Its nearly 2007 and time for some reflection, and an article in the McKinsey Quarterly on 10 long term megatrends caught my eye today. Its interesting to think about their impact on broadband media, and broadband media's impact on them.
The trends are (McKinsey notes in italics):
Trend 1. Centers of economic activity will shift profoundly, not just globally, but also regionally. As a consequence of economic liberalization, technological advances, capital market developments, and demographic shifts, the world has embarked on a massive realignment of economic activity.
So Asia as a % of GDP will go back to levels last seen in about 1700 AD - i.e. India and China will be great global economic powers again. The IT industry overall has seen huge offshoring over the last 5 years especially, but Broadband media changes the game, from a game of doing the same things with lower labour costs to doing things smarter with higher agility - and if manufacturing is anything to go by this can mean bringing things back closer to the customer. I think the more interesting note is the one about
regional shifts - ie within the USA, within Europe, within the social networks in the world (eg the English speaking world). Here is where regional development policy, and policies of individual states will start to matter, as citizens can move both their economic activity and their bodies about far more easily in a networked world. For example, Ireland right now has some great deals for companies - both established and startups - so there is quite a drain starting from London.
Trend 2. Public-sector activities will balloon, making productivity gains essential. The unprecedented aging of populations across the developed world will call for new levels of efficiency and creativity from the public sector. Without clear productivity gains, the pension and health care burden will drive taxes to stifling proportions.
Clearly broadband media can help with automating some proceses today (ie higher efficiency), as well as allowing things to be done in new ways (ie effectiveness) - but these are fiddling with deckchairs - the big numbers are heathcare, looking after the aged, and (in Europe) unemployment benefits.
What I never understood with this trend was the "why won't countries just cut down the state sector spending?" angle - probably not voluntarily, but imho at some point the sums just won't stack up and pressure to reduce spending will be overwhelming. I just can't see the money earning workers in 10 - 15 years time being prepared to fork over 60% + of their income to support the ageing baby boomers and long term underemployed. Given that the people paying the bills will not be the voting majority, this will all get very "interesting" in most democracies. With respect to ageing populations, Isaac Asimov once wrote a story about how the planet moved to voluntary euthanasia to control this problem, except of course the "voluntary" bit became subject to increasing social pressures. I may be one of those people - sobering thought.
Trend 3. The consumer landscape will change and expand significantly. Almost a billion new consumers will enter the global marketplace in the next decade as economic growth in emerging markets pushes them beyond the threshold level of $5,000 in annual household income—a point when people generally begin to spend on discretionary goods.
The people coming online in the next few years will still grow hugely - but they will be mainly Asian, not OECD. This will impact the language, culture and basic economics of the 'Net (see next point), especially as they will probably use lower cost devices (mobiles, PDA's etc) and lower bandwidth networks initially.
Trend 4. Technological connectivity will transform the way people live and interact. The technology revolution has been just that. Yet we are at the early, not mature, stage of this revolution. Individuals, public sectors, and businesses are learning how to make the best use of IT in designing processes and in developing and accessing knowledge.
This is the (r)evolution we set Broadsight up to work in. Blogging, the Web 2.0 movement and the rise of Web Video in 2006 are in my view early examples of these broadband driven shifts, but this is just the beginning. As Bill Gates once remarked, change is less than you expect in 2 years and greater than you expect in 10 (think back to how you worked / lived 10 years ago for example...or watch the film Wall Street)
Trend 5. The battlefield for talent will shift. Ongoing shifts in labor and talent will be far more profound than the widely observed migration of jobs to low-wage countries. The shift to knowledge-intensive industries highlights the importance and scarcity of well-trained talent. The increasing integration of global labor markets, however, is opening up vast new talent sources.
The battle for talent is a big McKinsey theme, often alluding to the "star and project team" based wages in many entertainment based industries (I include TV sports here...) but to be honest so far in most sectors I see it as mainly translating into a whole cadre of OECD senior executives using it as a reason to bid their salaries up as the rest of their employees'wages stagnate - clearly nearly all talent is at the top of companies looking at the overall wage data (and the talented also seem to be of remarkably similar background - if you look at where wages have rocketed, nearly all global talent today would appear to be white skinned, have an MBA and work in senior roles, mostly in financial institutions).
I haven't yet really seen the equivalent of the City of London's "big bang" where the Old Boys' clubs were broken down and talent was rewarded with much less regard to background, but it does seem to be starting off in the media industry now with the shift to user generated content plays, taking advertising (and thus financial power) with it. The role broadband media will play will be that of connecting disenfranchised talent to end users, as it has in media. How it plays out in say financial services will be very interesting to watch..outsourcing of analysis is already happening, but I suspect that the interesting bit will be forcing the opening up of many closed shop functions to new people. (I have always been intrigued by the continued survival of fund management for example, when it is clear that simple trackers beat the bulk of the managed funds on net benefit year on year)
Trend 6. The role and behavior of big business will come under increasingly sharp scrutiny. As businesses expand their global reach, and as the economic demands on the environment intensify, the level of societal suspicion about big business is likely to increase. The tenets of current global business ideology—for example, shareholder value, free trade, intellectual-property rights, and profit repatriation—are not understood, let alone accepted, in many parts of the world.
The recent trend to see the Corporation as a psychotic individual under law would seem to be an early harbinger of this mood shift. So far increasing political pressures on OECD governments to crack down on corporate excess has usually resulted in the bad practices being exported to the developing countries.
So far, 'Net media has worked as a way to identify poor performance by corporates (eg via blogging, price comparison) but I expect the smarter corporates will start to harness it to help their own ends far more, and (hopefully) help their customers in the process. As to IPR, I think in this arena the corporates are on the wrong side of the current....trying to limit the flow and use of ideas in a knowledge economy is a public bad, and the 'Net so far has shown a remarkable capability of going around obstacles. Don't bet against the 'Net.
Trend 7. Demand for natural resources will grow, as will the strain on the environment. As economic growth accelerates—particularly in emerging markets—we are using natural resources at unprecedented rates. Oil demand is projected to grow by 50 percent in the next two decades, and without large new discoveries or radical innovations supply is unlikely to keep up.
This is a big area for a short thoughtpiece, suffice to say that broadband media will be pressed into service increasingly as a cost saving alternative. Wherever the economics of the 'Net start to beat the increasing costs due to resource shortages, expect to see it deployed. For example, the amount of extra resource we spend constructing and running transport infrastructures to be able to cope with order-of-magnitude-larger peak loads for a few hours a day is staggering, so the economics of telecommuting will increasingly tell. Ditto shopping via web rather than by car.
Trend 8. New global industry structures are emerging. In response to changing market regulation and the advent of new technologies, nontraditional business models are flourishing, often coexisting in the same market and sector space.
I think we have seen a lot of this in the tech space already with bootstrapping of small companies, and it will continue as the transaction costs of access to capital, technology and people goes down (rentacoder anyone?). I have seen arguments that the role of the Corporate moves from control to co-ordination - not sure I believe that, the Corporate structure is designed for control, and I suspect a different sort of entity is needed to manage Co-ordination - matrix structures just don't cut it . Broadband media, by facilitating communication makes it far easier to run virtually, globally and at lower net cost than traditional physical models, but it has drawbacks of its own which are only starting to be understood (comms difficulties from no informal interaction for example).
Trend 9. Management will go from art to science. Bigger, more complex companies demand new tools to run and manage them. Indeed, improved technology and statistical-control tools have given rise to new management approaches that make even mega-institutions viable.
This has been the dream from Frederick Winslow Taylor onwards, though I have seen not that much evidence of any great change to date compared to say 10 years ago as what the above would have me believe. I have no doubt that many senior managers believe this to be the case, but my experience is that a lot more calculation to the desired end result actually occurs. What I have seen though is:
- a lot more maths used to back up many politically based decisions (or delay unwanted ones).
- many of the revolutionary new companies in the last 3-4 years not being funded using anything like conventional analytical approaches.
Trend 10. Ubiquitous access to information is changing the economics of knowledge. Knowledge is increasingly available and, at the same time, increasingly specialized. The most obvious manifestation of this trend is the rise of search engines (such as Google), which make an almost infinite amount of information available instantaneously. Access to knowledge has become almost universal. Yet the transformation is much more profound than simply broad access. New models of knowledge production, access, distribution, and ownership are emerging. We are seeing the rise of open-source approaches to knowledge development as communities, not individuals, become responsible for innovations.
Well, this is where we come into the frame again.....overall the technology trends we see are around increasing adoption of video as the mainstream medium, and trends towards increased use of:
- user generated (or at least searched and assembled) content
- need for new types of search and metadata creation
- social networks increasingly employed, and incresaing use of unfied identity/profiles across services
- open source and webservices
- services across multiple devices (many PC's, mobiles etc)
- advertising moving to be an interactive service
- huge use of analytics in all systems
So, much to mull over...have a great New Year celebration.
Post Script
For those who think this is all too high level - Om Malik is running a "make your own predictions for 2007" session
over here, along with some links to some others' predictions.
