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Management Intuition for the Next 50 Years
In the years to come, acceleration in the scope and scale of technology will usher in a new era of artificial intelligence, instant communication and boundless information. It will shake up a wide array of businesses and industries in unimaginable ways. Researchers at the McKinsey Global Institute (MGI) and McKinsey's Strategy Practice have collaborated to help anticipate the road ahead. They delineate how it differs from the one organizations have been on to date, and what those differences will mean for decision makers as they face the future. The researchers identified three of the most important factors: emerging-markets growth, disruptive technology and aging populations.

In 2009, emerging markets contributed more to global economic growth than developed ones for the first time in more than two centuries. By 2025, emerging markets will have been the world's prime growth engine for more than 15 years.

With regard to technology and connectivity, extraordinary advances in capacity, power and speed are reshaping industry. Global flows of data, finance, talent and trade are poised to triple in the next 10 or so years from levels that already represent a massive leap forward. Today, more than 66 percent of the world’s population has access to a mobile phone, while 33 percent communicate via the Internet. With information flows continuing to grow, the old mindset that technology is mainly a tool for cutting costs and boosting productivity will be replaced.

Finally, regarding global demographics, organizational leaders need to be aware that birth rate is falling and the world's population is graying at a dramatic clip. Aging has been evident in developed economies for some time, especially Japan and Russia where populations are on the decline. The demographic deficit is now spreading to China and should next sweep across Latin America, creating long-term growth headwinds. Looking ahead, the article's authors wrote that "it is likely that different regions, countries and individuals will have different fates, depending on the strength and flexibility of their institutions and policies. Indeed, we are already seeing this in portions of Southern and Eastern Europe that remain mired in recession and debt, and in the United States, where some local governments are on the verge of failure as their economic bases cannot keep up with the needs of their aging populations."

Considering the multiple stresses occurring throughout the global economy, uniform success should not be the expectation. However, neither should leaders and strategic thinkers become too pessimistic. But to be on the winning side in this increasingly volatile world, we must fully recognize the magnitude and the permanence of the coming changes and how quickly they alter long-established institutions. The authors concluded, "Those who understand the depth, breadth and radical nature of the change and opportunity that is on the way will be best able to reset their intuitions accordingly, shape this new world and thrive."
McKinsey Quarterly (09/14) Dobbs, Richard S.; Ramaswamy, Sree; Stephenson, Elizabeth
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OCTOBER 2014 EDITION
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