The Future report - 2011. A big read
The executive summary is below and the full report is here
Executive Summary
A great deal has changed in how we conduct business, where our economic activity takes place and where our markets are over the past few decades. We've seen information technology revolutionise our business and communications processes and today, the internet, social media, the cloud and an explosion of data are transforming our view of how we will do business in the next few years. Seismic shifts in our perception of continuity take place every now and again, such as the ash cloud from Eyjafjallajökull in Iceland, the Tsunami off the Japanese coast and our human failings in the field of financial services, that led to the global credit crisis and Great Recession. These reassure us that we have only feint claim to being able to control our complex physical and economic environments. The recent eruption of Grimsvoetn volcano in Iceland has done nothing to settle well founded views that there really are things we have no control over in our world. We do however, have the ability to look ahead - to examine what's coming next - and we have a duty to do this for ourselves, our family, our shareholders, employees and business partners.
Change creates opportunities for new markets, products, services and economies to emerge. In the past 100 years of recessions, depressions and panics, as they were once called, many of the largest corporations we know today, were incubated and launched. Change is uncomfortable, but good for innovation and accelerated growth. It's also dangerous for leading players in their fields, as upstart, new entrants, take market share. Key drivers of change and their potential consequences, are laid bare in this report for you to consider and respond to.
Populations
We are confronted by the evidence of our rapidly changing world every day and are contributing to its change each in our own way. In the past 50 years, we've doubled the number of people alive on our planet, reaching 7 billion people this year. In the next 40 years we are expecting over 2 billion more people to be alive than today.
Economies
At the same time, and as a direct consequence of this population growth , we are forecasting that our global economy will triple in size by 2050 and is set to have doubled to over $130 trillion in just twenty years time, in 2030 . Much of this growth is amongst the emerging economies of the world, including China, Brazil, India, Mexico and Russia. As a consequence, by 2019 the E7, emerging seven major economies, will be a larger economic bloc than the G7 countries who have, for the past 60 years, led the world economically and to a great extent, politically. By 2050 China will have the largest economy with a GDP of over $24 trillion whilst the United States' economy is expected to reach £22 trillion and India the third largest economy at $8 trillion.
Political authority
Apart from the economic influence, that will shift from the US and Europe to Asia, the political authority will shift to these fast growing emergent nations. Turkey and Indonesia are included in the E7 and have populations that are predominantly Muslim. Equally, China and India are predominantly atheist and Hindu respectively. As political and economic power shift away from the predominantly Judeo-Christian populated countries of North America and Europe towards Asia, new governance, based on different values and beliefs, will begin to impact how business and the world are run.
Middle Class
Of course, these two drivers of change, populations and economies, are having significant impact on us all. There's more economic activity in more countries than ever before, using increasingly scarce resources, creating wealth for the first time for billions of people. Over 70 million people are entering the middle class every year and most of them are from emerging economies.
Cities
As a consequence 20 of the world largest 50 cities will be in Asia by 2025, up from only 8 in 2007. In 2010 the urbanisation of the world reached 50 percent and it is expected that by 2030, 6 out of 10 people will be city dwellers, which is double the number back in 1950. By 2050 its forecast that 70 percent, of the then 9 billion people, will live in cities.
Infrastructure
All this concentration into our cities comes at a high price in terms of the infrastructure and resources that are required to sustain their populations. Over $40 trillion is required to be spent in the next 40 years to provide the infrastructure to support our choices to live in cities. We will need to develop new, innovative measures to provide food, water, waste management and all the other materials and services required by an increasingly wealthy and demanding city dwelling population.
Resources
China is expected to consume a third of all global energy used by 2035, much of which will need to be provided by renewable energy sources if we are to avoid the worst affects of global climate change. Already we've locked in a 1.4 degree temperature increase and can do nothing but mitigate its impact as the causes of that increase are already present. What we can do, and must do, is become dramatically more effective in managing how we use energy, recycle our waste and materials and how we consume. Many cities will experience a boom in cleantech services as part of the rapidly expanding response to this problem.
Food
The population of 9 billion by 2050 will eat increasingly well and consume at the base calorific rate equal to 13 billion people today. We will therefore need to consider our consumption of meat very carefully. 70 percent of the increase in our populations will be born in Muslim countries. Consequently we will have to increasingly consider how food, meat in particular and other goods and services meet emerging Halal standards. Ensuring that they will be acceptable to, what will be, a third of the population by 2050.
Technology
Technology has powered much of the convergence in the world's economies and provided the know-how and access to global markets for those that are dramatically moving from feudal and agricultural economies to the more valuable industrial, service and intellectual property economies. The internet has expanded to reach 1.7 billion people today and is expected to reach 5 billion people across the planet by 2050. The raw materials of today's technology are not inexhaustible and indium, used in liquid-crystal displays, and hafnium, a critical element for next-generation semiconductors, could be exhausted by 2017.
Technology is birthing new business models and is set to continue its disruptive and enabling role in the coming decades. When once employees had access to the best technology at work, today it's more likely that their technology at home or in their hand is superior to their employers. Increasingly, companies should look to 'outsource' personal technologies to their employees enabling them to use their own mobile technologies at work.
Control
In the same way, firms will need to start to let go of control across their networks and allow their staff access to their preferred communication tools. Most of these are hosted in the 'Cloud', over the internet. Letting go of control of what passes across a company's intranet from the outside world can lead to more satisfied, engaged and happier staff, as they stay in touch with friends and work colleagues alike, across their favourite social networks. Some studies are showing that these same staff are then proving to be more productive than those prevented from accessing them. A recent Australian study showed employees to be 9% more productive when allowed to access Facebook. Of course, securing the company's data is the objective not preventing modern day communications.
Social Media
Social media has lit-up every individual, who can now communicate across the globe in the same way as the richest corporation. Companies are increasingly becoming networks of collaborating firms and individuals operating across national boundaries. Where once vertical integration, enabled by technology, allowed us to gain economies of scale to make us competitive, today we retain, at the core, only what it necessary and outsource and partner with others to gain their capacity and capabilities for our organisations. Agility, creativity, innovation and collaboration are the watchwords for the successful company in the coming decades - which is no surprise given the amount of change we are being confronted by.
Outsourcing
As we gain in confidence in being able to effectively collaborate with outside firms and individuals, we are letting-go of functions and processes that are important to our company's success and increasingly outsourcing them to others to manage for us. Innovation and creativity are two areas where we will increasingly invite others to help us, through means such as Engineering R&D outsourcing or through crowdsourcing, where we invite many people to help us discover our next product or service offering.
Online
Mobile technology take-up has overtaken desktop technology for the first time, putting more emphasis and importance on our internet presence. This next decade will be much about making sense of the mass of information available on the internet including who to engage with. The internet is estimated to have grown by 1.2 zetabytes last year, that's 1.2 million petabytes, and if that still doesn't make sense, that's more content than existed in every book in the world just ten years ago.
Peerindex and Klout are the latest online tools that are profiling individuals and organisations and scoring their authority, reach and following. Are we seeing the emergence of online tools that seek to illuminate those that have real insight and knowledge that could be of use to us, maybe as contractors, employees, advisers or distributors? If this is a trend then our messaging, its content, frequency and audience will become increasingly important to us, individually and as companies.
Workforce
The millennial generation believes that international assignments are important to their career development - employers agree. It's predicted that there will be an increase of 50 percent in international assignments by 2020. But, as we seek to align our company's behaviours with our Corporate Social Responsibility initiatives and government climate change abatement legislation, travel may be a frequent casualty. Increasingly we will use video, avatars and immersive technology to supplement our need to travel. As the working population across the European Union is set to fall by 68 million in the next 40 years we will have to be clear about what's automated, what functions require human interaction and how we facilitate those interactions.
Work
Work itself is changing, with new jobs coming on-stream that didn't exist ten years ago, as a direct consequence of urbanisation, increasing life expectancy, new technologies, globalisation and climate change. We expect that service based job roles will increase by over 800 percent in the UK by 2017 and those in the hospitality sector by over 200 percent. To maintain our workforce we will increasingly hire women, the aged and disabled people and probably have three or even four generations of employees in our firms for the first time in any numbers. The diversity of our workforce and the roles we will ask them to perform, in massively changing circumstances, will put even greater stress on them than they experience today. The direct costs related to stress at work are now estimated to be as high as 4 percent of EU GDP.
Government
By 2020 public debt in the UK is set to reach 83 percent of GDP, 114 percent in France and 97 percent in Germany. This compares to just 55 percent in India. Governments are recognising that they can no longer afford generous pensions and the European Union Commission has said that the average retirement age across the 27 member countries needs to rise from 60 today to 70 by 2060. Governments are rapidly turning to the 'Cloud' to service the needs of their citizens and today EU citizens can access 82 percent of basic public services online.
The working population will start to shrink from 2012 and unless a dramatic change in migration policy is forthcoming, companies will have to deal with the consequences of older workers and fewer workers in the labour pool in the EU. The EU is setting policy towards car free cities in Europe by 2050. This could be a boom or bust strategy. On the one-hand it will lead to innovation and the rise of cleantech and on the other it may put off investment and inward migration of companies. We will see.
Response
There is a great deal of change around. The game at-hand is to understand what's happening and determine if it offers you an opportunity you could embrace or if it is presenting you with a threat that you need to mitigate. At all great points of change, whether it be economic, technological, global, environmental or population change; new markets, industry sectors and players emerge. This is not a time for the feint-hearted. There is very little opportunity or value in standing-still and doing nothing. It is a time to engage with the change we will be encountering and ask for yourself, your family and friends and for your organisation - how can I best embrace it.