2016-global megatrends
TRANSCRIPT
6 Global mega trends& their Impact on the Economic Health of Nations & Firms
John Gregg, Principal Navigate Consulting
July, 2016
1. Random events that have a low probability of occurrenceand a major impact on the mega trendsSource: Navigate Consulting
Resources &Environment
Governance &Activism
Demographics ConsumptionPatterns
Technology &Innovation
Wildcards
5 2
6
4 3
The 6 Mega-Trends
1
1
Globalisation
1.
1
Globalization is shaking the foundations of the world as we
know it and shifting economic power from "North" to "South"
3
North
South
1. The term South was first coined by the UN in the 1960s to referto those countries that were not part of the
1st World (i.e. NATO) r the 2nd World (i.e. the Soviet Union); with the collapse of the Soviet Union, the term isusually used to referto all emerging markets
Consumption
Patterns
Regulation &Activism1
72.6% mobilepenetration globally
89%
44%
Smartphone penetrationAmong Australians by2017
of Australian smartphoneusers make mobilepurchases
• 47% of mobile users are in Asia
• 130% penetration in Western Europe –
meaning that there are more phones thanusers
The old rules of sale no longer apply, the new consumerIs fully mobile, and could be anywhere at anytime
2
… and consumers areincreasingly choosing text as acommunications medium
6.1 Trillion
64%
Text messages sent globallyin 2014
Increase expected by 2019
Social Media is mobile and
prolific …
800,000,000
200,000,000
130
Active Facebook users
Users accessing Facebook
through their mobile devices
Friends per user
Source: Media reports, Mobithinking global statistics
2 Social media is a bourgeoning marketplace2
Nike ID has capturedthe marketfor personalizedathletic footwearBurberry launchedan online service for bespoke trench coatsin 2011New sites like Threadless.com and FashionStake.comrely oncrowd-sourcingto determineassortment
Adidas established a Design Center in Shanghaiin 2008 to
createcloser connection to Chinese consumerMarc Jacobs launcheda collection of sari-inspireddresses tocourt the Indian consumerand Louis Vuitton celebratedDiwali instore windows
Consumers asCo-creators
LocalizedDesign
Prada is launchinga “Made in…” series, to createlocalizeddesigns by collaboratingwith artisans and using traditionalmaterialsand techniques of a region
Customized offerings require a nimble supply chain to meet demand
Wildcards
And is giving consumers a say in developing their ownproducts and services
Goyard, Louis Vuitton and Coach allow customers to stamp
monograms on their bags for a personal touch
2
7
….andenables
convenientcomparison
shopping
Consumers have a variety of new waysto search for the lowest price
Example: the mobile consumer
Ubiquitous
access toinformation
facilitatesconsumer
pricediscovery….
-4
-6
-8
-10
-12
-2 2004 2006 2008 2010 2012 2014 2016
ChinaFrance
India
Japan
Mexico
United Kingdom
United States
While they are forced to do so by falling orslowing income growth
Real Personal Disposable Income(% change p.a.)
14
12
10
8
6
4
2
0
Source: EconomistIntelligenceUnit, NavigateConsulting
On the commodities market, easy access to information isallowing consumers to put great pressure on suppliers
2
We are at a unique historical moment whenevery Major global power is redefining itself
The US faces a formidable arrayof challenges to its leadership“Perhaps the greatest danger to asustainable future . . . is our seeminginability to balance the needs of thepresent with the requirements ofyears yet to come.”
Center for the Study of thePresidency
With remarkable economic dynamism,China still faces significant challenges• Stratification a major concern-
income, use of resources, environment
• How to incorporate the 900 millionin the interior in the other China
• Uncertainty about how Beijing willreconcile its political system with itsmarket capitalism
Europe’s historical experiment withunity is being put to the test
•Where is the EU moving. Will it
widen and deepen, or has it reached
the limits of integration? Unification
or federation?
•Financial crisis in Greece has
shown cracks in the broader EU
architecture
Delineating the boundaries ofthe next Russia•Evolving legitimacy role inFederation and in relations withNear Abroad countries
•Raises overarching questions
about what kind of Russia itwants to be—democraticor lessthan democratic—and where itwants to be (i.e.,oriented towardEurope or Asia?)
33
Source: Energy Information Agency, Food and AgricultureOrganization
200
100
0
2000
Oil Price
Food Price
2014
Volatile natural resource prices
• The FAO warns that there are permanentfactors
underpinning prices that will work to keep them at bothhigher average levels than in the past andreducethelong-term pricedeclinein real times
FAO Food and Oil Price Indices, 2000-2014(Base=2002-2004)
300
We are entering an era of heightened global demandfor food, water and energy
Strong demand pressures
• We will see a doubling of demand for food, water and
energy by 2050• Energy demandcontinues to grow with non-OECD
countries driving the bulk of the growth• Unsustainablewater use has already led to aquifer and
great lake depletion
World Marketed Energy Demand:OECD and Non-OECD,
1990 2035 (quad-rillion btus)
500Non-OECD
400
300
200
100
01990
OECD
2035
3
0
Source: Navigate Consulting
4
Only sustainability will allow 8 billion people in 2040to live at high standards on our planet
2040: 8 billion people striving to …
… consume
We will need 5 planets …… be mobile
… communicate
… use energy
… or become “sustainable”
… be healthy
4
Contribution of knowledge industries to GDPin selected high-performing OECD countries
Ratio of intangible to tangible investments 1,US companies
136
110
82
606254
40
20
0
60
100
80
140
120
1950s 2000s1990s1980s1970s1960s
394040
414242
4343
0
10
5
25
20
15
30
35
45
40
Korea NetherlandsFranceUKGermany Sweden BelgiumUS
Knowledge work is an increasingly important component of the global economy
Investment priorities by corporationsshow a shift towards knowledge activities
1. Intangible investments are R&D, software, design and new product development; tangibles are machines
and buildings Source: US Federal Reserve, OECD, Navigate
5
445542
425605
416
1034
467621651
EgyptChina
7071
12001000
2000
South IndonesiaThailand TurkeyFrance Germany JapanUKUS
800600
400
Tertiary Graduates, 2014 (000s)
7200
2782
2600
2400
2200
2000
18001600
1400
= Established market
= Emerging market
Korea
78% of US engineering doctorates in 2014 were awarded to foreign students, 3/4 of whomare from Asia, up from 51% in 1999
Source: UNESCO, National Science Foundation, Navigate Consulting
Emerging markets such as China, Egypt, South Korea, Indonesia, Thailand and Turkey are producing as many or more university graduates as established markets
The supply of educated workers is increasingly coming from the developing world
5
Japan 3.4
3.5
Mexico 0.5
Russia
South Africa
1.1
0.9
China 1.5
France 2.1
Germany 2.5
Switzerland 2.9
Source: OECD Science and Technology Industry Outlook , Navigate analysis
Mexico 1.2
China
South Africa
1.6
1.5
Switzerland 7.0
Russia 7.2
Germany 7.5
France 8.2
Japan 11.1
16.6
…and have a large pool of knowledgeworkers
R&D Personnel per 1,000 total employment, Selected
countries
Finland
6
Developed countries are investing heavily in R&Dto stay competitive in global economy
Knowledge centers like Finland, and Japan spendlarge percentages of their GDP on R&D…
Gross Expenditureon R&D as a % of GDP, Selected
countries
Finland
6
however their number is enormous
Iran closes theStraits of Hormuz
Global Pandemic
Power Strugglein Beijing Currency Collapse
Nuclear DetonationConfrontation with
North Korea
NaturalDisaster
BioterrorAttack
Viruses Disable GPSSatellites
Carbon SequestrationBreakthrough
CropPandemic
QuantumLeap
What if two of these wildcards would happen by 2025?
Source: Navigate
Wildcards are random events with low probability to happen,
Wildcards