Megatrends are global macro forces that will transform business, the marketplaces that they operate in, and society at large.
US author John Naisbitt first coined the term more than 35 years ago in his first book ‘Megatrends: Ten New Directions Transforming Our Lives'.
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The 'gig economy'
The 'gig economy' is where independent workers accept piece work, instead of holding regular jobs. It is most popularly characterised by businesses like Uber. But, it also includes a broader move towards self-employment and micro-businesses.
More recently, experts have started to conclude that the gig economy has had less impact on the economy than first imagined. (Source: How Estimates of the Gig Economy Went Wrong - WSJ)
AI encompasses a variety of different methods. AI researcher Pedro Domingos explains that there are five basic approaches to machine learning, from neural nets that mimic the brain, to support vector machines that classify different types of information and graphical models that use a more statistical approach. (Source: Four Things Every Leader Should Know About Applying Artificial Intelligence To Business – Innovation Excellence published 01/11/2018)
- Artificial intelligence will destroy some forms of work and create new forms of work. No-one knows for sure what the net effect on jobs will be. But the skills required to succeed in the future will be different.
The invention of the wheel in about 5,000 BC meant that you needed fewer people to move a heavy stone block. Instead of making the rest redundant, they simply started moving more and larger stones. The same can be said for steam power, electricity, and computing power. And there is little reason to believe that the same will not be true of artificial intelligence, and whatever follows it.
- AI skills are the fastest-growing category on Linkedin, increasing by 190% globally from 2015 to 2017.
Simultaneously, what will matter most at work is what is left after AI and automation - humanity. The fastest-growing skills gaps relate to soft skills: oral communication, people management, time management and leadership.
- Research by the IMF suggests that automation will affect women's jobs disproportionately. This is because they tend to be employed in more routine jobs.
- The ethical considerations become more complex as machines take on more complex roles. For example, in a situation where the death of either a passenger or a pedestrian is unavoidable, how should an autonomous vehicle choose?
Emerging business models
There is a gradual shift from business models predicated on selling products to business models predicated on service subscriptions, shared ownership and rental:
- Netflix and Spotify allow members to pay a monthly fee for streaming access to their film and music libraries.
- The Dollar Shave Club allows members to pay a monthly fee to have razor blades sent to them on a regular basis. (Source: Subscription models of financial advice emerge - FTAdviser.com)
- Subscription models of financial advice are emerging in the US (Source: Subscription models of financial advice emerge - FTAdviser.com)
- See also: 7 Major Disadvantages of the Sharing Economy | CustomerThink published 27/12/2018
A platform is a business model that allows multiple participants (producers and consumers) to connect to it, interact with one another, and create and exchange value. The most successful companies in the digital era, including Alibaba, Amazon, and Facebook, were all designed on platform business models. (Source: Insurance beyond digital: The rise of ecosystems and platforms | McKinsey) Uber and
An ecosystem, meanwhile, is an interconnected set of services that
- Consumer (B2C) ecosystems currently emerging around the world tend to concentrate on needs such as travel, healthcare, or housing.
- Business-to-business (B2B) ecosystems generally revolve around a certain decision maker—for example, marketing and sales, operations, procurement, or finance professionals.
Personalisation and Mass Customisation
Since the second industrial revolution, commerce has been driven by economies of scale: standardising products and services and then flogging them to as many people as possible. (Think of the Model T Ford, available in any colour as long as it is black!)
But that is changing. Technology is allowing firms to deliver services personalised to individual customers and customised to increasingly small customer segments.
This is enabled by technologies such as Artificial Intelligence, 3D printing. AI allows firms to line about customers on an increasingly granular level, whilst 3D printing allows them to personalise products for those customers.
- Shapeways profiles customers before sending them a selection of clothing. The customer buys what they want and returns the rest. The AI learns from these choices and then sends a better selection next time. (Source: Bigger Is No Longer Better When It Comes to Consumer Brands published 29/08/2018)
Climate change and resource scarcity
- As the world becomes more populous, urbanised and prosperous, demand for energy, food and water will rise. But the Earth has a finite amount of natural resources to satisfy this demand. (Source: Megatrends - Issues - PwC UK)
The fourth Industrial Revolution
The first Industrial Revolution was powered by the invention of the steam engine. The second was powered by electricity and characterised by the development of the mass production assembly line and the division of labour. The third was powered by the development of the digital computer. The fourth is being powered by artificial intelligence.
The fourth Industrial Revolution is powered by a combination of:
- Artificial Intelligence and machine learning,
- the Internet of Things (IoT),
- additive manufacturing or 3D printing, and
- automation and robotics
BNY Mellon has described it as "the convergence of physical and digital that can create a digital feedback loop leading a specific outcome in the real world." (Source: The many faces of Industry 4.0)
The digital revolution has no boundaries or borders. It is changing behaviour and expectations as much as the tools used to deliver new services and experiences. (Source: Megatrends - Issues - PwC UK)
- By 2030 the world’s population is projected to rise by more than 1 billion. Equally significantly, people are living longer and having fewer children. (Source: Megatrends - Issues - PwC UK)
- By 2020, the spending power of people aged 60 and over will reach an estimated $15trn. (Source: Are megatrends simply hype or a serious investment opportunity?)
- The millennial generation is growing and could soon be one of the largest in history. (Source: Are megatrends simply hype or a serious investment opportunity?)
Shift in global economic power
Some emerging economies that were growing rapidly are now in recession. Commodity prices have played a considerable role in sending these economies into reverse. (Source: Megatrends - Issues - PwC UK)
- Today, more than half the world’s population live in urban areas and almost all of the new growth will take place in lesser known medium-sized cities of developing countries. (Source: Megatrends - Issues - PwC UK)
- 1800: 3%
- 1950: 29%
- 2008: 50%
- 2040: 65% (Source: Anatomy of a smart city)
- The increasing pressures of urbanisation are leading to increasing interest in 'smart cities' (Source: Anatomy of a smart city)
- As a counter-trend, worsening commutes and increasing real-estate prices mean that large employers will look for alternatives to concentration in large cities. This could include smaller regional offices, flexible working from home, or working from localised shared work-centres with virtual teams enabled by collaboration technologies.
By 2019, Generation Z will outnumber millennials, and for the first time in modern history, 5 generations will work side by side.
- Gen Z: those born from 1997 onward. 1/3rd of the global population and 1/5th of the working population.
- Gen Y or Millenials or Echo Boomers: those born between the mid-80s and the early 2000s.
- Gen X: those born from the early to mid-1960s to the early 1980s.
- Baby Boomers: those born between the mid-1940s and the early to mid-1960s
- The Silent Generation or G.I. Generation (US): those born between the mid-1920s and the early-mid 1940s.
In 2019, for the first time, globally, people will spend more hours a day on the Internet than watching TV, consuming more content than ever before in history.
As evidenced by Brexit, Trump, and the Scottish and Catalan independence movements.
- make immigration harder,
- exacerbate the refugee crisis, and
- exacerbate the impact of
ageingpopulations on developed nations.
This will extend to the digital sphere:
- China is developing a shadow internet, and
- some non-European firms are choosing to block European web visitors rather than comply with GDPR regulations.
Institutions, including employers, will learn to embrace diversity: of ability, gender diversity, neurodiversity, etc.
Inclusive design - designing products and services for people with different needs from the outset, rather than adapting products and services after the fact - will become more commonplace.
Movements like #metoo will ruthlessly seek out and expose any remaining dark corners.
Big Tech regulation
Concerns about data privacy will:
- lead to increase regulation, such as the GDPR
- cause some people to close their accounts, but more to use ad blockers and opt out of cookies.
Big Tech taxation
Local and national authorities are looking for more effective ways to tax big tech firms who redirect profits to lower tax jurisdictions:
- The UK: planning a digital tax of 2% on tech companies
- The EU: tax reform has petered out.
- The US:
- Seattle: head tax
- San Francisco: Proposition C
- India, South Korea, Mexico and Chile are all working on the same idea.
Big Tech antitrust
The US has traditionally shied away from this fearing it could stifle innovation, but Europe has a freer hand and fewer local tech giants.
Reducing extreme poverty
Over the last 25 years, more than a billion people have lifted themselves out of extreme poverty. The global poverty rate is at its lowest level in recorded history.
Economic and cyber cold warfare
Global economies may be too integrated for full trade or cyberwarfare. But, escalating tension between the US and China may lead to a cold war.
Data driven life-hacking
We will increasingly turn to data to 'hack' our lives.
This will initially focus on:
- Health care: Patients will have access to their own data and medical professionals will have better access to more of it.
- Personal finances: It will have a similar effect on personal finance, with improved transparency and individual control co-evolving with better support from professionals.
Organisations will fragment
The gig economy will move up the value chain. Inter-company collaboration will increase. This will fragment big corporates into smaller autonomous and collaborative ecosystems.
Old technology, like the internal combustion engine, will get smarter before it goes away. For example:
- an anti-smog device installed on the engine for a few hundred bucks that
reducesfuel consumption by 20% and particles by 80%.
- built-in AI in your car can help you drive greener and cut another 20% off the bill.
- today, half the energy we use is wasted because we have inefficient systems.
And it is not just technology. Insects have more protein than any other meat. They are lauded as an environment-friendly way to feed a growing population. Already, over 2 billion people worldwide consume insects on a regular basis for a source of protein.
From learning to doing
As the world continues to change