Disruptive Forces:Part 1

This is the first of seven chapters in our ‘Disruptive Forces’ series that will examine disruption and the primary drivers of a disruptive future. We will also consider the wider implications for society and organisations.

Introduction We are living in a period of dynamic and unprecedented change. Such is the speed of change that what we see as marvels today, are fast becoming the new normal. From AI, augmented reality, driverless cars to drone swarms, the changes unfolding before us are breath-taking, and the speed of change is only accelerating.

Truly sustainable organisations will not be able to hide behind the whirlwind of today’s challenges and short-term financial objectives, and ignore the impact the future will undoubtedly have. Nor, will it be possible to think of that future in continuous improvement terms. Not to consider, plan and deliver on a disruptive future means organisations run a high risk of being disrupted a lot quicker than they ever thought possible. Usually by ‘upstarts’; This new breed of competitor may have significantly less resources and may not necessarily be any more efficient or aware of the trends impacting the future than anyone else. However, they did have the foresight to seize the day, challenge the status-quo and start out on the journey to deliver on that disruptive future; and they did all of that yesterday.

Although ‘hindsight is a wonderful thing’, we can see into the future, in the trends and patterns of yesterday and the ‘here and now’. Some are as ‘clear as day’, others more subtle. As a firm we track 83 primary forces, across 6 broad categories, demographics, the environment, technology, social, economic and political, and we are constantly scanning for emerging drivers through traditional means as well as our own proprietary algorithms. These primary forces can act independently, or converge, and sometimes collide at different rates, intensities and importance, depending on the contextual complexity and adjacencies in which an organisation operates. Organisations need to understand the behaviour of these forces, synthesising them into a well-developed judgement on the presented facts. Then develop a plausible ‘future world’, view. Organisations can then prioritise the challenges that need to be overcome as well as mapping the inputs and architecture required to compete for a share of this future opportunity.

The goal is to bring about revolution in an evolutionary way – by planning and executing on this disruptive view through the 3 phases of growth; the ‘here and now’, the new ‘mid-term’ and the truly disruptive emerging phase.

Disruptive Forces Taking the first 5 of our primary forces we examine the issue and consider some of the implications.

1 – The global population is ageing. The UN1 says that by 2050 1 in 6 people (16% of the global population) will be aged over 65 (1.5bn people), up from 1 in 11 today. Looking at this more regionally, by 2050, 1 in 4 persons living in Europe and Northern America could be aged 65 or over. This change will have profound implications on politics, society, the world of work, education and the economy etc., and whilst at first thinking it may seem like an existential threat, especially given that today:

There are 4 people of working age, globally, for every person over 65. By 2050 this will be just 2 or even below, and
health and social care systems are seemingly unable to cope today, let alone tomorrow. It’s also an opportunity because whilst ageing is inevitable (for now), how we age is not. To put this in perspective the European silver economy, ignoring public spending and social care, will grow to €5.1tn by 20252, which if it were a sovereign nation would be the 3rd largest economy in the world. Taking on the challenges of this demographic and the latent opportunity it presents is going to require seismic shifts in policy, attitudes and innovation, with the re-framing of older people as an important, and useful, asset requiring lifelong investment. Continuous learning and re-skilling, flexible working practices and working for an ethical purpose are all going to be key in employers being able to attract older people back into work. Financial institutions will have to get used to supporting silver entrepreneurs as well as social enterprise. Little known is that that the over-50s, according to the FT, account for 43 per cent of those who start their own businesses, that 23% of new entrepreneurs in the USA were aged between 55 and 643 and 20% & 15% of all scientific and academic output respectively, derives from people aged 70-79.4

People will want to live independent, healthier, fulfilling and more active lives, as well as aiming to live longer in their own homes. This provides businesses and the public sector with a great opportunity to innovate and provide products and services that support and tap into this golden age; education, transport, housing, AI, robotics, wearables, food and retail, fitness, support services, healthcare, cognitive and social wellbeing, communications and media – the list is endless.

2 – Water scarcity is on the rise. “Over 780 million people in 43 countries are facing water scarcity due to lack of availability, uneven distribution and access, and contamination”5 in 2015 the World Economic Forum said that the water crisis was the number 1 threat globally. It’s not only the developing world that is being impacted, compared to 2013, acreage in California declined by 11% in 20146. Australia has also seen the brunt of heavy droughts which have culminated in the recent unprecedented bush fires and Cape Town in South Africa is about to become the first major city to run out of water.

With the dwindling acreage for food production, water is becoming a tradeable economy with far reaching and profound implications. Socially, it will drive: inequality, the rise of the ‘haves and have nots’, mass migration, social activism and unrest to name but a few. Public policy, even in developed countries will need to focus on improving infrastructure, sanitation, reducing water usage and conservation of this vital resource. Whilst there is a tendency to focus on the negatives, scarcity is also driving disruptive change and innovation. From design, manufacturing, consumer goods, farming to urban planning, be it the use of AI for irrigation and watering, recycling and nutrient enrichment in hydroponics, ‘sponge cities’ and stem cell developments to name but a few (see the link below for the work that Microsoft in conjunction with Stanford University is undertaking). Innovation competitions are challenging teams to come up with radical solutions such as the water XPRIZE which looked at how to harvest water from thin air.

Machine learning and remote sensing data has been combined to detect smaller dams and reservoirs.

3 – Rapid urbanisation By 2050 66% of the world’s population will be living in cities, in 2014 this was 54%7 generating 85% of global GDP8. Meaning that 1.5 million people are added every week, larger numbers than the city of Birmingham, UK. According to McKinsey9, by 2025, urbanisation will welcome an additional 1.8 billion consumers to the world economy, 95% of them in emerging markets. This will place huge demands on infrastructure, services, job creation, climate, food production and the environment. This disruptive change also provides a catalyst for significant opportunities for legacy cities to re-invent themselves. Combining this with technologies such as 3-D printing, AI, augmented reality. these cloud-based systems decentralise innovation and allows people to join the global economy from anywhere in the world. True globalisation on an individual level. Urbanisation will also drive innovation in smart eco-cities, mass transit, automated vehicles, local ecosystems, vertical farming, inter-generational services and support, the sharing economy and urban mining. Technology will disrupt legacy services interlinking them with the individual citizen in countless different ways.

The delivery of this level of disruption is going to require significant investment and it is estimated that $8trillion will be required for infrastructure in Beijing, Shanghai, New York and London over the coming 10 years10. Furthermore, cities consume 75% of their natural resources and account for 80% of global greenhouse gas emissions. It goes without saying that the ‘climate emergency’ with its challenges and associated opportunities must be overcome.

4 – Connected internet devices are increasing exponentially. By 2030 it is estimated that there will be 125bn connected internet devices up from 17bn in 2017. Today more than half of us are connected to the internet, or the ‘internet of all things (IOT)’ as it is being dubbed and we are adding 127 devices every second according to the McKinsey Global Institute. As we sit preparing this briefing for you, we have no fewer than 6 devices connected to the internet! The sheer scale of growth in users and devices is astounding and it is estimated that over 5.5m things are being added daily and the number of people joining the internet in 2019 was approaching 210m11. Advancements in computing power, connectivity and immersive computing will combine to deliver richer experiences and interlinkages in data, information, goods and services. National boundaries, typical societal norms (communication and relationships), and corporate models will blur and provide both a challenge and opportunity for governments and society. Disruption will be around every corner, from revolutionising the supply chain and logistics, healthcare diagnosis, monitoring and provision to individual customisation of your media, retail, services and product purchasing; the mass market of one. Amongst many opportunities will be wearables as well as in-location and body monitoring technologies with a multitude of applications. Alongside these, however, come a series of challenges relating to privacy, data ownership and security to name but a few.

5 – Developing economies. By 2050 6 out of 7 of the largest economies will be from the developing world: this will be a major shift in the world order, where the E7 will have a greater influence and purchasing power than the G7. This inexorable shift is occurring at a rapid rate. In just 15 years, 2015-203012, it is estimated that the emerging economies as a proportion of total world economies will have grown from c.33% to 57%. This growth is lifting millions out of poverty and giving rise to a new and larger middle class with significant disposable income. By 2030, two thirds of the global middle class will reside in the Asia Pacific region. That said, paradoxically, it will also accentuate the inequalities between the ‘haves and have nots’ , potentially leading to a higher degree of uncertainty and risk. Something that policymakers will need to consider as these economies develop. Developing nations will be home to 440 of the world’s fastest growing cities, generating 47% of the global GDP growth through to 202513. This primary force and the intersections and collisions with other drivers will have far reaching impacts from:

Investments in smart and eco-cities which will be a catalyst for significant disruption in the systems, infrastructure, products and services that feed them Increasingly volatile commodity prices as well as security risk Accelerating M&A of old-world businesses by BRIC companies
Re-positioning of financial institutions
Growth of the globally connected remote employment market and rise of the individual knowledge worker Global collaboration and knowledge brokers Potential negatives will be the rise of nationalism and trade or currency protectionism Summary Given the ever-increasing velocity of disruptive change and innovation, this decade will be an era of great uncertainty. For organisations, competing for a share of the future opportunity and to sustain their relevance and build value it will require a well-developed and grounded story of the future. A future that considers all the primary forces of disruption and their intersecting behaviours and collisions.

This foresight is essential for building the strategic map, core competencies, architecture and execution plans to move through the 3 phases growth in an evolutionary way.

As this series develops, we will demonstrate the importance of a strong intelligence platform that synthesises the patterns and trends in today’s complex and interrelated world as well as the subtle emerging signals over the horizon. Organising them into a set of primary forces that illuminate the path to a successful disruptive future.

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World Population Prospects: 2019 Revision The Silver Economy EU report W.H.O.: World Report on Ageing & Health Philips Ageing Well Zenia Tata United States Department of Agriculture (USDA) United Nations Population division Sydney Business School 2017 PWC analysis Statista.com OECD. 2010. “Perspectives on Global Development 2010: Shifting Wealth” European Union Institute for Security Studies