The most interesting insight in Richard Dobbs, James Manyika, and Jonathan Woetzel book to be published on May 12th by Public Affairs “No Ordinary Disruption: The Four Global Forces Breaking All the Trends” argues that the world economy’s operating system is changing and being rewritten. The authors explain the trends reshaping the world and contend why leaders must adjust to new realities.
In the early 19th century industrial revolution changed world’s geo-strategic perspective and today four fundamental disruptive forces are pushing world into dramatic transition that most world leaders seem unable to comprehend their trends, impending effects and magnitude and they need looking beyond Shanghai: The world is dealing four new trends in old manners namely: The age of urbanization, accelerating technological change, response to the challenges of an aging world and greater global connections centered on trade, people, finance.
The locus of economic activities is shifting within 440 small and medium size cities of world’s that many Western leaders might not have heard or could point on a map. These could be Mumbai, Dubai, and Shanghai, Hsinchu in northern Taiwan, Brazil’s Santa Catarina state, halfway between São Paulo and the Uruguayan border, Tianjin a city that lies around 120 kilometers southeast of Beijing whose estimated GDP is over $130 billion, making it around the same size as Stockholm, the capital of Sweden. By 2025, it is estimated that its GDP will be around US$ 625 billion, approximately that of all of Sweden.
The world is experiencing acceleration in the scope, scale, and economic impact of technology. Technology is overturning the speed of change in our lives and notion of status quo. In the past it took telephone more than 50 years after its invention to become utility item for half of the American homes and radio took 38 years to attract 50 million listeners. But Facebook attracted 6 million users in its first year and that number multiplied 100 times over the next five years.
The speed of innovation has multiplied and spread in recent years, it is poised to change and grow at an exponential speed beyond the power of human intuition to anticipate. The authors present interesting data in support of this argument, China’s mobile text- and voice-messaging service WeChat has 300 million users, more than the entire adult population of the United States. In 2009, two years after the iPhone’s launch, developers had created around 150,000 applications and by 2014 the number had reached 1.2 million, and users had downloaded more than 75 billion total apps, more than ten for every person on the planet. Twenty years ago, less than 3 percent of the world’s population had a mobile phone.
Technology offers the promise of economic progress for billions in emerging economies. The technological adoption and innovation is shortening the life cycle of companies and forcing executives to make decisions and commit resources much more quickly. The speed, processing power and connectivity have brought data revolution thus pushing world into a golden age of gadgetry, age of instant communication, and apparently boundless information which has placed unprecedented amounts of information in the hands of consumers.
The human population of new world is getting older, fertility is falling and the world’s population is graying dramatically. Ironically, we are not responding to the challenges of an aging world and caring for large numbers of elderly people will put severe pressure on government finances. Once aging was evident in developed economies, but now it is spreading to China and soon will reach Latin America. Thirty years ago, only a small share of the global population lived in the few countries with fertility rates substantially below needed to replace each generation i.e.2.1 children per woman. But by 2013, about 60 % of the world’s population is living in countries with fertility rates below the replacement rate.
Today’s world is much more connected through trade and through movements in capital, people, and information (data and communication)—what we call “flows.” The global trading system has expanded into a complex, intricate, sprawling web. Asia is becoming the world’s largest trading region. The volume of trade between China and Africa rose from $9 billion in 2000 to $211 billion in 2012. Global capital flows expanded 25 times between 1980 and 2007. More than one billion people crossed borders in 2009, over five times the number in 1980. The increasing speed of connecting trade, people, finance, and data is ushering a dynamic new phase of globalization, which would create unmatched opportunities, and perhaps foment unexpected volatility.
These four factors are happening simultaneously and world is changing radically thus disrupting long-established patterns, assumptions, tendencies, and habits that had long proved so reliable. Suddenly these have lost much of their resonance. We have more data and advice at our fingertips. The iPhone or the Samsung Galaxy contains far more information and processing power than the original supercomputer. But in the new world leaders need building intuitions to adjust to new realities and benefit from globalization which is full of opportunities and equally unsettling.