIC mergers and acquisitions and further increases in BRIC patents and R&D expenditure. Also expect a reaction to all of the above in the form of localism.
Fact #5: In 2008, an average PC was 32,000 times more powerful and 12 times less expensive than an average PC in 1981
If you want an idea of what the world might look like in 10 or 15 years time try a simple thought experiment. Pretend that you fell asleep in the year 2000 and woke up this morning, eleven years later. What would be different? My list would include 9/11, the global recession, Iraq, Afghanistan, Libya, Egypt, Youtube, Facebook, Twitter, Web 2.0, cloud computing, iBooks and the price of oil, cooper and gold.
But that’s just the obvious stuff. Technological advances over the past couple of decades mean that we’ve developed automated spell check, speech recognition, biometric identity, home DNA testing kits, brain-to-machine computer interfaces, augmented relativity, gesture based computing and robots in early years education and aged care (in Japan–where else). In short, we are on the cusp of a new era where human and machine intelligence will combine to reshape the world.
Some examples? Holographic Telepresence, Claytronics, Sticky Air, Conversational Computing, Plant-Eating Robots, Hybrid-Electric Planes, Smart Dust, Lab-Grown Meat, Invisibility Cloaks, Space-Solar Power, Robotic Surgery, Face Recognition Doors, Precision Agriculture, Fish Ranching, Broadcast Electricity, Wireless Recharging, Exoskeletons, Personalised-Interactive Books, Smart Road-Pricing, Cars that are afraid of crashing and Clothing that calls for help if you fall over and hurt yourself … the list is endless, but there’s a pattern slowly emerging, which is that things that were once static and stupid are breaking free of physical constraints and becoming more mobile and intelligent.
Interestingly, there are currently 5 billion devices are connected to the Internet, but by 2013 this figure is expected to hit 1 trillion (6). This should create a worldwide sensor network, but it will also start to blur the distinction between what’s real and what’s virtual.
Implications? Life will continue to accelerate and we will continue to wonder why we never have enough time to do anything despite our use of time saving technologies. Critically, we will need to shift from teaching people to know things to teaching people how to invent things, solve problems and relate to other human beings. Critically, we need to end our obsession with educating only one half of the brain (the logical left side) when it is precisely this side that technology is getting so got at.
Sources: (Fact#1) New Scientist magazine, UK – (Fact#2) Eurasia Group, U.S. – (Fact#3) Economist magazine, UK – (Fact#4) The Guardian, UK – (Fact#5) A Brief History of the Future by Jacques Attali – (6) IMS Research & Cisco Systems, US.