Trends Behind the Who, Where, When and How of the Social, Cultural & Economic Changes We See Today
For all the talk of change, it is difficult to envision exactly what is changing and why. The problem is that change is happening rapidly at every level. At the social, the cultural, and the economic levels we’ve seen the landscape shift and take on entirely new dynamics.
While this era is full of opportunities, it is also deeply unsettling. And there is a great deal of work to be done whether you are the owner of small business or a vaunted political figure. We all need to realize that many of our assumptions about how the world works are wrong; we need to recast the transformative global forces at play; we need to identify long-standing trends that are breaking apart; we need to develop the courage and foresight to clear our minds and start anew, not relying heavily on past experience.
To start we should first look at the global economic forces that spurred the changes we see about us today. In this article I do my best to reveal those forces and how they’ve affected business practices.
The 4 Major Trends of Economic Change
There are 4 predominant trends that account for the Who, Where, When and How of the social, cultural, and economic changes we see in the world today.
Trend 1: The “Where” of Economic Change
The first trend is characterized by the migration of economic activity from developed to emerging markets. Emerging markets, such as China’s, are experiencing urban and industrial revolutions simultaneously, creating profitable entry points for multinational corporations.
As recently as 2000, 95% of the world’s largest international companies (Airbus, IBM, Nestlé, Shell, and The Coca-Cola Company, to name a few) were headquartered in developed economies. Current estimates are that by 2025, China will be home to more large companies than either the United States or Europe, and that nearly half of the world’s largest companies will be headquartered in emerging markets.
This means that by 2025 not only will corporate epicenters be located abroad, but so too will the centers of economic activity. Global urban population has been rising by an average of 65 million people annually during the past three decades. In economic terms, this means that we can expect about half of the global GDP to come from about 440 cities in emerging markets.
All of this is happening quickly, more quickly than ever before. A major factor in the rate of change is technology, and the interconnectivity of all people worldwide.
Trend 2: The “When” of Economic Change
The second trend is characterized by the speed and acceleration of technology. Technology has always been a great force in overturning the status quo. The potent difference today is the sheer pervasiveness of technology and the rate of change.
Consider that it took more than 50 years after the invention of the telephone for every American to posses one. It took the radio 38 years to attract 50 million listeners. Now consider that it took Facebook one year to attract 6 million users and that it had multiplied 100 times in just five years. The rate of adoption is unprecedented. Concurrent with the acceleration in adoption is acceleration in the rate of innovation. Companies now need to be agile to stay relevant.
A memorable example comes from Apple.
Two years after the iPhone’s launch, in 2007, developers had created around 150,000 applications. By 2014, that number had hit 1.2 million, and users had downloaded more than 75 billion total apps. That’s more than ten per person on the planet. This put more processing power at the hands of everyday users than ever before. It also allowed people to connect in more places and in more ways.
That processing power and connectivity alone brought about substantial change, but it’s only part of the story. Technology’s impact is further increased by the data revolution, which puts unprecedented amounts of information in the hands of consumers and businesses alike. Compounded onto all that is the emergence of technology-enabled business models, from online retail platforms, like Alibaba, to car-hailing apps, like Uber.
Thanks to these mutually enhancing forces, more and more people will enjoy a golden age of gadgetry, of instant communication, and of apparently boundless information.
The combined potentials of those technological forces promise economic prosperity for billions in emerging economies, and fast. Only twenty years ago, less than 3% of the world’s population had a mobile phone. Now, roughly 2/3 of the world’s population has one, and 1/3 of all humans are able to communicate on the Internet.
All of this generates a fast and competitive market environment where speed is the deciding factor between success and failure, and failure arrives far more frequently than success.
Trend 3: The “Who” of Economic Change
The third trend is characterized by a steady decline in youth and the working population on a global scale. Across the board the human population is getting older and the rate of replacement (the correlative rate at which people die and are born) is declining steadily. Although a disproportionate large elderly population has been an issue in developed nations like Japan and Russia, the demographic deficit is now present in China, and will soon reach Latin America.
This means that for the first time in human history, the human population could plateau with a large demographic of non-working and highly dependent members.
For some perspective, consider that a sustainable fertility rate is around 2.1 children per woman. For the past three decades a minor segment of the world’s population lived in countries with a fertility rate dangerously below that minimum requirement. But by 2013, about 60% of the world’s population lived in countries with fertility rates below the replacement rate.
To put that into context, the European Commission expects that by 2060, Germany’s population will shrink by 1/5, and the number of people of working age will fall from 54 million in 2010 to 36 million in 2060, a level that is forecasted to be less than France’s. China’s labor force peaked in 2012, due to income-driven demographic trends. In Thailand, the fertility rate has fallen from 5 in the 1970s to 1.4 today. Among other things these precarious changes signal a smaller workforce, which will place the onus on productivity for driving growth and may force us to rethink the economy’s potential.
Not only will our expectations of economic prosperity change, but so too will our relationships with the elderly. The care they require will put severe pressure on government finances, and as such on the national populations at large.
Trend 4: The “How” of Economic Activity
The fourth trend is characterized by the way countries are interconnected in trade and through movements in capital, people, and information (data and communication).
The globalization story has taken on new contours as a result of changes in trade structures and relations mitigated by the Internet. In the past, a series of lines connected major trading hubs in Europe and North America. Now the global trading system has expanded into a complex, intricate, sprawling web, with Asia being the world’s largest trading region.
Of particular note is the growing trade relationship between China and Africa. The volume of trade between those two emerging economies rose from $9 billion in 2000 to $211 billion in 2015. Global capital flows expanded 27 times between 1980 and 2015. More than 1.2 billion people crossed borders in 2015, over five times the number in 1980. During the global recession in 2008, those capital and people flows paused and have since recovered with increased intensity. The resultant opportunities and volatility has ushered in a new phase of globalization without developed nations at the epicenter.
In Sum
There is an urgent imperative to adjust to these new realities. Yet, for all the ingenuity, inventiveness, and imagination of the human race, we tend to be slow to adapt to change. There is a powerful human tendency to want the future to look much like the recent past. On these shoals, huge corporate vessels have repeatedly floundered. Revisiting our assumptions about the world we live in—and doing nothing—will leave many of us highly vulnerable. Gaining a clear-eyed perspective on how to negotiate the changing landscape will help us prepare to succeed.
laurent j.v dubois en Adobe
8 年somos fabricantes
Inspiring Passion & Success, CEO, 4X Start-up Founder/Leader, Board Director, Strategy, Innovation, Sustainability, Change Management, Risk Management, IoT, Author "Xponential Growth", Consulting.
8 年Great article. The huge change forces are impacting social and economic life. The basic Cultural attrubutes cannot be really impacted on short term.
Student at DeVry University
8 年What, precisely, is the criteria for being considered a "developed" nation? Gross monetary holdings? Average number of computing devices per household? It certainly has nothing to do with education or skill level of the general population, or availability of healthcare and basic human needs for residents and citizens, because the United States has fallen way behind in all of those categories despite being thoughtlessly labeled "developed"; while the propaganda still claims that the U.S. is the greatest country in the world. Stop lying to yourselves and to us. The arrogance of declaring world supremacy in ANYTHING while millions of your own people are given no other option except turning to crime, or social programs deemed by many as "handouts," just to survive, is sickening. Give up the quest for excessive individual wealth. It completely undermines the ongoing struggle for a logical and sustainable development by encouraging personal profit and selfishness at any other cost.