Data economy
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A stream of disruptive events is reshaping the business environment through eight major trends, ranging from slower growth of financial capital to more activist governments.
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The effects of these trends will be uneven across markets and industries, raising the value of capabilities around future sensing.
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For most companies, navigating the new landscape will require increased flexibility, along with changes in strategy, financing, and talent.
As disruptions and crises have piled up in recent years, business leaders might be forgiven for wondering, “Are we done yet?” Between Covid-19, inflation, political polarization, the rise of artificial intelligence (AI), wars in Ukraine and the Middle East, and recession fears across many countries, the macro environment is more uncertain than it has been for decades. Worse, traditional economic indicators seem to have lost their predictive power.
Yet it is worth recalling that while previous eras with similar disruptions, such as the 1970s, were unsettling to live through, they ushered in some remarkable business success stories. In the face of even more intense turbulence and uncertainty, a new round of major business gains will hinge on companies understanding how their world is changing and how they must adapt.
Shudders from a confluence of structural changes
Our new world will be shaped by both structural and cyclical changes in the macro environment and in business. The structural forces are well known but underappreciated in the magnitude of their combined effects. Consider changes in technology, which are occurring across a range of areas at an exponential rate. The usage and computational power of generative AI is growing even more rapidly than the capabilities of microprocessors under the longstanding rule of Moore’s Law.
While technology advances, so does the buildup of carbon and climate stress. Fortunately, carbon emissions have plateaued and even started to decline in developed nations. However, the demands of transitioning away from carbon while meeting the world’s growing energy needs will continue to stretch natural resources, resulting in more volatile markets and contributing to domestic and global tensions.
Financial markets, too, face profound change as debt burdens reach levels that historically have proved to be unsustainable. In recent years, low interest rates eased these debt burdens while inflating a broader range of asset bubbles as global financial capital has more than tripled over the past three decades to roughly 10 times global GDP. Now, the current environment, with both higher inflation rates and higher real interest rates that are expected to remain elevated, will likely reverse this dynamic.
One big driver of the steady rise in public debt, for instance, has been aging populations in many developed and developing countries. As populations age and shift from net savers to net consumers, global capital formation will slow even as demand for investment increases. Older workers’ share of global jobs will increase by 150 million by 2030, as overall workforce growth shrinks and goes negative in many markets
