TOP 12 MEGATRENDS TOWARD 2020
Edited Form developed by-
Klaus E. Mogensen and Troels Theill Erikesen
Copenhagen Institute for Futures Studies
Additional Editing by – Joel Johnson
One of the most important things a business owner and manager can do is to be aware of changes within the industry in which the business operates. Just as important is the awareness of national and worldwide trends that affect the economy as a whole.
A good example of not being aware and choosing to ignore a trend is the challenges now facing the newspaper and magazine media, many of whom have chosen to close their doors. No one in the print industry realized or predicted the Internet would have such a major impact. Consequently, those who have chosen to ignore the Internet and chose not to understand the information age are going by the wayside. Another example is Blockbuster Video Rentals who did not realize the impact the Internet, cable, and satellite services would have on its bottom line.
Internet sales have expanded at such a rapid pace that more and more businesses are jumping on the band wagon and new business models are created daily to serve people who find themselves squeezed for time and are finding it much easier to shop on line than spend their valuable business and family time with a salesman or in a retail store.
Small manufacturers are slower about finding ways to increase services to their customers. Many do not understand the importance of understanding the networking trend or developing interactive web sites where partnering can take place to increase inventory turn rates for themselves and their customers, thereby increasing the bottom line for both. Manufacturers who believe trends do not affect their business will be saddened to discover their competition has beaten them to the punch and they will wonder where all their customers went.
Staying on top of business and personal trends is just one more way to make you more competitive in the future. Listed below are 12 important trends to watch.
The world’s population is ageing. It is happening because we live longer, and because there will be relatively more elderly than youths in the next decades. This is especially true because the world’s women have had fewer children in the last 55 years.
The ageing megatrend applies to all regions of the world, and has great significance for society, economics, corporations and individuals. Social dynamism may be reduced because older people are often less open to change than the young.
The elderly of the future are expected to get a great deal of attention because many of them are financially well off. Today’s elderly are in better health and more affluent than the elderly of the past.
The greatest consequences of ageing will be felt on the labor market after 2010, when the number of people of working age will fall. The labor market will be a seller’s market, and youth will be in great demand.
Globalization is the fast growing global interconnectedness reflected in the expanded flows of people, capital, goods, services, information, technologies, and culture. Globalization is not a new phenomenon, but it will mean something different in the future. Entrepreneur Ehsan Bayat utilized the advantage of building his telecommunications company in a developing country and has seen immense success.
Companies and money markets are the most global things today, and we see a growing international division of labor. We increasingly experience common production and consumption values. Globalization makes us more alike across the world.
The global development leads to increased liberalization and expanded trade in most countries, and regions.
#3 Technological Development
Our use of technology is what differentiates us from other animals. We are the only creatures who construct and develop tools that make life more pleasant for us. Since the start of the industrial age, technological development has accelerated, so changes come faster and in more areas. The most important technological development areas in the next decades will be information technology, biotechnology, nanotechnology and energy.
Information technology has created enormous changes in recent decades: personal computers, the Internet, mobile telephones, industrial robots, iPods, and much more. In 2020 computers will be about 200 times faster than today’s computers, and will have memories 1,000 times as large. Computers and robots will take on increasingly complex assignments, and the Internet will be a breeding ground for completely new, virtual industries.
In recent years, we have seen great progress in biotechnology with the mapping of the human genome, cloning of mammals, and genetic modification of plants and animals. At the present time there is much controversy going on concerning the megatrend, but as research continues it is expected that many cures for major diseases will be found, expanding the expected life span even further. Research in biotechnology also opens the door to a new future in the production of the food supply and world hunger.
Nanotechnology is a general term for technology with structures on a nanometer scale (one billionth of a meter). Researchers develop nano-materials with many fantastic characteristics such as extreme strength, special electric properties and extremely low friction. Nano electronics may, in a few years, replace microelectronics. A little further into the future are nano-machines; microscopic robots that, for example, swim around in our veins removing cancer and plaque.
Prosperity is a megatrend because the majority of the population of OECD countries and large groups in formerly developing countries are now growing more prosperous. It may have taken a bad credit loan to get started, but once the company becomes prosperous, it makes it all worth while. Between 2% and 4% growth is assumed in the western world in coming years, and in some regions—especially North America, Latin America, and Asia—the growth rate will likely reach 10% – 15%. It is doubtful that Africa and the Middle East will enjoy such growth and increase in prosperity because fertility rates are expected to remain high in these regions, among other factors. Moreover, prognoses indicate the Russian middle class will grow from 50% to 85% in the next 10 years, the Chinese from 5% to 40% and the Brazilian from 25% to 50%.
The economic growth will cause a change in the demand for new types of products, with a new business structure as a result. In short, most countries are going through a structural, social and economic change in the transition from agricultural and /or industrial society to a knowledge society. When we grow richer, new needs arise and we consume more in the form of intangible products such as entertainment, experiences, services, savings and investment.
More prosperity and more consumption will change the relationship between costs, prices and profit. The relationship that formerly existed between consumer prices and production costs, based on resource contributions such as labor and capital, is no longer present. Much of the value of the tangible products and future is not in production costs but in the knowledge behind the product: product development, marketing, distribution, etc. That also means that there will be much greater pressure on companies and individuals to be change oriented, creative and innovative.
Individualization is the shift from more collectivist societal norms to more individualism. In the Middle Ages, a person was defined by his relationship to God. He was placed in a framework where God penetrated every aspect of society, thus making man’s fate preordained. The Renaissance and the advent of modern industrialization freed man in this respect. Suddenly the son of a farmer did not necessarily have to become a farmer. Man’s fate was now more a question of interest and skill rather than obligation and tradition.
Commercialization is the meeting of increasingly more human needs on the private market through trade that can be both supply and demand driven. Commercialization is closely linked to other megatrends such as globalization, prosperity, individualization and digitalization. Digitalization has made it much easier to reach consumers globally, and the Internet promotes commercialization by making it both cheaper and faster for companies to market to the global market. Globalization has great influence on commercialization because increased international trade, greater investment and more travel. Prosperity and individualization also accelerate commercialization because consumers have more money and at the same time demand individually tailored products and services.
#9 Health and Environment
In 1962, when the American marine biologist Rachel Carson published Silent Spring, she painted a picture of mankind’s lack of feeling of responsibility for the earth. Professionals ridiculed Carson’s gloomy predictions, but when, in 1972, the same professionals raised the alarm with the report Limits to Growth, few shook their heads. The oil crisis had created a new awareness of the resource problem that grew in light of the growing prosperity and a menacing population explosion. The green wave of the 1980s put focus on ecology and sustainability, and fitness centers appeared everywhere. With the political consumer’s boycott of Shell because of Brent Spar and French wine because of nuclear tests in the middle of the 1990s, consumer power was manifested. Since then, the triple bottom line has been a part of many companies’ accounts, and the development continues with renewed focus on corporate social responsibility (CSR) and the new corporate social innovation (CSI).
Today fitness has become wellness, and so has gained a more spiritual and personality-optimizing character. New spa baths, treatment resorts, and other offerings are constantly appearing on the market, and the American wellness industry expects record-breaking sales of US $73 billion in 2006.
The health and environment megatrend will have even greater significance in the coming years. There will come more age related illnesses, more lifestyle illnesses such as obesity and stress, and more mental illness. Men’s sperm quality has fallen greatly over the last 10 years, more children suffer from allergy, and smoking is banned in more and more places. There will be focus on clean drinking water—even in the countries that until now have not had problems drinking water from the tap. The World Bank calculates that the spread of avian influenza cold cost US $ 800 million a year and prompt a significant drop in GNP in the effected countries. The Asian Development Bank calculates, moreover, that a pandemic could create a period with low growth in which global trade would fall by 14%. The health megatrend is, therefore, of great significance for the world economy.
The industrial revolution was the starting signal for increased acceleration, which has only grown since then. Today, for example, there is more knowledge for the individual to consider, more to produce and consume, more to throw out, more to communicate, more to transport, and many more people to interact with. The pace of change is the number of changes in society per unit of time, and there are not absolute numbers for it. But that many people say there are more and more changes is sign enough of it.
Changes touch us on many levels, and we change job, partners, friends, interests, home, knowledge, news and ideas faster than before. Information is not just more accessible today—the entry of new products on the market goes faster and faster. A single example is that it took 13 years before 30 million video cassettes were on the market, but just eight years for the same number of CDs and only five years for 30 million DVDs. Modern people must make far more daily choices than ever before, and in our curiosity and our aspirations for development, new knowledge and improvements will be forces that will increase the pace of change in their future. So will new technologies such as nanotechnology and biotechnology.
The pace of change already makes great demands on the ability of companies and organizations to reorganize. And that is not all: if you want to protect your competitive power, it is not enough to be change ready—you must be change oriented so that you do not make do with subsequently and passively adjusting to the changes that happen in your world. According to a study by McKinsey, it is probable that a market leader will lose its position at the top in five years, twice as fast as 20 years ago. Speed and flexibility are other demands on companies and organizations n an accelerating development.
#11 Network Organizing
To enter a network is a natural part of being human. Central to all networks is communication, because communication is the reason we have a society, a culture, an identity and an economy. Network organizing is a megatrend because network has become a central term that permeates our way of thinking. Cheaper transport, better infrastructures, the Internet, mobile telephony and increasing prosperity have revolutionized the opportunities for communication and network organizing. This megatrend is, in other words, closely connected to the development in several other megatrends, not only digitalization, globalization, and individualization, but also prosperity, materialization and commercialization.
A network’s value increases exponentially with the number of members who are in it. Changes in a network society do not happen linearly as they do in an open society. That means that many changes that took decades in the past now happen significantly faster. An example, just two years after the World Wide Web was launched in 1992, 10 million users were on it, while it took the telephone four decades to attract the same number of users. Network organizing greatly affects technological, societal, and economic development, and we have probably seen only the beginning. The rapid development potential in the network society means, on one hand, that companies can expand incredibly fast, as happened with Microsoft, but, on the other hand companies in all industries can risk outcompeting each other in a very short time. This applies to Microsoft, which, even though 90% of computers use its programs, is losing share to the free operating system Linux.
Network organizing challenges our entire way of thinking and traditional institutions such as the nation-state, the church, culture and language because people enter other and new networks than before.
More than 48.3% of the world’s 6.5 billion people live in urban areas. The United Nations predicts that the share of the world population living in urban areas will rise to 53.6% in 2030, or about 3.9 billion people. While the average annual rate of change in urbanization towards 2030 is predicted to be only 9.5% in more developed regions, it is predicted to be 2.3% in less developed regions, primarily in Asia and Africa.
Large-scale migration from region to region and countryside to urban areas continues in both Asia and the Middle East. Thus, cities can also be seen as places of opportunity in which the major need is effective management and provision of services, creation of economic opportunity, and the provision of safe and healthy environments.