Small Biz Watch: Future business trends
What trends will transform business over the next decade or two? That's good information to have whether you're an entrepreneur, a small-business owner, or a megaconglomerate manager. Looking into the crystal ball is always dodgy, but consulting firm McKinsey & Co. has taken a stab at it in the latest issue of the firm's quarterly journal. Here are several of its forecasts:
Structure. In many industries, a barbell-like structure is appearing: a few giants on top, a narrow middle, and then a flurry of smaller, fast-moving players on the bottom. This structure will provide new opportunities for small business.
Asia. Although the United States will still have the largest share of absolute economic growth, Asia (excluding Japan) will account for the same level of global gross domestic product as western Europe. Today, Asia accounts for 13 percent vs. Europe's 30 percent.
Aging. The aging of populations will increase demand for social services, requiring either greater worker productivity or higher taxes. Some private-public policy hybrid is likely in order to provide healthcare and retirement security.
Consumers. Nearly a billion new consumers will enter the global marketplace in the next decade as consumer spending power in emerging economies will more than double to $9 trillion. That's about where western Europe is today.
Resources. Expect higher prices ahead unless technology and innovation result in more-efficient use of resources. Oil demand is projected to grow by 50 percent in the next two decades, and supply is unlikely to keep up with new approaches.
Management. Running a business will turn from an art to a science. More and more executives will adopt algorithmic decision-making techniques and use highly sophisticated software to run their organizations. Forget about getting a competitive edge—these tools will be necessary merely to play the game.