A shifting global picture

We are currently living in an extremely dynamic economic and global environment driven by a series of mega-trends that will have a significant impact on businesses for years to come.

For young people who may be the leaders and CEOs of global companies in some 20-30 years' time, those megatrends could be at their peak and exerting considerable influence. It is crucial therefore that having a clear insight into those trends and their potential impact will put the next generation in a strong position to adapt to a changing environment.

The macro-economic, social and environmental shifts thought to sweep the globe over the next couple of decades just serves to emphasise how the ability to manage change is a key attribute for any business leader. And they play a part in what many commentators describe as the world of VUCA – volatility, uncertainty, change ambiguity.

Bill Carney, a Professor and Strategy Specialist, says that the speed of change in the current global environment and in the years ahead should not be under-estimated.

"The pace of change is just getting faster and faster so you have less time for reflection, less time to think about and plan your next move before you have to take it," he says.

So what are the megatrends that are playing a part in this fast-changing environment? They are defined in different ways but common issues appear on every list.

Changing demographics; increasing pressure on natural resources; technology and the ways it connects the world; and the shift in economic power from west to east and north to south, will all help to shape the business world in the years to come.

While the mega-trends need to be viewed in combination to really understand their potential influence, it is interesting to explore some of them individually.

From a demographic standpoint, there is a change in the age composition of our population driven by a combination of factors including the maintenance of good health well into later life and falling fertility rates, so we're not having as many young people coming into our labour markets, our societies and communities.

As Sarah Harper, Professor of Gerontology at Oxford University,​ explains, this ‘megatrend' will have an impact on companies' employment strategies.

"One of the ways in which some employers are adjusting to this is by retaining older workers," she says.

"Many individuals, because they are fitter and healthier for longer, want to stay active within the labour market. That then leads to certain questions about whether there are certain work practices that we have to adapt."

Meanwhile, the ongoing shift in the balance of economic power will mean that businesses need to continually expand their horizons as they look for the next big opportunity. By 2030, some 3.6bn people will be middle class, with most of that growth coming from so-called emerging economies. Traditional and business education could help those economies leapfrog western market in their economic power and influence.

As Adrian Wooldridge, The Economist's Managing Editor, says: "We're seeing the world shifting on its axis. The West has been in charge since the 16th century but that is no longer the case as the emerging world is coming up to challenge the West."

Climate change and the strain on resources is not a new phenomenon but its impact on businesses cannot be ignored. Water, food, arable land and energy are all set to come under increasing stress, while significant effort and investment is likely to be needed to tackle the worst effects of rising emissions in the next century.

It is a situation that increases the imperative on businesses to focus on developing sustainability and embracing low carbon technologies or processes. Those businesses that adapt their processes early on stand to benefit significantly in the long-run.

As the next generation play a greater role in the family business, establish their own enterprises, or become leaders in global company, they will be operating in the face of some of the megatrends outlined above.

It is tempting to view these megatrends purely in the light of the challenges they may present but for those businesses that show an ability to adapt and change, the opportunities in the coming decades will be significant.

Adrian Woolridge concludes: "We are living through an extraordinary and unprecedented period of disruption in which a whole series of changes are piling on top of each other and changing the way that we do business and organise the world.

"It's better to exaggerate the disruption and change taking place and be prepared, than it is to be complacent and therefore caught out by these changes."

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