Nobody knows what the future will look like. It is all too easy to focus on one single trend, development or incident, then extrapolate and jump to the wrong conclusion. But there comes a time when people have a feeling that change is in the air. We live in such a time. Something is in the air. But it is difficult to get a grip on exactly what is changing, how and why, and what the future will look like as a result.
Answers lie in the science of foresight analysis (sometimes called future research). Foresight analysis is a robust, cross-disciplinary, scientific research that focuses primarily on social science. After extensive research, the most fruitful way to analyze the changes occurring would be to identify the current mega-trends in global society.
It is important to understand that a mega-trend is a long-term, transformational process with global reach, broad scope, and a fundamental and dramatic impact. More specifically, there are three dimensions that define a mega-trend:
• Time: Observable over decades, mega-trends can be projected with a high degree of probability at least 15 years into the future.
• Reach: Mega-trends affect all regions and stakeholders, including governments, individuals and businesses.
• Impact: Mega-trends fundamentally transform policies, society and the economy.
Using these dimensions, six mega-trends are identified:
- Globalization 2.0,
- Environmental Crisis,
- Individualization and Value Pluralism,
- The Digital Era,
- Demographic Change and
- Technological Convergence.
Five Essential Points of Globalization 2.0:
1. Globalization 2.0 is fundamentally different from version 1.0. The East will progress from just being the workplace of theWest; Western companies will still operate in the East, but under different circumstances. Goods, people and capital will flow in multiple directions, not just from West to East, but also very much from East to West.
2. Traditional trade patterns will be disrupted. As economic power shifts eastward, trade between emerging markets will flourish. The East will rely less and less on the West for goods and services. Organizations will need to think differently about marketing.
3. Beware of “glocalization.” New middle classes will emerge in more and more countries, each with its own set of consumer demands, thereby “glocalizing” the market. A single, centralized strategy and operating model will no longer be adequate for multinational organizations.
4. The burden of complexity will intensify. Globalization 2.0 will demand a complexity of thinking that few organizations or leaders have encountered –– significantly intensifying the cognitive and, in particular, the conceptual and strategic demands on already overstretched leaders.
5. Contextual awareness will be critical. Organizations will need to be more adaptable and encourage diversity of thought in order to enhance their contextual awareness and ensure that communications is truly two-way.
The Environmental Crisis
Five Essential Points of Environmental Crisis:
1. Climate change is real and almost irreversible. Global warming as a result of economic activity has caused extreme weather events around the world, leading to death, displacement and considerable economic damage. The earth’s temperature is approaching catastrophic levels.
2. Critical resources are being depleted. Peak oil supply from conventional sources was reached in 2006. Yet global energy consumption is rising as millions of consumers worldwide join the ranks of the middle class. Water shortages are becoming increasingly drastic. Rare earth minerals –– essential to modern technology –– are becoming scarcer, more expensive, and more difficult to reach.
3. The implications are potentially catastrophic.This creates a recipe for, at best, drastically reduced margins for organizations, and, at worst, deep global recession, famine and widespread social turmoil.
4. Carbon footprint moves from corporate social responsibility to the bottom line. Carbon reduction will become essential to market competitiveness. Organizations will need to embed environmental awareness into their processes and decision making in order to create a culture and operations that minimize environmental impact.
5. Transformational thinking and operations will be necessary. Leaders will need to think transformationally to achieve this, communicate a clear rationale for such radical change, and ensure that they execute the vision. New kinds of collaboration, including joint ventures with competitors, will be required to find innovative solutions.
The environmental crisis is perhaps the most profound of the six mega-trends. It calls into question the very fundamentals on which economic prosperity and development are based. And at its heart are grave implications for global society and prosperity and, therefore, for businesses and their leaders.
The environmental crisis facing the earth comprises a complex web of factors. Two of these are the changing climate due to global warming and a growing scarcity of natural resources (principally oil, water and rare earth minerals).
Individualization and Value Pluralism
Five Essential Points of Individualization and Value Pluralism:
1. Mounting affluence will drive growing individualism in emerging societies. Greater income levels will give people easier access to cultural influences, which will expose them to a wider range of life and career options.
2. People’s values will increasingly pluralize. Higher incomes will also grant individuals the freedom to follow their unique priorities and tastes when choosing between these new options.
3. Niche opportunities will emerge in local markets. Societies will individualize at different paces. Agile businesses will be able to identify and capitalize on local market opportunities created by individualization.
4. Organizations’ internal and external environments will fracture. As the expectations of individuals are transformed by increased wealth, companies will need to consider every employee and every customer as an individual. Failure to do so will mean loss of talent and business.
5. Greater flexibility and sensitivity will be essential. With loyalty at a premium, organizations must get closer to their markets and workforces than ever before. More flexible, less centralized and flatter structures will be needed to understand and respond to customers’ and employees’ needs.
As societies industrialize and their citizens become wealthier, everyday life becomes increasingly governed by more individualized choices and decisions. With more money in their pockets, people find that they can leave behind the economic strictures of the past. Prosperity frees a society from scarcity of the basic requirement of human existence, such as food and shelter. As a result, people’s priorities move up through Maslow’s hierarchy of needs as they look to improve other aspects of their lives. People are driven by more profound values, like humanism, religious faith, social justice and protection of the environment.And they are at liberty to indulge in more emotionally fulfilling activities, seeking intellectual challenge and pursuing their aesthetic preferences. As a society’s wealth grows, so does its citizens’ access to education and a diverse range of media. Exposure to this cultural capital opens their eyes to new lifestyle options.
The Digital Era
Five Essential Points of the Digital Era:
1. The digitalization of our lifestyles is becoming the norm. With ubiquitous Internet connectivity, the proliferation of mobile devices, and the popularity of social networking, we are now “always on,” at home and at work. This is eroding traditional boundaries between our personal, private and professional lives.
2. Digital natives have increasing influence. The inexorable progress of digital technology is creating a divide between younger, tech-savvy “digital natives” and older generations. Younger people have a technological edge over their more senior colleagues, yet in many cases lack the attitudes and social skills expected in the corporate world and tend to challenge authority. Organizations must find ways to accommodate and cross-skill both groups.
3. Virtualization is disrupting power relationships between companies, customers and employees.The digital era has given rise to new virtual business models and platforms, enabling consumers to pick and choose more easily and trade among themselves instead of with commercial providers. This gives customers unprecedented levels of choice. In addition, reputations are at risk as disgruntled employees can publicly hold employers to account online.
4. The workplace is fragmenting.When employees are always on, the concepts of work and the workplace become fluid. Often employees can perform tasks anywhere, anytime, challenging the need for a central, bricks-and- mortar location and traditional organizational hierarchies. This will appeal in particular to digital natives, who readily embrace virtual working methods and tools and have little respect for orthodox structure and hierarchy.
5. Leadership will need to “go remote” and prioritize loyalty and reputation management. Leaders need to get a grip on managing diverse, loose-knit teams whose members are dispersed around the world and have varying degrees of digital competence. In order to create loyalty, leaders must foster a sense of unity, engagement and collaboration among people who rarely meet, and ensure that there is effective decision making among these groups. Openness, integrity and reputation management will be key in a transparent, virtual world.
Digitization is a booming worldwide phenomenon. It is not only changing the way we communicate; it is also transforming the way we work and the nature of our professional and personal relationships. It is opening up new divides, blurring long-established boundaries, and turning traditional hierarchies upside down.
This state of technological affairs is producing a new breed of digital citizens. Younger generations have never known life without the Internet and mobile technology. Living life in such a public and always-on manner breaks down the barriers that traditionally divided people’s personal, social and professional lives.
The digital era is also disrupting conventional power relationships between companies and their customers, fragmenting traditional market structures and value chains, and creating a constantly shifting kaleidoscope of opportunities and threats.
In an inescapably digital environment, younger employees gain a clear competitive edge in the workplace, contrary to traditional organizational hierarchies. Younger, tech-savvy individuals find themselves with more influence and able to have more impact than 50-something managers, who may lack technological skills and essential knowledge of the sphere in which so much business is done.
Five Essential Points of Demographic Change:
1. The world’s population is expanding and aging in parallel. The global populace is expanding, particularly in developing and emerging markets, and rapidly maturing, especially in the industrialized world. Both trends are forecast to continue and even intensify well into this century. International migration is also on the rise and will be magnified by an array of “push” and “pull” factors in the coming decades.
2. Demographic change is placing great pressure on social structures and (especially Western) companies. National welfare systems are being stretched to the breaking point by growing populations as well as by faltering support ratios (numbers of working-age adults to dependent citizens) as a result of aging. In addition, many Western societies (and also China) are maturing beyond the point at which they will begin to perform less effectively in socioeconomic terms.
3. The war for talent will intensify. An aging global population will mean a shrinking global workforce, stepping up the competition for specialized skills, high performers and effective leaders. Corporations and even nations will find themselves in a global war for key talent.
4. Workforces will diversify as companies adapt. Successful organizations will need to develop an increasingly diverse workforce to ensure an adequate talent pipeline. This will mean recruiting men and women of all ages and from a variety of cultural backgrounds, relying on migration where necessary. Working practices, employment conditions and HR procedures will evolve to reflect the varying needs of different ages, ethnicities and genders.
5. Managing diversity will be a core leadership competency. Leaders will need to display exceptional sensitivity to their employees’ needs and abilities to earn the loyalty and maximize the performance of diverse teams. This will demand a thorough knowledge and depth of understanding of their teams.
Demographic change is primarily a combination of three concurrent phenomena: population growth, aging societies and increasing migration. As these trends alter the dynamics of the world’s populace, they will wreak havoc on organizations’ product and employment markets.
Organizations will have to work harder to attract, integrate and develop an adequate pool of potential star performers, which will include international migrants, older workers, a higher proportion of women, and em- ployees with eldercare as well as childcare responsibilities. This will mean nding new approaches to recruiting and identifying talent.
Five Essential Points of Technological Convergence:
1. Technological progress is likely to transform many aspects of our lives. Advanced scientific disciplines –– nanotechnology, biotechnology, IT, cognitive science and robotics –– will drive major innovations in important areas such as healthcare, logistics and nutrition.
2. Convergence will drive the greatest innovations. The coming together of these scientific fields will make possible the greatest leaps forward, transforming some industries, threatening others, and creating a myriad of new product markets.
3. R&D will take center stage. Research and development will become an interdisciplinary function, requiring an even higher skill base. Making sure that R&D has the right mix of skills will be a key leadership responsibility.
4. Convergence will necessitate new levels and forms of collaboration. Diverse scientific disciplines, businesses, academia and even competing companies will need to work together on pioneering research programs. Meanwhile, companies will need to do away with conventional organizational boundaries to enable unprecedented levels of collaboration and knowledge sharing.
5. Societies will debate the ethical boundaries of technological advancement. Societies will need to question the rights and wrongs of some areas of innovation –– for example, the potential to slow aging and enhance human cognition –– and set a framework for acceptable progress. Businesses will need to respect this debate.
Nobody knows what the future will look like. What we can be certain about is that people will grasp the opportunity to enhance their knowledge and capability. Also certain is, as technological convergence progresses, it has the potential to create new industries, transform sectors, and threaten the very existence of some business models.