Growth of populations, migration, and urbanization will determine the course of societies and economies.
Megatrends: A sound grasp of the most important megatrends: A bigger picture for a better strategy strategy to be leveraged for corporate advantage.
Trend Compendium 2030: Understanding and applying megatrends
In our volatile, uncertain, complex and ambiguous (VUCA) world, a sound grasp of the most important megatrends makes for a superior perspective to be leveraged for corporate advantage – not least in strategic planning processes.
Megatrend 1: Demographic dynamics
Megatrend 2: Globalization & future markets
Megatrend 3: Scarcity of resources
Megatrend 4: Climate change & ecosystem at risk
Megatrend 5: Dynamic technology & innovation
Megatrend 6: Global knowledge society
Megatrend 7: Sustainability & global responsibility
For us, it's been a long time coming: Almost a decade ago, little did we know that a successful cooperation with the World Economic Forum would evolve into a deep, analytical understanding of global megatrends. Since then, the Roland Berger Trend Compendium 2030, now in its third re-tooled edition, is our firm's most popular global trend resource, as is evident from the vast number of projects where our understanding of megatrends has been beneficial to clients around the globe.
How to untangle what matters
In the daily hum-drum of 21st century information overload, at first glance, trends may appear unhelpful, irritatingly intertwined and somewhat fuzzy – just another layer of noise and distraction. Yet, megatrends are exactly the opposite – they are the antidote, the 'anti-noise' – allowing decision makers to take a step back and unpick what is important, because megatrends are universal and are set to impact all markets. Megatrends encompass economic factors as well as social and environmental shifts. Therefore, understanding megatrends provides a much needed handle on current and future risks and opportunities. Ultimately, understanding megatrends provides focus and clarity of what's really important in the long run.
To better understand the major shifts in world population, we focus on four important sub-trends:
Population growth: A world population growth of 16% or 1.2 billion people to 8.6 billion people by 2030 leads to both challenges and opportunities, not least because the population in developing countries will grow more than 6 times faster than that of developed countries.
Young vs. old countries: Due to increasing life expectancy and low fertility rates, the median age will reach 44.0 years in the developed countries; the 60+ age group will gain further importance as a customer group. The developing countries will reach a median age of 31.2 years in 2030.
Migration: The reasons for people to leave their home are manifold: war and conflicts, economic asymmetries and a lack of access to education. Asia, Latin America and the Caribbean as well as Africa will see a net emigration, while North America, Europe and Oceania will experience a strong net immigration.
Urbanization: On average, 60% of the world population will live in cities in 2030 – ranging from 81% in developed countries vs. 56% in the developing world. This will most likely cause a particular strenuous challenge in terms of providing adequate infrastructure to fast growing cities.
Globalization and the growth of future markets will remain the main drivers for the global economy. In considering the business opportunities for companies, we analyze the major facets – economy, politics, and society – of globalization, scrutinize the progress of the economic integration and map how important country clusters will perform by 2030.
Globalization is set to continue, with worldwide exports growing faster than the worldwide gross domestic product (GDP). By 2030, global exports will have more than doubled; exports from developing economies are projected to grow almost fourfold. Regional and bilateral trade agreements are likely to further boost worldwide trade; their development depends on the consensus and objectives of country leaders. The economic power and future development of the BRICS cluster up to 2030 is extraordinary as its real GDP in PPP will double between now and 2030. But it is not a homogeneous picture across the five nations: While China and India will grow their joint share of global GDP in PPP from 24.0% today to 33.5% in 2030, the joint proportion of Russia, Brazil and South Africa will decrease from currently 6.7% to 5.2%
Beyond BRICS - Have you considered the potential of other promising country clusters?
- MINT - Mexico, Indonesia, Nigeria and Turkey,
- MIST - Mexico, Indonesia, South Korea, Turkey,
- Next 11 - Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines,Turkey, South Korea, and Vietnam
Although these countries do not compare to the economic power of China or India, their growth rates clearly outperform those of advanced economies.
Natural resources are essential input factors for every economic activity as well as for the life of human beings, animals and plants. Most of them are not renewable but finite. Three main areas of resources are under review:
- energy – where the choice of sources is crucial. Growing population figures, GDP growth, urbanization and the expanding middle class are main drivers for an increasing energy demand;
- water and food – both affected by risks in water supply, as over 50% of the world's population will live in water stressed areas by the middle of the century, which is a huge risk to the predicted growth for developing economies;
- other commodities – such as raw materials which suffer from regional imbalances. To handle the scarcity, companies have to invest in innovative technologies like remanufacturing, recycling and material reduction.
Increasing concentrations of greenhouse gases (GHG) have been the main driver of rising temperatures since the middle of the 20th century. Even with relatively minor increases in average temperature and sea levels, the nature, frequency and intensity of extreme weather events – such as tropical cyclones, floods, droughts and heavy precipitation – are expected to be on the rise. Companies need to assess their exposure for these risks. Besides, we face a huge imbalance in required versus actual bio capacity – signaling that the earth's regenerative capacity is used up faster as it is able to regenerate.
Here, three areas are particularly deserving of attention: The power of innovation, Life Sciences, and digital transformation. Innovations hold the power to help overcome the major challenges facing mankind. The analysis of cutting edge areas of innovation is therefore crucial, particularly in areas driving economic and societal developments over the coming decades. Technology diffusion is on track to accelerate until 2030, raising the possibility of new touch points between developing and developed nations. The Life Sciences are a promising field with the potential to resolve major challenges by 2030. Overcoming food scarcity, curbing growing levels of pollution or simply better management of diseases are just a few areas where progress can be made.
The most rapidly evolving trend affecting people, companies and governments around the world is that of digitalization. Smart devices already surround us both at work and in our homes. Artificial Intelligence will impact everyone's lives and has the potential to raise efficiency to the next level across industries. The digital transformation is permeating every link in the industrial value chain, from logistics to production and service provision. Digital transformation will bring fundamental change to business and takes effect via four levers: digital data, automation, connectivity, and digital customer access.
Knowledge, a sound educational infrastructure plus good levels of educational participation across genders and age groups, are important building blocks of what ultimately constitutes stable and prosperous civic societies. Children's school attendance, measured in years spent in education, is a fundamental marker for future labor market participation and potential wealth creation within economies. Even though, globally speaking, educational levels are improving, we have to deal with uneven developments over the next decades. A shifting landscape of talent pools combined with higher mobility of the millennial generation is leading to a global war for talent. The gaps between men and women with regard to educational and labor force participation as well as the varying levels of disposable income result in far reaching problems across societies. Closing the gender gap could unlock potential such as stimulating fresh labor market dynamics, channeling stronger flows of talent or creating additional purchasing power. It is crucial to understand at which levels female empowerment is currently insufficient and where raising participation of women offers great opportunities.
In times of manifold conflicts and global challenges such as climate change, the need for societal and economic sustainability as well as global responsibility is only too evident. Good and sustainable national and supranational governance can strengthen democracy and improve the policy performance of states. In particular, the increasing number of intrastate conflicts is calling for an even stronger coordination of international governance in future. For companies and their global value chains, this suggests a need to review potential areas of conflict more vigilantly.
Current levels of state-directed official development assistance are clearly insufficient. On the other hand, global private philanthropy is on the rise. This trend is strengthened via a growing global middle class whose power to contribute to philanthropic spending will increase strongly towards 2030. Customers demand sustainable products and are also willing to pay more for products and services from corporations that act in a socially responsible manner. Utilizing this dynamic, effective CSR management, communication and execution has the potential to add value for corporations.
Applying the scenario mind set collaboratively
As early as 2009, Roland Berger formalized a long standing successful relationship with HHL Leipzig Graduate School of Management by co-founding the Center for Strategy and Scenario Planning – Roland Berger Research Unit.
HHL and Roland Berger have been collaborating on scenario planning for many years and the Center embodies the synergies that result from bringing together internationally renowned experts in the fields of strategic management and planning from both academia and practice. Based on HHL's experience in teaching strategic management and our experience in advising corporate clients around the world, we have developed innovative scenario tools that support our unique six step scenario approach. It is tailored to the needs of top management, delivering outcomes that are rooted in solid business sense and data, taking into account individual perspectives and the experience of each company. It permits unambiguous statements to be made about the most important factors influencing the object of analysis, like an industry, a region or a technology, and the scenarios built on these influencing factors.