During the late 18th and early 19th centuries Industrial Revolution, one new dynamism has brought about dramatic change to the global economy. Today our world is experiencing an even more intense evolution due to the confluence of four fundamental disruptive forces. Compared with the Industrial Revolution, the estimation is that this transition is taking place 10 times faster and at 300 times the scale, or roughly 3,000 times the impact.
1. Urbanization Era
The first trend is the shift of the economic activity and dynamism to emerging markets like China and to cities within those markets. These emerging markets undergoing simultaneous industrial and urban revolutions, shifting the center of the world economy east and south at a speed never before witnessed. As recently as 2000, 95 percent of the Fortune Global 500—the world’s largest international companies including Airbus, IBM, Nestlé, Shell, and The Coca-Cola Company, to name a few—were based in developed economies. By 2025, when China will host more large companies than either the United States or Europe. It is estimated that nearly half of the world’s large companies—defined as those with revenue of $1 billion or more—to be in emerging markets.
2. Technological change on the move
The second disruptive force is the acceleration in the scope, scale, and economic impact of technology. Technology has always been a great force and Innovative Marketing is the proof. It took more than 50 years after the telephone was invented until half of American homes had one. It took radio 38 years to attract 50 million listeners.
But Facebook attracted 6 million users in its first year and that number multiplied 100 times over the next five years. In 2009, two years after the iPhone’s launch, 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, more than ten for every person on the planet. As fast as innovation has multiplied and spread in recent years, it is poised to change and grow at an exponential rate beyond the power of human intuition to anticipate.
3. Response to the challenges of an aging world
It is a fact that human population is getting older. Fertility is decreasing, and the world’s population is graying dramatically. While aging has been evident in developed economies for some time—Japan and Russia have seen their populations decline over the past few years—the demographic deficit is now spreading to China and soon will reach Latin America.
For the first time in human history, aging could mean that the planet’s population will plateau in most of the world. But by 2013, about 60 percent of the world’s population lived in countries with fertility rates below the replacement rate. The European Commission expects that by 2060, Germany’s population will by one-fifth, and the number of people of working age will fall from 54 million in 2010 to 36 million in 2060, a level that is forecast to be less than France’s.
4. Greater worldwide connections
The last disruptive force is the degree to which the world is much more connected through trade and through movements in capital, people, and information (data and communication)—what is known as “flows.” Trade and finance have long been part of the globalization story but, in recent decades, there’s been a significant shift. Instead of a series of lines connecting major trading hubs in Europe and North America, the global trading system has expanded into a complex, sophisticated, sprawling web.
Asia is becoming the world’s largest trading region. The volume of trade between China and Africa rose from $9 billion in 2000 to $211 billion in 2012. Global capital flows expanded 25 times between 1980 and 2007. More than one billion people crossed borders in 2009, over five times the number in 1980. These three types of connections all paused during the global recession of 2008 and have recovered only slowly since.
There is an urgent need but though 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. We have to revisit our assumptions about the world we live in. Gaining a clear-cut perspective on how to negotiate the changing landscape will surely help us prepare for success.