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Market Context
Megatrends
Market Context

Ascent Look Out begins our horizon scanning process with an in-depth analysis of the megatrends that will advance the opportunities and threats in each of your markets. This section describes each of these socio-cultural, economic and political waves, commenting on its trajectory and how it might impact the transformation challenges you’re facing.

Technologies in the Digital Journey
Technology | x | y | x (phone) | y (phone) | Impact | Range | Section | Keys | Description
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Contemplating the Singularity | 14 | 22 | 35 | 30 | Primary impact domain for trend | Emerging | Socio-Cultural | business,trust | Concept With the pace of technological innovation accelerating, especially Artificial Intelligence, many expect that we will one day reach the Technological Singularity – the point where machines would be more intelligent than humans. Furthermore, machines would be capable of recursive self-improvement, self- evolving their intelligence in an exponential fashion – unlike humans, bounded by slow biological evolution. This concept is often associated with ‘transhumanism’ (or ‘posthumanism’), a loose set of theories that foresee technology as a means to profoundly enhance human intellectual, physical and psychological capacities well beyond their natural condition, ultimately leading to augmented or even ‘post humans’. Trajectory Linked to the ideas of science and progress that have emerged since the 19th century, human augmentation and transformation through technology is a long-term dream of futurists who have nurtured 20th century myths, notably through science fiction and prospective thinking. While very prospective and promoted by a small number of futurist thinkers, these ideas began to get concrete traction in the 1990s. At that time pioneering thinkers, such as Ray Kurzweil (now CTO of Google), predicted that the technological singularity would be reached around 2045. These ideas have spread in recent years, with concrete advances in nanotechnologies, cognitive computing, gene therapy, robotics and life science for military (augmented soldier), healthcare (prolonged life and cure of genetic diseases) and business applications. Beyond 2020, exascale, and later quantum technologies, should begin to surpass the power of a human brain, opening up potentially revolutionary applications. Pioneering companies, including Google and multiple start-ups, have already begun to heavily invest in disruptive technologies with the long term goal of ‘solving death’ – though this ambition far exceeds current scientific capabilities. Meanwhile, a growing number of scientists and industry leaders – most notably Bill Gates, Stephen Hawking and Tesla Motor’s CEO and co-founder of PayPal Elon Musk – are raising concerns around the technical singularity. Concerned about machines being able to think for themselves and potentially becoming more powerful than humans, they are amongst the thousands of people who have signed an open letter proposing proper safeguards be put in place to research and develop such intelligence without humans losing control. Impact Singularity and Transhumanism are at this point purely prospective thinking, even if the technology community is supporting active research on disruptive artificial intelligence and life sciences by some corporations and think tanks such as the Singularity University. If real progresses are to be made, this may lead to extreme opportunities. Research may also lead to the new social, medical and security risks highlighted by decades of apocalyptic Sci-Fi culture. Many tech leaders express concerns about the rapid rise of the artificial intelligence that may solve all our problems or, equally, threaten us within the coming decades. Corporations should follow these research trends since they may profoundly transform our world in the coming decades. They must also show caution around the business, legal, social and ethical implications and risks.
Demographic Evolutions | 29 | 10 | 70 | 13 | Primary impact domain for trend | Emerging | Socio-Cultural | business,trust | Concept The world is in the midst of four key demographic trends: a rapidly growing population; an aging population in the West and increasingly in developing countries; a shrinking number of young societies and states; and growing urbanization. Trajectory The world’s population continues to grow rapidly: the UN anticipates a global population of 8.5 billion by 2030 and 9.7 billion by 2050, up from 7.3 billion as of mid-2015. Overall, the UN expects Africa’s population to be the fastest-growing, up from 1.2 billion in 2015 to 1.7 billion in 2030 and 2.5 billion in 2050. But it sees European populations declining from 738 million in 2015 to 734 million in 2030 and 707 million in 2050. According to NIC, 95 percent of recent increases have been in developing countries, nearly all in rapidly expanding urban areas. The UN anticipates the proportion of people living in cities will grow, from 54 percent today to around 66 percent in 2050, with the number of megacities growing in parallel. Ultimately, growth may slow down even in emerging countries, leading to stabilization and then, potentially, a ‘demographic winter’ with the global population plateauing somewhere above 10 billion people, but this is still subject to estimation. Sustainability at this level of population remains a concern for some prospectivists. In 2015, the number of people aged 60 and over was 901 million – around 12 percent of the world’s population. This number is expected to grow to 1.4 billion by 2030 and 2.1 billion by 2050. Currently, Europe has the greatest percentage of its population aged 60 or over (24 percent) but all major areas of the world, except Africa, are projected to have nearly a quarter or more of their populations aged 60 or over by 2050. In 2015, the median age of the world’s population was just under 30, but the UN projects this to increase to around 36 by 2050 and 42 by 2100. Median age is lowest in regions with low fertility: it was 42 in Europe in 2015, where it’s expect to reach 46 in 2050 and 47 in 2100. In less developed region, median age was 20 in 2015 and projected to reach 26 by 2050 and 36 years by 2100. Impact Services must be aligned with aging populations in developed countries. Meanwhile, new business models will be crucial to driving inclusive growth initiatives in emergent economies such as in Africa, the Middle-East and India where the population explosion may create social unrest if resources and employment don’t catch up. Social welfare and health systems, on the other hand, are becoming increasingly strained as the relative size of the working populationuces. Today’s third digital revolution, with its rise of automation and robotics, will help ensure services in diverse domains such as smart healthcare and smart cities remain sustainable as the population transforms.
Generation Z | 20 | 15 | 50 | 20 | Primary impact domain for trend | Emerging | Socio-Cultural | experience,trust | Concept Generation Z, generally acknowledged to be those born after 1995, will come of age in the 2020s. Also called ‘echo boomers’, as they echo the silent generation who were born just before the Second World War, Generation Z was raised during the recent economic downturn.Emotive, yet lucid, and in search of stability alongside flexibility, they were brought into a fast-changing, uncertain and economically depressed world. As teenagers, they saw their parents worry about keeping their jobs, making ends meet and keeping a roof over their heads. Their focus is inherently global, with mass media bringing growing global issues (including unemployment, climate change, terrorism and humanitarian) to their regular attention.Full digital natives, they have been surrounded by social media, mobile applications, personalized online services and cloud computing since childhood. To them, virtual reality, nanocomputing, 3D printing, driverless cars and other innovations are simply the next step forward. Trajectory According to various models, generations evolved through the recent modern history in four-phase cycles. The first phase of the current cycle is characterized by the baby boomer generation (1945-1960) ‘prophets’ who were moved by freedom and individualism, initiating the protest movements of the 1960s. These are followed by the pragmatic, adventurous and sometimes cynical Generation X (1961-1981) ‘nomads’, characterized by the financiarization of the 1980s, which saw financial institutions and markets increase in size and influence. And then the more disengaged Generation Y (born 1982-1995) ‘heroes’ who were raised during the early phase of the digital revolution and the beginning of the economic crises in the Western world. Over-protected as children, Generation Z ‘artists’ tend to be risk-averse. They distinguish themselves from the preceding Generation Y by their increased desire for security and stability in a fast-changing world where social and professional positions are progressively less stable. As such, they tend to be conformists, since conformism provides a more secure path to success. However, their search for security is combined with a strong need for personal fulfilment and independence. In an economy marked by the rise of freelancers, it’s not surprising that they value their careers, seeking security, contentment and passion. They might have multiple employments, sometimes in multiple countries, to ensure they won’t find themselves in a risky position in an economic bust. When it comes to digital, it’s not just Generation Z whose lives are influenced by today’s increasingly connected and monitored world. With emerging technologies allowing us to permanently quantify our individual performance – our health, our fitness, our finances and more – a clearer picture of our digital selves is emerging, based on our consumption of digital services. Impact Each generation tends to mark its epoch in opposition to the previous one, as consumers, entrepreneurs and employees. As consumers, Generation Z are marked by a ‘what I want, when I want’ culture, in an epoch focusing on access rather than property, services rather than products and where alternatives are just a swipe away. Meanwhile, employers looking to retain Generation Z talents should offer this lucid generation, whose blind fidelity is not a given, flexibility and fulfillment. Meeting high expectations and understanding how to leverage empathy to build trust will be key. As consumers, they’re less susceptible to manipulation. Organizations that fall below their standards will simply find their potential Generation Z customers look elsewhere.
Growing Global Middle Class | 23 | 5 | 60 | 11 | Primary impact domain for trend | Emerging | Socio-Cultural and Economic | business,excellence | Concept The World Bank hopes to see an “end to poverty” by around 2030. This shift encompasses two strong trends: a significant rise in the middle class in emerging markets accompanied by a significant drop in poverty, which has fallen to around 10 percent of the world population. The Organization for Economic Co-operation and Development (OECD) defines middle class as those making between $10 and $100 a day, adjusted for the purchasing power of each currency, while the World Bank defines the threshold under which an individual is considered to be living in poverty as $1.90 or less a day, taking into account country-level data on living standards.Counteracting this is the corresponding relative loss of purchasing power of the middle class in Western countries, as a consequence of global rebalancing. This is leading to social unrest in the West, made worse by the widening gap between rich and poor.This widening gap has been confirmed by Credit Suisse Global, estimating that half of global wealth – amounting to $250.1 trillion – is now held by just one percent of the population. Despite only accounting for less than one percent of the population, millionaires own around 45 percent of global wealth. The geographical imbalance is particularly evident in North America and Europe, which together contain 18 percent of the global adult population, but account for 67 percent of total household wealth. At the other end of the scale, in Africa and India the population share exceeds the wealth share by a factor of more than ten. Trajectory OECD estimates that the world’s middle class will swell from two billion to almost five billion by 2030, with growth coming from developing countries while the middle class is squeezed in developed countries. With increased wealth comes increased spending power. Today, people in developing countries make up a greater percent of the world’s consumer spending than ever before, with that trend set to continue to rise. Spending by middle-class Asian consumers, for example, could rise nine percent a year through 2030, according to the Asian Development Bank. Conversely, the spending power of the shrinking and struggling Western middle classes has plateaued, expected to only rise slightly over the next couple of decades. This is due to a complexity of factors, including aging populations and an increase in single-parent households alongside automation, offshoring, and competition from workers of low-cost countries. Credit Suisse Global expects wealth growth to pick up by the end of the decade, reaching $345 trillion by mid-2020, 38 percent higher than in 2015. It projects the number of millionaires to grow to 49.3 million adults. In 2020, emerging markets will likely account for 9.1 percent of millionaire wealth, one percent above current levels. Impact Reduction of extreme poverty opens new opportunities for low-cost products and services in emerging economies. Targeting new mass markets (such as the unbanked) could prove very profitable. The billions of newly affluent middle-class households, with their increased spending power, are also reshaping global markets, offering renewed opportunity for growth in Asia, Middle-East Africa and Latin America. Enhanced efficiency and improved productivity will be critical to offering the products and services they require at a relevant price. However, the shrinking Western middle class means the share of adults living in both upper- and lower-income households is rising in developed countries. This requires suppliers to change their classical product segmentation to focus on upper and low-cost segments, at the expense of mid-range solutions – a phenomenon known as the ‘consumer hourglass economy’. This also opens opportunities for reinventing business with new models, such as ‘as a service’ or the ‘sharing economy’, targeting this changing balance of wealth.
Power of Communities | 47 | 5 | 47 | 15 | Secondary impact domain for trend | Maturing | Socio-Cultural and Political | trust | Concept Increased personal and social mobility decreases the likelihood of multiple generations of the same family living in the same geographical area. It also leads to a rise in single person households, with young professionals, in particular, more likely to move around and live alone, away from their traditional (family) and geographical networks.As a consequence of this, and possibly as a backlash against the trend towards individualization, new ways of community building are emerging. Much of this activity occurs on the internet. This digital connectivity is leading to a rise in ‘communalism’ (where people seems themselves as part of their ethnic, religious or cultural group rather than the wider community) and social activism driven by the power of communities. Trajectory In the industrialized nations, the apparent loss of physical communities is seen as a key cause of social disintegration and of the emergence of antisocial behavior. In our virtual worlds, communities are growing. Worldwide, there are over 1.49 billion monthly active Facebook users. Focus is shifting away from the individual toward the community and common welfare. People are making use of their collective intelligence, building networks and organizing their community activities by themselves. There’s increased awareness around and participation in charities and non-governmental organizations (NGOs) thanks to social networks. Co-operation is also an important behavior trend for the more digitally-connected generations Y and Z, as are connections and relationships (community), social or personal justice and authenticity. These groups tend to be more socially aware than their predecessors. Impact Public and private sector organizations must put the power of communities at the heart of their digital strategies to build trust with the people they serve. It could be through the facilitation of peer-to-peer and social exchanges through or around their services or products. It could also be through open innovation serving as a platform to let communities form and grow, ultimately extending solutions and services thanks to social and third party dynamics. Either way, they must not only listen, but also react, leveraging the voice of the community to steer them in the right direction.
Migration | 69 | 3 | 27 | 17 | Secondary impact domain for trend | Burning | Socio-Cultural and Political | excellence,trust | Concept Economic and demographic inequalities between low- and high-income countries have driven migration patterns around the globe for many years. People from Asia, Africa and Latin America have been moving to Europe, Northern America and Oceania for almost half a century, fleeing conflict or seeking better education and opportunities.Growth prospects in the US and in Europe, where workforce levels are declining, will depend on these immigration flows, but immigration may also lead to multi-cultural tensions. Trajectory According to the UN, between 1950 and 2015, the major areas of Europe, Northern America and Oceania have been overall net receivers of international migrants, while Africa, Asia and Latin and the Caribbean have been net senders. From 2000 to 2015, high-income countries received an average of 4.1 million net migrants annually from lower- and middle-income countries. But migration is accelerating, particularly towards Europe with conflicts in the Middle East and very strong growth in Africa driving people out of their homelands. Furthermore, some prospects foresee unpredictable spikes in migration driven by climate change-related events. The UN expects high-income countries to receive 91 million immigrants between 2020 and 2050, while total births in these countries may exceed deaths by 20 million. Thus, net migration may account for 82 per cent of population growth in the high- income countries. As aging high-income countries struggle with fewer people of working age, the vacuum may be filled by immigrants from low-income countries. These opportunities are balanced by risks that call for accelerated inclusive growth and education initiatives. Impact Transnational migration flows shape societies’ character. Households in the West are increasingly multi-ethnic. However, co-existence of ethnically different populations might lead to nationalistic and ‘communalistic’ (where people see themselves as part of their ethnic, cultural or religious group rather than part of the wider community) tendencies. Countries must decide how they should react to increasing migration. Tighter regulation and border controls may be needed. With large migrations comes the need for strong social and education initiatives. Technology can also pay a key part. Efficient and effective processes are vital for eliminating uncertainty and ensuring new arrivals are quickly settled into their new home.
Neo-Luddites | 14 | 6 | 20 | 9 | Primary impact domain for trend | Emerging | Socio-Cultural | business,trust | Concept The rise of technology creates expectations and fears. In the 19th century, a social movement of British artisans, the Luddites, violently opposed technological advances in the textile industry. Considering their skills as property to be protected, they argued that machines undermined the labor skills that were a crucial part of the economy.Similar new technophobic groups are emerging today. These ‘neo-luddites’ believe modern large corporations with their modern technologies threaten their way of life and their livelihoods. As such, they have developed radical resistance to technology.Their ‘neo-luddism’ is mostly founded on loose, radical anti-system movements. It covers a wide variety of beliefs: from groups preaching economic decrease and return to the soil to technophobic groups (including anti-nuclear, anti-GM and anti- nanotechnologies). Trajectory Neo-luddites are currently a very small minority. However, the coming hyper- connected world that may lead to threats on privacy and the rise of automation and robotics that may pose a significant threat to employment may drive an increase in their numbers. Some estimate that as many as 60 percent of current jobs may be automated by 2022, with extreme scenarios pointing to a risk of 90 percent unemployment by 2030. In the previous industrial revolutions, Schumpeter’s ‘gale of creative destruction’ has always succeeded in replacing extinguished jobs with new ones. The 19th century Luddite artisan movement, for instance, progressively vanished with the rise of the new industrial economy and its employment opportunities. However, the speed and scale of the current transition is complicated to project. Nevertheless, it creates the risk of revolt again the high rises in unemployment and radical inequalities of wealth that are usual in massive destructive creation eras such as the one we are experiencing today with the third digital revolution. Impact The economic impact of today’s third digital revolution creates both opportunities and social risks that must be carefully managed at international, state and even corporation social responsibility level. Governments and corporations alike should concentrate on inclusive growth initiatives to increase jobs and social care, helping build the trust amongst the general population that is crucial to mitigating any risk. At the same time, they must protect the privacy of individual’s data while increasing transparency and inclusivity, for instance. Technology, on the other hand, provides many opportunities to not only promote an inclusive society, but also enable sustainable growth that is good for the environment. Some technologies ensure physically disadvantages individuals have access to information and services, for instance; others optimize our use of natural resources.
Uberization and the Sharing Economy | 73 | 3 | 39 | 24 | Secondary impact domain for trend | Burning | Economic and Socio-Cultural | experience,business,trust | Concept Amongst the many new business models created by the digital revolution, the sharing economy has become the symbol of disruption. It’s sometimes evoked through the name of one of its major players, Uber, to signify the rise in adoption of the business model embraced by that company – hence uberization.Also referred to as the ‘collaborative’, ‘peer- to-peer’ or ‘access’ economy, the sharing economy model sees privately owned or managed goods or services shared or rented out via peer-to-peer marketplaces. It enables anyone to easily become their own entrepreneur, monetizing their assets and their labor. Trajectory In just five years, Uber has grown from a small start-up to a company large enough to threaten the whole taxi and transport industry in more than 300 large cities across the globe. Over that period, its valuation has also grown – to an astounding value of $50 billion. The economic downturn led to customers seeking the best price while becoming eager to leverage their own goods and services for additional revenue. Well beyond Uber, this kind of model is also being developed across diverse sectors, by for-profit, non-profit, barter and co- operative structures, where corporations, governments and individuals all actively participate as buyers, sellers, lenders or borrowers. Examples can be found in hospitality (AirBnB), finance (KickStarter), logistics (Cargomatic) and many other markets. The sharing economy model has been criticized for its disruptive social effect on whole industries and for the high share (20 to 30 percent commission) that marketplaces take from the revenue. While the sharing economy tends to attract not only amateurs but also professional operators, it’s also reputed to create a unpredictable, unsecure and very competitive way of living, leaving many sellers making less than the minimum wage. Impact The sharing economy model has been praised for its capacity to create a good user experience anduce costs though digital disintermediation, with its dynamic supply and pricing lowering the high fixed and marginal cost of traditional businesses. Uber, in particular, is a wake-up call to all industries on the importance of customer centricity and platform model thinking in their digital transformation strategy. Being ‘uberized’ is now among the core risks perceived by many organizations with the rise of digital. Nevertheless, the sharing economy is just one of the numerous business models enabled by digital. While it has impressed minds by its capacity to completely transform and reinvent whole ecosystems of buyers and sellers – and by the social, economic and regulatory implications of these changes – corporates would be wise to also evaluate other novel possibilities. However, the system’s future cannot be anticipated until it’s structured and governed. In the meantime, companies should identify the relevant aspects of their corporate strategy – especially risk hedging.
Growing Global Middle Class | 32 | 42 | 55 | 42 | Secondary impact domain for trend | Emerging | Socio-Cultural and Economic | business,excellence | Concept The World Bank hopes to see an “end to poverty” by around 2030. This shift encompasses two strong trends: a significant in the middle class in emerging markets accompanied by a significant drop in poverty, which has fallen to around 10 percent of the world population. The Organization for Economic Co-operation and Development (OECD) defines middle class as those making between $10 and $100 a day, adjusted for the purchasing power of each currency, while the World Bank defines the threshold under which an individual is considered to be living in poverty as $1.90 or less a day, taking into account country-level data on living standards.Counteracting this is the corresponding relative loss of purchasing power of the middle class in Western countries, as a consequence of global rebalancing. This is leading to social unrest in the West, made worse by the widening gap between rich and poor.This widening gap has been confirmed by Credit Suisse Global, estimating that half of global wealth – amounting to $250.1 trillion – is now held by just one percent of the population. Despite only accounting for less than one percent of the population, millionaires own around 45 percent of global wealth. The geographical imbalance is particularly evident in North America and Europe, which together contain 18 percent of the global adult population, but account for 67 percent of total household wealth. At the other end of the scale, in Africa and India the population share exceeds the wealth share by a factor of more than ten. Trajectory OECD estimates that the world’s middle class will swell from two billion to almost five billion by 2030, with growth coming from developing countries while the middle class is squeezed in developed countries. With increased wealth comes increased spending power. Today, people in developing countries make up a greater percent of the world’s consumer spending than ever before, with that trend set to continue to rise. Spending by middle-class Asian consumers, for example, could rise nine percent a year through 2030, according to the Asian Development Bank. Conversely, the spending power of the shrinking and struggling Western middle classes has plateaued, expected to only rise slightly over the next couple of decades. This is due to a complexity of factors, including aging populations and an increase in single-parent households alongside automation, offshoring, and competition from workers of low-cost countries. Credit Suisse Global expects wealth growth to pick up by the end of the decade, reaching $345 trillion by mid-2020, 38 percent higher than in 2015. It projects the number of millionaires to grow to 49.3 million adults. In 2020, emerging markets will likely account for 9.1 percent of millionaire wealth, one percent above current levels. Impact Reduction of extreme poverty opens new opportunities for low-cost products and services in emerging economies. Targeting new mass markets (such as the unbanked) could prove very profitable. The billions of newly affluent middle-class households, with their increased spending power, are also reshaping global markets, offering renewed opportunity for growth in Asia, Middle-East Africa and Latin America. Enhanced efficiency and improved productivity will be critical to offering the products and services they require at a relevant price. However, the shrinking Western middle class means the share of adults living in both upper- and lower-income households is rising in developed countries. This requires suppliers to change their classical product segmentation to focus on upper and low-cost segments, at the expense of mid-range solutions – a phenomenon known as the ‘consumer hourglass economy’. This also opens opportunities for reinventing business with new models, such as ‘as a service’ or the ‘sharing economy’, targeting this changing balance of wealth.
Liquid Corporations | 42 | 44 | 70 | 35 | Primary impact domain for trend | Emerging | Economic | excellence,trust | Concept Liquid corporations take the concept of ‘boundaryless’ organizations popularized in the 1990s to a new level. In a volatile world were billions of connected customers, things, partner, competitors and regulation bodies evolve in real time, massive use of outsourcing, crowdsourcing and open innovation strategies enable organizations to dynamically adapt to new market realities. Trajectory The increased pace of innovation and chaotic markets changes are putting immense pressure on corporation strategies: 45 percent of Fortune 1000 companies were replaced between 1983 and 1993, rising to 70 percent between 2003 and 2013. While creative destruction is accelerating, monolithic organizations inherited from the past are increasingly evolving toward complex, open ecosystems. Enabled by digital, they take best practices from start-ups, the technology giants and open communities. Focused on customer requirements, procurement, operations and delivery are dynamically executed across an open network of suppliers and partners, blurring traditional silos between providers, operations and customers. The rise of fabless corporations, outsourcing, BPO, the gig economy and crowdsourcing is a clear sign of this happening. Some estimate that, by 2020, 40 percent of US employees may be freelancers, for instance. Impact Ultimately, a liquid organization is not a stable, fixed structure; it federates an ecosystem that can adapt to market changes in near real time. Organizations should take advantage of these trends toward a networked economy to gain agility and flexibility. A dynamic ecosystem of providers spawned across suppliers and continents may function at the expense of accountability. This increases the risk of compliance issues, business failures and loss of customer trust as such, organizations wanting to implement ‘liquid corporation principles’ will need to set up strong governance processes.
Secular Stagnation (vs Creative Destruction) | 52 | 34 | 52 | 40 | Primary impact domain for trend | Maturing | Economic | business,trust | Concept Global economic activity remained subdued in 2015, according to the International Monetary Fund (IMF). Growth in emerging markets and developing economies declined for the fifth consecutive year, while a modest recovery continued in advanced economies. While some believe this stagnation is simply a conjectural hangover effect of the 2001 and 2008 crises, others warn economies risk becoming trapped in an extended and structural period of slow growth in productivity, income and job creation.Prospects of accelerated innovation, however, may sustain the alternative scenario of a new era of growth, similar to that which followed the invention of steam and electricity. The rise of the Internet of Things (IoT) and Industry 4.0, along with nanotechnologies, biotechnologies and cognitive sciences, may bring the boost economies need to avoid the pessimistic scenario. Trajectory The economic stagnation of the past decades is attributed by economists to various factors. They notably include demographics (aging population in developed countries) and macro-economic issues (including an excess of savings over investment, debt overhang and supply-side headwinds). A slowdown in technology innovation is also mentioned among the key factors, with recent years’ immaterial innovation creating less nominal growth and productivity improvement than in previous decades. However, based on long-term economic cycles, economists inspired by Kondratiev and Schumpeter theories also recognize recent deflation, bankruptcies, banking crisis, credit crisis and more as the ‘winter’ season of the 1945-2025 economic cycle powered by the first generations of information technologies. Ongoing innovations created by the third digital revolution, combining digital with nanotechnologies, biotechnologies and cognitive sciences, may provide a significant contribution to solving this issue, possibly leading to a new growth era culminating around 2030. In the short term, the next wave of IT/OT convergence, along with Industry 4.0, smart cities and other technology-enabled transformations, could rapidly bring a whole new boost to productivity and the economy. Together they could help answer two major opportunities on the horizon: the silver economy in the West and the growing demand for low-cost solutions and services from emerging countries’ popular and middle classes. Impact Whatever the causes, low growth prospects will create concerns in the short term. More than ever, corporations must prepare for a sluggish and competitive world. Leveraging innovation driven by new digital opportunities is not only a matter of competitive survival; it’s critical for any company wanting to position itself at the core of future growth opportunities. With digital automation and robotics decoupling productivity growth with jobs and income, the possible social impact of automation must, however, be carefully watched for by policy makers and corporations alike. After all, the success of an economy depends as much on demand as it does on supply. Building social trust through inclusive growth and work reinvention, in a digital world where 40 percent of jobs could be automated by 2020 and where humans will have to work side by side with robots, will be one of the major challenges for the years to come.
Resource Security (Energy, Water, Food) | 60 | 30 | 60 | 35 | Primary impact domain for trend | Maturing | Political and Economic | business,excellence | Concept The world’s resources are under ever- increasing strain owing to an increase in the global population and the consumption patterns of an expanding middle class. This strain is only being exacerbated by climate change and environmental changes due to that population growth, urbanization and human related activities. Trajectory The US National Intelligence Center (NIC) projects that demand for food, water and energy will grow by approximately 35, 40, and 50 percent respectively by 2030. The energy sector, in particular, is shifting to a low-carbon path that supports economic growth and energy access. In line with the Paris Agreement drafted at the 2015 United Nations Climate Change Conference, COP 21, the International Energy Agency has underlined a number of measures that could lead to a peak in global energy- related greenhouse gas emissions while supporting economic growth and providing energy to more people. These measures include: increasing energy efficiency in the industry, buildings and transport sectors; progressivelyucing the use of the least-efficient coal-fired power plants and banning their construction; increasing investment in renewable energy technologies in the power sector from $270 billion in 2014 to $400 billion in 2030; gradual phasing out of fossil-fuel subsidies to end-users by 2030;ucing methane emissions in oil and gas production. Impact Proactive efforts will be required by policymakers in combination with private sector partners to avoid a future dominated by natural resource scarcity. Strong technology innovation will also play a vital role in optimizing resources in the next15 to 20 years. This will not only include genetically modified crops, precision agriculture, water irrigation techniques, solar energy, advanced bio-based fuels and enhanced oil and natural gas extraction via fracturing; but also the smart technologies that will help optimize resource (oil, gas and water) usage through simulation and analytics. Furthermore, simulation and analytics will also be core to improving resource(oil and gas) exploration and developing the next generation of sustainable technologies that include genetic engineering, nanotechnologies, nuclear fusion and others. In addition, new services will not only give the consumer a better understanding of how they’re using resources, but companies can also leverage them to encourage good consumer behaviors aimed atucing the strain on those resources.
Global Market Volatility | 78 | 16 | 45 | 45 | Primary impact domain for trend | Burning | Economic | business,excellence | Concept Market volatility refers to the swings from boom to bust. Globalization, securitization (the process of transforming illiquid assets into a security), private and public debt along with the rise of supporting digital technologies have all contributed significantly to the fast financial growth of these last decades. This, in turn, contributed to economic growth, but also increased market volatility risks.Over recent years we have seen massive swings in the stock markets, going up and down in magnitudes that seemed hardly thinkable before. These risks has been increased by the rise of High-Frequency Trading, massive quantitative easing policies from central banks and the rise of shadow banking equivalent to global gross domestic product (GDP). Trajectory Investment banks, mortgage companies, hedge funds and other non-bank financial intermediaries saw their finance activities that were not subject to regulation – “shadow banking” – grow dramatically post 2000, playing a significant role in the 2008 financial crisis. Despite regulations being enforced across the banking sector post crisis, shadow banking is estimated by the Financial Stability Board (a regulatory task force of top 20 economies) to have continued to grow from $25 trillion in 2008 to $75 trillion in 2013. This equates to 25 percent of worldwide financial assets, half of the traditional banking system and is equivalent to the global gross domestic product (GDP), raising concerns about possible systemic effects of a next crisis. Volatility has also increased with the rise of High-Frequency Trading (HFT), which developed after the US Securities and Exchanged Commission authorized electronic exchanges in 1998. Automated, algorithm-driven and enabled by technology, HFT is executed in milli, or even micro, seconds. Consultancy Tabb Group estimated HFT to make up 56 percent of equity trades by value in the US and 38 percent in Europe in 2010. At that time, potential volatility due to HFT orders had already been experienced on several occasions with some equities losing most of their value in a few minutes as a side effect of the concurrent algorithmic chain reaction. Even if it was corrected afterwards by human operators, this showed its potential to create or increase market panic. Today, HFT is estimated to account for 75 percent of all equity order volumes in the US, 40 percent in Europe and 10 percent in Asia, with potential for rapid growth. Together globalization and financiarization – where financial institutions and markets increase in size and influence – mean we now live in an uncertain world where volatility risks are high. The US National Intelligence Council (NIC) believes the international economy will continue to be characterized by various regional and national economies moving at significantly different speeds, exacerbating global imbalances and straining governments and the international system. The key question in their mind is whether the divergences and increased volatility will result in a global breakdown and collapse or whether the development of multiple growth centers will lead to resiliency. Impact Geopolitical tensions, potential social crises in high-demographic emerging countries, private or sovereign debt crises, along with the impact of disruptive technology advances, could lead to new financial black swans. Governments and corporations alike must therefore leverage prospects for growth, but be prepared for an uncertain and volatile world. They will need to be more flexible and forward-looking, reinventing their business models, building ones that are better able to resist that volatility. At the same time real-time stock market analysis will help them become more agile in today’s fast-moving world. Enabled by advanced analytics and high performance computing, this analysis will help them identify and react to stock market fluctuations more swiftly.
Uberization and the Sharing Economy | 82 | 11 | 57 | 40 | Primary impact domain for trend | Burning | Economic and Socio-Cultural | experience,business,trust | Concept Amongst the many new business models created by the digital revolution, the sharing economy has become the symbol of disruption. It’s sometimes evoked through the name of one of its major players, Uber, to signify the rise in adoption of the business model embraced by that company – hence uberization.Also referred to as the ‘collaborative’, ‘peer- to-peer’ or ‘access’ economy, the sharing economy model sees privately owned or managed goods or services shared or rented out via peer-to-peer marketplaces. It enables anyone to easily become their own entrepreneur, monetizing their assets and their labor. Trajectory In just five years, Uber has grown from a small start-up to a company large enough to threaten the whole taxi and transport industry in more than 300 large cities across the globe. Over that period, its valuation has also grown – to an astounding value of $50 billion. The economic downturn led to customers seeking the best price while becoming eager to leverage their own goods and services for additional revenue. Well beyond Uber, this kind of model is also being developed across diverse sectors, by for-profit, non-profit, barter and co- operative structures, where corporations, governments and individuals all actively participate as buyers, sellers, lenders or borrowers. Examples can be found in hospitality (AirBnB), finance (KickStarter), logistics (Cargomatic) and many other markets. The sharing economy model has been criticized for its disruptive social effect on whole industries and for the high share (20 to 30 percent commission) that marketplaces take from the revenue. While the sharing economy tends to attract not only amateurs but also professional operators, it’s also reputed to create a unpredictable, unsecure and very competitive way of living, leaving many sellers making less than the minimum wage. Impact The sharing economy model has been praised for its capacity to create a good user experience anduce costs though digital disintermediation, with its dynamic supply and pricing lowering the high fixed and marginal cost of traditional businesses. Uber, in particular, is a wake-up call to all industries on the importance of customer centricity and platform model thinking in their digital transformation strategy. Being ‘uberized’ is now among the core risks perceived by many organizations with the rise of digital. Nevertheless, the sharing economy is just one of the numerous business models enabled by digital. While it has impressed minds by its capacity to completely transform and reinvent whole ecosystems of buyers and sellers – and by the social, economic and regulatory implications of these changes – corporates would be wise to also evaluate other novel possibilities. However, the system’s future cannot be anticipated until it’s structured and governed. In the meantime, companies should identify the relevant aspects of their corporate strategy – especially risk hedging.
Addressing Global Climate Change | 87 | 7 | 69 | 26 | Secondary impact domain for trend | Burning | Political and Economic | excellence,trust | Concept Evidence from the US space agency, NASA, shows a current warming trend across our planet: sea levels are rising, surface temperatures continue to increase despite solar output decline, oceans are warming, ice sheets are shrinking, glaciers are retreating, extreme weather events are becoming more common. In fact, all 10 of our planet’s warmest years occurred within the past 12 years. According to NASA, most of the current warming trend is very likely human-induced and proceeding at a rate that is unprecedented in the past 1,300 years. Trajectory Adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005, the Kyoto Protocol is an international treaty that commits its 192 state parties touce the greenhouse gases emissions that are believed to be the root of the human-induced climate change. In December 2012 the 18th United Nations (UN) climate summit reached an agreement to extend the Kyoto Protocol, which was due to expire at the end of 2012, to 2020 with a stated goal of keeping climate change below two degrees Celsius. The 2015 United Nations Climate Change Conference, COP21, negotiated the Paris Agreement, a global agreement on theuction of climate change. Key elements included: endeavoring to limit global temperatures to one and a half degrees Celsius above pre-industrial times; reaching zero net greenhouse gases emissions between 2050 and 2100; and revisiting global goals every five years beginning 2023. Recent legislation from the European Commission (EC) has reasserted environmental issues on the economic agenda. Its 20-20-20 targets include a 20 percentuction in European Union (EU) greenhouse gas emissions; 20 percent of EU energy consumption from renewables; and a 20 percent improvement in the EU’s energy efficiency by 2020. Its 2030 climate and energy framework, meanwhile, targets 40 percent, 27 percent and 27 percent improvements by 2030. The 2050 targets are currently being looked into. Meanwhile, the US National Intelligence Center (NIC) has highlighted that climate change will worsen the availability of some critical natural resources. As the severity of existing weather patterns intensifies, wet areas will only get wetter and arid areas will become drier. Precipitation will decline in the Middle East and Northern Africa as well as Western Central Asia, Southern Europe, Southern Africa and the US Southwest. Arctic resources may become more accessible. Impact Climate change and public perception of the causes have raised corporate responsibility and ethical operations on the agenda of corporate decision-makers, both public and private. This should accelerate sustainability and energy transition initiatives. Digital initiatives such as smart cities, smart grids and electric cars will play a major role in bringing innovative solutions and processes. Faced, nevertheless, with the potential for more extreme weather phenomena across the globe as a result of climate change, protecting assets from floods, hurricanes, blizzards and other disasters becomes even more critical. Major investment funds, such as BlackRock, consider climate change risk to be an investment issue. Companies will need to ensure they have disaster recovery plans in place that both ensure data can be quickly and easily recovered in the event of a disaster, and ensure members of sta can continue to operate from alternative locations.
Resource Security (Energy, Water, Food) | 81 | 38 | 85 | 38 | Secondary impact domain for trend | Maturing | Political and Economic | business,excellence | Concept The world’s resources are under ever- increasing strain owing to an increase in the global population and the consumption patterns of an expanding middle class. This strain is only being exacerbated by climate change and environmental changes due to that population growth, urbanization and human related activities. Trajectory The US National Intelligence Center (NIC) projects that demand for food, water and energy will grow by approximately 35, 40, and 50 percent respectively by 2030. The energy sector, in particular, is shifting to a low-carbon path that supports economic growth and energy access. In line with the Paris Agreement drafted at the 2015 United Nations Climate Change Conference, COP 21, the International Energy Agency has underlined a number of measures that could lead to a peak in global energy- related greenhouse gas emissions while supporting economic growth and providing energy to more people. These measures include: increasing energy efficiency in the industry, buildings and transport sectors; progressivelyucing the use of the least-efficient coal-fired power plants and banning their construction; increasing investment in renewable energy technologies in the power sector from $270 billion in 2014 to $400 billion in 2030; gradual phasing out of fossil-fuel subsidies to end-users by 2030;ucing methane emissions in oil and gas production. Impact Proactive efforts will be required by policymakers in combination with private sector partners to avoid a future dominated by natural resource scarcity. Strong technology innovation will also play a vital role in optimizing resources in the next15 to 20 years. This will not only include genetically modified crops, precision agriculture, water irrigation techniques, solar energy, advanced bio-based fuels and enhanced oil and natural gas extraction via fracturing; but also the smart technologies that will help optimize resource (oil, gas and water) usage through simulation and analytics. Furthermore, simulation and analytics will also be core to improving resource(oil and gas) exploration and developing the next generation of sustainable technologies that include genetic engineering, nanotechnologies, nuclear fusion and others. In addition, new services will not only give the consumer a better understanding of how they’re using resources, but companies can also leverage them to encourage good consumer behaviors aimed atucing the strain on those resources.
Return of the Blocs | 65 | 61 | 85 | 30 | Primary impact domain for trend | Emerging | Political | trust | Concept Throughout history, wars and economic depressions (or recessions) have led to increases in protectionism, while peace and prosperity have tended to encourage free trade. Current economic geopolitical tensions may mark a return of trade blocs: trade alliances across countries that have common ambitions. Furthermore, the current currency war taking place amongst the central banks is significantly increasing risks for cross-border trade and investment. Trajectory The passage of GATT (General Agreement on Tariffs and Trade), from the post Second World War era until the early 1990s, saw many protectionist trade barriers fall. The fall of the Soviet Union in the early 1990s led to hope for the return of free trade. In 1995, such trade protection was formalized with the creation of the World Trade Organization (WTO). Since then, numerous free exchanges zones have been created or are being negotiated. Examples include the North American Free Trade Agreement (NAFTA), a trilateral rules-based trade bloc in North America involving Canada, the United States and Mexico; the Trans-Pacific Partnership (TPP) that makes it easier for American companies to sell Made-In-America products across 11 other countries; and the Transatlantic Free Trade Area (TAFTA) proposal for creating a transatlantic free trade area covering Europe and North America. The return of conflicts and geopolitical tensions with Russia, China, Latin America and Islamic countries over recent years has seen numerous import and export restrictions put in place. These restrictions work by means of tariffs, subsidies, import quotas or handicaps placed on imports. They can also include tariffs being imposed on products not produced in a sustainable fashion, or as stimulus packages for the development of clean technologies. Impact The return to the blocs may touch IT in particular since IT is seen as an increasingly strategic sector, touching all verticals. In this domain, there’s a rising will from several large countries and unions (including China, Europe and Brazil) to develop their own industries, especially in high- performance computing, cloud, software and security. The PRISM case has notably driven many countries to grow regulations to protect technologies and data better through local trusted suppliers and local data management.
Power of Communities | 75 | 47 | 80 | 47 | Primary impact domain for trend | Maturing | Socio-Cultural and Political | trust | Concept Increased personal and social mobility decreases the likelihood of multiple generations of the same family living in the same geographical area. It also leads to a rise in single person households, with young professionals, in particular, more likely to move around and live alone, away from their traditional (family) and geographical networks.As a consequence of this, and possibly as a backlash against the trend towards individualization, new ways of community building are emerging. Much of this activity occurs on the internet. This digital connectivity is leading to a rise in ‘communalism’ (where people seems themselves as part of their ethnic, religious or cultural group rather than the wider community) and social activism driven by the power of communities. Trajectory In the industrialized nations, the apparent loss of physical communities is seen as a key cause of social disintegration and of the emergence of antisocial behavior. In our virtual worlds, communities are growing. Worldwide, there are over 1.49 billion monthly active Facebook users. Focus is shifting away from the individual toward the community and common welfare. People are making use of their collective intelligence, building networks and organizing their community activities by themselves. There’s increased awareness around and participation in charities and non-governmental organizations (NGOs) thanks to social networks. Co-operation is also an important behavior trend for the more digitally-connected generations Y and Z, as are connections and relationships (community), social or personal justice and authenticity. These groups tend to be more socially aware than their predecessors. Impact Public and private sector organizations must put the power of communities at the heart of their digital strategies to build trust with the people they serve. It could be through the facilitation of peer-to-peer and social exchanges through or around their services or products. It could also be through open innovation serving as a platform to let communities form and grow, ultimately extending solutions and services thanks to social and third party dynamics. Either way, they must not only listen, but also react, leveraging the voice of the community to steer them in the right direction.
Migration | 86 | 27 | 77 | 70 | Primary impact domain for trend | Burning | Socio-Cultural and Political | excellence,trust | Concept Economic and demographic inequalities between low- and high-income countries have driven migration patterns around the globe for many years. People from Asia, Africa and Latin America have been moving to Europe, Northern America and Oceania for almost half a century, fleeing conflict or seeking better education and opportunities.Growth prospects in the US and in Europe, where workforce levels are declining, will depend on these immigration flows, but immigration may also lead to multi-cultural tensions. Trajectory According to the UN, between 1950 and 2015, the major areas of Europe, Northern America and Oceania have been overall net receivers of international migrants, while Africa, Asia and Latin and the Caribbean have been net senders. From 2000 to 2015, high-income countries received an average of 4.1 million net migrants annually from lower- and middle-income countries. But migration is accelerating, particularly towards Europe with conflicts in the Middle East and very strong growth in Africa driving people out of their homelands. Furthermore, some prospects foresee unpredictable spikes in migration driven by climate change-related events. The UN expects high-income countries to receive 91 million immigrants between 2020 and 2050, while total births in these countries may exceed deaths by 20 million. Thus, net migration may account for 82 per cent of population growth in the high- income countries. As aging high-income countries struggle with fewer people of working age, the vacuum may be filled by immigrants from low-income countries. These opportunities are balanced by risks that call for accelerated inclusive growth and education initiatives. Impact Transnational migration flows shape societies’ character. Households in the West are increasingly multi-ethnic. However, co-existence of ethnically different populations might lead to nationalistic and ‘communalistic’ (where people see themselves as part of their ethnic, cultural or religious group rather than part of the wider community) tendencies. Countries must decide how they should react to increasing migration. Tighter regulation and border controls may be needed. With large migrations comes the need for strong social and education initiatives. Technology can also pay a key part. Efficient and effective processes are vital for eliminating uncertainty and ensuring new arrivals are quickly settled into their new home.
Addressing Global Climate Change | 93 | 14 | 86 | 33 | Primary impact domain for trend | Burning | Political and Economic | excellence,trust | Concept Evidence from the US space agency, NASA, shows a current warming trend across our planet: sea levels are rising, surface temperatures continue to increase despite solar output decline, oceans are warming, ice sheets are shrinking, glaciers are retreating and extreme weather events are becoming more common. In fact, all 10 of our planet’s warmest years occurred within the past 12 years. According to NASA, most of the current warming trend is very likely human-induced and proceeding at a rate that is unprecedented in the past 1,300 years. Trajectory Adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005, the Kyoto Protocol is an international treaty that commits its 192 state parties touce the greenhouse gases emissions that are believed to be the root of the human-induced climate change. In December 2012 the 18th United Nations (UN) climate summit reached an agreement to extend the Kyoto Protocol, which was due to expire at the end of 2012, to 2020 with a stated goal of keeping climate change below two degrees Celsius. The 2015 United Nations Climate Change Conference, COP21, negotiated the Paris Agreement, a global agreement on theuction of climate change. Key elements included: endeavoring to limit global temperatures to one and a half degrees Celsius above pre-industrial times; reaching zero net greenhouse gases emissions between 2050 and 2100; and revisiting global goals every five years beginning 2023. Recent legislation from the European Commission (EC) has reasserted environmental issues on the economic agenda. Its 20-20-20 targets include a 20 percentuction in European Union (EU) greenhouse gas emissions; 20 percent of EU energy consumption from renewables; and a 20 percent improvement in the EU’s energy efficiency by 2020. Its 2030 climate and energy framework, meanwhile, targets 40 percent, 27 percent and 27 percent improvements by 2030. The 2050 targets are currently being looked into. Meanwhile, the US National Intelligence Center (NIC) has highlighted that climate change will worsen the availability of some critical natural resources. As the severity of existing weather patterns intensifies, wet areas will only get wetter and arid areas will become drier. Precipitation will decline in the Middle East and Northern Africa as well as Western Central Asia, Southern Europe, Southern Africa and the US Southwest. Arctic resources may become more accessible. Impact Climate change and public perception of the causes have raised corporate responsibility and ethical operations on the agenda of corporate decision-makers, both public and private. This should accelerate sustainability and energy transition initiatives. Digital initiatives such as smart cities, smart grids and electric cars will play a major role in bringing innovative solutions and processes. Faced, nevertheless, with the potential for more extreme weather phenomena across the globe as a result of climate change, protecting assets from floods, hurricanes, blizzards and other disasters becomes even more critical. Major investment funds, such as BlackRock, consider climate change risk to be an investment issue. Companies will need to ensure they have disaster recovery plans in place that both ensure data can be quickly and easily recovered in the event of a disaster, and ensure members of staff can continue to operate from alternative locations.

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