Today’s world economy is undergoing major transitions in four areas: economic shifts, technology innovation, an aging population, and global connections. Each of these transitions is happening faster than major disruptions of the past. Each has many downstream effects that are resulting in significant market changes. How the world’s largest sales forces respond will determine their future success.
Economic Shifts
The first trend is a shift of activity from advanced economies to emerging and developing economies such as China and India. Today, these emerging markets are going through a fast-paced industrial and urban revolution. By 2025, experts predict China will be home for more large companies than the United States or Europe. In addition, predictions indicate that by 2025, half of the companies with revenues over $1 billion will be headquartered in today’s emerging and developing markets. Growth and economic opportunity continue to shift to areas such as Asia, Latin America, and the Middle East.
Along with the shift in power to emerging and developing economies, the global urban population is growing at a rapid rate—equivalent to adding seven new Chicagos a year. It is estimated that half of the global GDP growth between 2016 and 2025 will come from the top 440 emerging cities—many of which the Western world is unaware.
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Technology Innovation
The second trend is the impact of technology innovation. Technology has always been a disruptive force but its impact is accelerating. It took 50 years for the telephone to penetrate half of American homes. Facebook signed up 6 million users in its first year, and grew to 600 million users only five years later. Facebook accumulated four times more users in one-tenth the time of telephone adoption. WeChat, a Chinese mobile service, has 700 million monthly active users. As amazing as these numbers are, the pace of change and growth in the coming years is going to intensify. The result is likely to stretch today’s imaginings.
Moreover, the data explosion is fueling technology advances. Processing power and connectivity act as a multiplier on the quantity and quality of data accessible by everyone, everywhere, in real time. New technology-enabled business models such as Alibaba.com and are popping up. The Internet of Things (IoT), use of smart devices, unmanned systems, and robots continue to change the way businesses operate.
Technology drives economic progress for billions of people in emerging and developing economies. It enables businesses such as Facebook to start and gain massive scale with incredible speed and little capital. Entrepreneurs and start-ups frequently enjoy technical advantages over large, established businesses. That is a huge risk to the world’s largest sales forces.
All this technology innovation has a dark side—the growth of cybersecurity risks. The challenge for governments and businesses is knowing how to empower their people while not leaving themselves exposed. The tug-of-war over privacy versus surveillance is expected to intensify because many citizens continue to distrust government and big corporations with their information.
An Aging Population
The third trend is an aging population. The world’s population is slowing in growth and getting older. Some of the lagging economies, such as Japan and Russia, see their populations in decline. The aging population trend is already spreading to emerging and developing economies such as China and Latin America. The planet’s population could plateau in the near future.
Over the next 40 years, countries such as Germany could see population decrease 20 percent, shrinking the productive workforce. A smaller world workforce places greater focus on productivity to drive growth. It may even cause companies to rethink the world’s economic potential. Caring for elderly people contributes to growth in some industries while putting pressure on government and working people’s finances.
Global Connections
The fourth trend is the increasing connectedness of the world. Far-reaching connections span trade, finance, people, information, and so on. Trade and finance have always been part of the global economy. Still, in recent years, the way these industries connect has shifted. Instead of having a few lines of communication between the East and West, the global trade market is now a complex, sprawling web. Asia is becoming the world’s largest trading region.
Emerging and developing economies are turning into bigger players. The volume of trade between China and Africa grew by more than 200 times between 2000 and 2012. More than 1 billion people crossed borders in 2009, more than five times the number 30 years earlier. Connections contracted a bit during the global recession of 2008. Nevertheless, the technology and data connections were not affected. They have continued to grow with increasing speed. All of these developments are unlocking tremendous opportunities. At the same time, pervasive connections are creating a complex system with unexpected volatility.
The Future Is Now
Economic shifts, technology innovation, an aging population, and global connections continue to accelerate in pace, scale, and impact. These forward-looking trends disrupt most of the established patterns of doing business across every industry and in almost every market of the world economy. The fact that all four trends are simultaneously at play radically increases the depth and pace of change. This affects the way companies make decisions. And it wreaks havoc on forecasts, plans, and proformas that are built upon extrapolating past performance.
There is a great deal of work to do. SBI 100 companies must realize that much of what they thought about how the world works no longer holds true. Businesses that want the future to look much like the recent past must step out of their comfort zone. If not, sales forces will suffer from an outdated worldview—and many of today’s SBI 100 companies will lag behind global GDP. Companies that saw revenues grow more slowly than GDP need to pay more attention to these trends. It is time for a call to action. With changing assumptions and the explosion of data, new models and fresh approaches are more urgent today than ever before.
References:
International Monetary Fund
World Economic Outlook (WEO) Update: Subdued Demand, Diminished Prospects. January 2016
McKinsey Global Institute. No Ordinary Disruption: The Four Global Forces Breaking All the Trends, by Richard Dobbs, James Manyika, and Jonathan Woetzel. May 2015
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SBI 100 The World's Largest Sales Forces
In this issue, we rank the world’s largest sales forces.
