Thursday, July 8, 2010

PL 40/10: Global forces

Filed under: future — plinius @ 7:46 am

Organizations operate in many different environments.

Some are deeply rooted in local communities. The employ local people, use local resources and serve local customers and needs. Local organizations tend to know a lot about local conditions – but not so much about the bigger world outside.

Others operate within national environments. They will know more about national markets, policies and trends.

McKinsey & Company

The global environment is even bigger. Actors at the global level must necessarily study global trends and markets in order to plan for the future. McKinsey is such an actor. Wikipedia tells me that

McKinsey & Company is a global management consulting firm that focuses on solving issues of concern to senior management.

Below I quote from a recent McKinsey study of the global environment. There is a lot to learn from global organizations, I feel – even if you disagree with their political attitudes.

Five global forces

– For much of the past year, a team at McKinsey has revisited and retested our assumptions about the key global trends that will define the coming era.

We have identified five forces, or crucibles, where the stresses and tensions will be greatest and thus offer the richest opportunities for companies to innovate and change:

  • The great rebalancing. The coming decade will be the first in 200 years when emerging-market countries contribute more growth than the developed ones. This growth will not only create a wave of new middle-class consumers but also drive profound innovations in product design, market infrastructure, and value chains.
  • The productivity imperative. Developed-world economies will need to generate pronounced gains in productivity to power continued economic growth. The most dramatic innovations in the Western world are likely to be those that accelerate economic productivity.
  • The global grid. The global economy is growing ever more connected. Complex flows of capital, goods, information, and people are creating an interlinked network that spans geographies, social groups, and economies in ways that permit large-scale interactions at any moment. This expanding grid is seeding new business models and accelerating the pace of innovation. It also makes destabilizing cycles of volatility more likely.
  • Pricing the planet. A collision is shaping up among the rising demand for resources, constrained supplies, and changing social attitudes toward environmental protection. The next decade will see an increased focus on resource productivity, the emergence of substantial clean-tech industries, and regulatory initiatives.
  • The market state. The often contradictory demands of driving economic growth and providing the necessary safety nets to maintain social stability have put governments under extraordinary pressure. Globalization applies additional heat: how will distinctly national entities govern in an increasingly globalized world?

Strategic planning

Our thinking is exploratory rather than definitive.

Precisely how these forces will unfold—and, as important, how they interact—is very much a work in progress. Still, our research, extensive one-on-one contacts, and broader survey data give us confidence that these topics should be framing every organization’s strategic conversations about how best to chart its future course.



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