A framework for change
“Organizations need to be ready to seize the upside of disruption,” says Uschi Schreiber, EY Global Vice Chair — Markets and Chair, Global Accounts Committee. “They need to know where disruption is coming from, where it’s headed and what it means. The megatrends report, and our framework for change, can help organizations establish the right baseline for a strategy that can turn downsides into upsides, and threats into opportunities.”
Widely considered essential to understanding the forces that transform economies, business and government, EY’s report investigates disruption through a framework of four interconnected ideas: primary forces that generate disruption through megatrends and result in future working worlds, as well as weak signals whose present role is unclear.
“Most meaningfully for corporate decision-makers,” says Schreiber, “they demand different kinds of responses.”
Three primary forces shape the future
EYQ identifies three catalysts of disruption: technology, globalization and demographics.
The next wave of technology will be driven by human augmentation. Whereas tech’s role as human helper has been passive up to now, innovations in artificial intelligence (AI), augmented reality (AR) and virtual reality (VR) mean a new era of human/tech cooperation is on the horizon — autonomous vehicles and AR glasses are only the beginning.
EYQ points to populism as the driver to watch relative to globalization. The report argues globalization is a scapegoat for job loss, as automation displaces more jobs than immigration and trade. It cautions that corporate leaders should proactively address the potential for automation to disrupt jobs, especially in emerging markets.
In demographics, EYQ identifies aging populations as the drivers of disruption, necessitating new developments in tech, health care and city planning.
Megatrends arise where primary forces intersect
EYQ’s report outlines 10 megatrends:
- Industry redefined is a trend that suggests permeable barriers between industry sectors and cross-sector collaboration will become the new normal.
- The future of work reflects shifting paradigms in the working world spurred by technology and changing demographics. EYQ suggests education will evolve in kind, as will corporations’ approach to supporting the workforce.
- The super consumer will arise as humans embrace AI. “Technology will change the way consumers communicate with markets, companies and each other, as well as how they live,” according to EYQ.
- This change will only come about through intensive investment in behavioral design, as companies grapple with consumers’ natural bias against new technologies.
- Adaptive regulation considers the growing need for agility in government. EYQ points to the sharing economy as a harbinger of this, and says the future of regulation is “open, real-time and dynamic.”
- Remapping urbanization considers how climate change “will transform the shape of cities,” along with disruptive technologies like AVs, electronic vehicles (EVs) and ridesharing.
- Likewise, the report predicts innovating communities will arise from the outflow of talent from costly megacities. This and shifting workforce paradigms stand to benefit smaller cities and “legacy cities” (those that boomed during the industrial revolution but have since fallen behind).
- Enabled by tech and spurred by aging populations, health reimagined reflects a new health care paradigm that will be “predictive, personalized, proactive, and participatory,” to the benefit of patients as well as governments and business.
- Similarly, food by design considers “innovations at the intersections of food, biotech, wellness and digital” to address demand for a more sustainable and healthful food industry, as the current system becomes untenable due to climate change and population growth.
- Finally, molecular economy refers to nanotechnology’s growing potential to disrupt manufacturing in the push for greater efficiency and cleaner materials. EYQ predicts a multiyear period of disruption in response to nanotech.
Envision your future working world
The report suggests future working worlds will be shaped by a rebalanced global system, renewed social contracts and superfluid markets.
The next waves of technology and demographics will result in a global system EYQ calls “multipolar,” with “different countries influential across particular dimensions,” increased connectivity, and a regional rebalancing spurred by infrastructure programs like China’s Belt and Rail Initiative (BRI).
At the same time, disruption has strained longstanding social contracts between citizens and society. The report advises that renewed social contracts must address questions of democracy, inequality and education, among others.
“We have now entered the age of superfluid markets,” EYQ says. New technologies have eliminated inefficiencies and frictions, and this will continue. Companies will become leaner, teams will be organized around task, rather than by role, and freelance labor will grow.
Weak signals to watch
EYQ characterizes weak signals as murmurs of disruption with potential to grow and evolve rapidly. The report identifies two of these signals:
- Emotionally intelligent machines have the potential to affect better outcomes. Current hurdles to this include privacy concerns and our still-limited understanding of the human brain.
- Supersonic travel potentially plays a role in city planning, workplace and consumer culture. The report specifically refers to Elon Musk’s Hyperloops, and theorizes the United Arab Emirates is the most likely site for first implementation.
Disruption is coming — is your organization ready to respond?
