wild and unpredictable, diverse and discontinuous. Business cannot extrapolate the success of today, and hope to win tomorrow. Even if you did, you would be swamped by a world of imitating competition all seeking to play the same game.
Just like the world changes at an incredible pace, in fantastic and unexpected ways, so too must businesses learn to change – to play the new game, or better still to play their own game. To shape markets in their own vision, to create business models that suit them, to engage and enable customers to achieve more. This is what it means to change the game.
The turmoil of financial markets, collapsing banks and defaulting nations, are the dying cries of a changing world; a reordering of markets and power that we are slowly recognizing. Amidst the shake-up there are new winners and losers. In 2014, China's real GDP grew by 7.1 % compared to 0.9 % in Europe. Markets from Colombia to Indonesia are thriving.
As Samsung launches its smart watch, Beijing is recognized as the world's leading city for renewable energies, Shenzen becomes the new Wall Street, the best web designers are in Hyderabad and fashion designers in Buenos Aires, we realize that the best ideas in business are shifting rapidly too. No longer are these fast growth markets the source of low-cost supplies and low-budget consumers. They have youth and education, investment and disposable income – and most of all ambition – on their side too.
Every market is driven by change, fundamental power shifts and global trends, heightened expectations of customers and new sources of competition. The shifts in power are economic and political, but also demographic and cultural. In a connected world, trends and expectations cross boundaries instantly. Even the most local or traditional markets are not immune. African children want the latest computer game just as much as those in California, Arabic consumers want global fashions and ready meals, whilst local market stalls in Europe focus on fresh, organic and exotic produce.
Technologies fuel and embrace this change. Computing power continues to grow exponentially, an iPhone smarter than a Space Shuttle, mobile devices supported by Cloud storage transform where and how we do business, whilst the most significant technical breakthroughs are in genetics, robotics and nanotech.
The current decade will be unique in its tectonic shifts. As the global population accelerates to 7.7 billion before slowing, power will shift, the G7 will be replaced by the E7 (that's the BRIC nations, plus Indonesia, Mexico and Turkey). Even more dramatic is the growth in global wealth, a combined GDP almost doubling from $53 to to $90 trillion. But the shift is not linear, not an extension of today, but a fundamental reordering – think of it like a kaleidoscope. Making sense of this global maelstrom, and seizing the opportunities within it, will separate winners from losers.
• West to East.. the shift is intellectual and cultural, as well as economic. It will also be North to South (the rise of Africa), local to global (no borders), and global to local (staying real). Compare the fortunes of Air Asia with American Airlines, the growth of Tata with the decline of GM.
• Big to Small.. the shift favours the fast and agile, not the slow and stable. Small businesses beat large ones. And people trust small businesses more too. Just look at the changing format of hotels, from Sheraton and Hilton to Aloft and Airbnb. When Facebook acquired Instagram for $1bn in 2012, it only had 13 employees.
• Scale to Focus.. the shift from success through volume and market share, to being able to target the profitable niches, treating customers as different and special, not a mass of averages. Consider the fragmentation of media into specialisms and multiple platforms, more relevant and profitable.
• Skills to Ideas.. the shift from the industrial to digital age means that capabilities can always be found, it is ideas that make you different. As a result we are more human in a tech world. Think about the most admired leaders, like Branson and Buffett, smart but staying real.
• Me to We.. the shift from individual to collaborative, embracing the value of diversity and engagement, connecting and collaborating to think smarter and act faster. Time to get connected to platforms like Alibaba, networks like Linked-In, crowd-funders like Kickstarter.
• Push to Pull.. the shift from surplus demand to surplus supply, the power to customers, and empowerment of consumers. Different is not enough, we need to be intimately relevant, in context and on demand. Think about Amazon, Google, or even pizza delivery.
ACCELERATING EXPONENTIALLY
The speed and impact of change is not only fast and relentless, but also exponential. It keeps multiplying. Familiar with the continual doubling of computing power, the never ending search for better and faster, and the ongoing obsolescence of devices, innovations keep building on each other, each growing exponentially, each magnifying the next.
Networks have the most exponential impact of all, proliferating ideas and capabilities, power and potential.
Whilst the future will be more volatile and uncertain it will also be more vibrant and unreal. The impact of change in a connected world is fast and far-reaching, as the advance of technology opens up new opportunities hard to imagine. Complexity is the norm as we learn to make sense of limitless information, discontinuities will be frequent, frictions will be displaced, and change will be exponential. Whilst ambiguity might seem disconcerting, paradox is the source of amazing possibility.
When astronauts return from space, they marvel at the new perspective they gain of our planet – how small it seems in the expanse of space, and how unique and fragile its life-enabling ecosystems really are. It can transform attitudes about what matters, how to solve problems, about the scale of our ambitions and potential impacts.
We need to learn to think bigger, to reframe our sightlines, to think in a connected way, to understand the cause and effects of systems.
Global GDP is estimated to grow from $62 trillion back in 2010 to over $90 trillion by 2020, according to the World Bank. The economies of China and India will triple in that period, with China replacing America as the world's largest economy. Looking further ahead, by 2050 the old G7 of advanced nations will be collectively half the value of the E7 nations (also including Brazil, Indonesia, Mexico, Russia and Turkey).
As economic power shifts east, political influence and military capability will follow. As global citizenship mushrooms to 7.5 billion, it is the new lower- to middle-income consumers that will have most impact on markets. Accelerating demand for oil and gas, food and fresh water, metals and land, will create price volatility and political tensions. Peak oil in 2021, after which it is expected to dwindle in supply, will exasperate the problem, whilst carbon emissions and sea levels continue to rise.
Huge population shifts from countryside to cities, farms to factories, transform landscapes and demographics, putting enormous strain on infrastructure. Baby boomers live on, as the ageing populations of advanced nations need more healthcare, whilst youthful populations of growing economies will demand better education. They will also embrace technology faster, hungry for innovations and entrepreneurial wealth.
Of these forces, GRIN (genetic, robotic, intelligent and nano) technologies will be most disruptive. However, perhaps an even a bigger driver of markets and brands will be the dreams and expectations of consumers, alongside the imagination of the next generation entrepreneurs to fulfil them in novel and profitable ways.
Making sense of the future requires a leap of imagination. In the past we drew trend lines to understand smooth evolutions into the future. We cannot predict the future of smartphones as an incremental journey from today's models, as the devices jump to our wrists and clothing, to become embedded in our vision or minds. Nokia has learnt that a dominant market position can lead to irrelevance within five years.
EXPLORING NEW POSSIBILITIES
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