Resetting Intuition
Many past assumptions, tendencies, and habits that had long proved so reliable have suddenly lost much of their importance. That is partly because intuition still determines much of our decision making. Our intuition has been formed by a set of experiences and ideas about how things worked during a time when changes were incremental and somewhat predictable. If we look at the world through a rearview mirror and make decisions on the basis of the intuition built on our experience, we could be wrong. In the 21st century, executives, policy makers, and individuals all need to scrutinize their intuitions and boldly reset them if necessary. This is especially true for organizations that have enjoyed great success. There is an urgent imperative to adjust to these new realities.
Age of Urbanization
The first trend is the shifting economic activity and emerging markets like Asia, Latin America and the Middle East and other cities within those markets. These global emerging markets are simultaneously shifting the center of the world economy east and south. By 2025, when China will be home to more large companies than either the United States or Europe, we expect nearly half of the world’s large companies—defined as those with revenue of $1 billion or more—to be headquartered in emerging markets.
Accelerating Technological Change
The acceleration in the scope, scale, and economic impact of technology is at amazing speed. It took more than 50 years after the telephone was invented until half of American homes had one. Twenty years ago, less than 3 percent of the world’s population had a mobile phone; now two-thirds of the world’s population has one. Today, innovation has multiplied and spread in recent years, it is poised to change and grow at an exponential speed.
Technology offers the promise of economic progress for billions in emerging economies at a speed that would have been unimaginable without the mobile Internet. Entrepreneurs and start-ups now frequently enjoy advantages over large, established businesses. The furious pace of technological adoption and innovation is shortening the life cycle of small to medium companies allowing them the competitive edge in business.
World Aging and Its Challenges
For the first time in human history, aging could mean that the planet’s population will plateau in most of the world. The human population is getting older. Fertility is falling, and the world’s population is graying dramatically. By 2013, about 60 percent of the world’s population lived in countries with fertility rates below the replacement rate. The European Commission expects that by 2060, Germany’s population will shrink by one-fifth. China’s labor force peaked in 2012, due to income-driven demographic trends. In Thailand, the fertility rate has fallen from 5 in the 1970s to 1.4 today. A smaller workforce will place a greater pressure on productivity for driving growth and may cause us to rethink the economy’s potential. Caring for large numbers of elderly people will put severe pressure on government finances.
Resetting Intuition
Many past assumptions, tendencies, and habits that had long proved so reliable have suddenly lost much of their importance. That is partly because intuition still determines much of our decision making. Our intuition has been formed by a set of experiences and ideas about how things worked during a time when changes were incremental and somewhat predictable. If we look at the world through a rearview mirror and make decisions on the basis of the intuition built on our experience, we could be wrong. In the 21st century, executives, policy makers, and individuals all need to scrutinize their intuitions and boldly reset them if necessary. This is especially true for organizations that have enjoyed great success. There is an urgent imperative to adjust to these new realities.