by Daniel Priestley, finalist in 2018 The Business Book Awards for his book, 24 Assets: Create a digital, scalable, valuable and fun business that will thrive in a fast-changing world, published by Rethink Press . The Business Book Awards 2019 is now open for entries.
There are five mega-trends converging in the 2020s that will affect that way entrepreneurs run their businesses and seek out opportunity. Just one of these trends would be enough to transform the business landscape, but all five at the same time will cause one of the greatest shifts in human civilisation the world has ever seen.
Trend 1: Retiring Baby Boomers
From 1946 until 1964, there was a huge spike in the birth rate and we refer to this population increase as the Baby Boom. People born in this time have collectively had a huge impact on economies. In the 1950s, they needed baby products and companies like Gerber Baby Food was a darling stock. In the 60s they blew up the music industry. In the 1970s, it was cars and in the 80s it was houses that were in hot demand by the boomers.
Fast-forward to today and you’ll see these people retiring in droves. They are moving from income earners and tax payers to pensioners and welfare recipients. They are shifting from wealth accumulation to wealth liquidation. This trend will impact financial markets, economies and government policy.
Trend 2: Millennials in Management
While the Boomers are heading into retirement, the Millennials (born 1981-1999) are moving into management roles, starting families and buying homes.
The Millennials however, are a different generation from their parents and grandparents for several reasons. They’re ‘digital natives’ having grown up with a PC in their home and a mobile phone from a very young age. They were the first generation to be given credit cards from the age of 18, and most had to pay for university degrees with debt.
They believe in “access over ownership”, choosing to stream music rather than own albums and preferring Uber and AirBnB over cars and holiday homes. The business models of the past simply don’t cut it with this group.
Trend 3: Technology Unemployment
For the last 50 years, technology has been our friend because it makes any human being more powerful and efficient. An accountant with a PC is a more productive and knowledgeable accountant; a driver with an onboard computer is a better and safer driver. This may not be true for many jobs as new technology is removing the need for human intervention.
The USA manufactured twice as much in 2015 as it did in 1985, but it did so with one third of the workers in manufacturing. Foxconn in China is replacing over 50,000 workers per year with fully autonomous robots that can assemble all sorts of products. The West might bring local manufacturing plants back, but it won’t bring the manufacturing jobs back – machines are the builders of the future.
Trend 4: Government Austerity
Governments will struggle to generate taxes to sustain the normal spending and borrowing habits of the past. For thousands of years, governments have defined themselves primarily by geography – the US Federal Government, the London City Council, the European Union, etc. This poses a huge problem in a digital world that doesn’t run on geographical lines anymore.
Big companies don’t limit themselves to a geographical border. They define themselves by their vision, mission and values and will happily go anywhere they lead. It’s effortless for companies to move money internationally and profits to a low tax environment.
Historically, countries didn’t care too much about this because whatever they failed to collect from corporations, they made up for with income tax from their workers. In a world where people travel freely and work from anywhere, this gets harder. When companies can easily outsource labour costs to low income countries, local governments are in real trouble. In a world where a lot of the value is created by systems not people, it’s an impossible shortfall.
Trend 5: From Consumption to Connection
Many entrepreneurs are discovering that businesses that simply sell a commodity aren’t very profitable. Consumers want meaning, they want to see businesses that solve real problems and even tackle social issues. People buy from companies that display values and vision beyond making money. Ironically, it’s these companies that are making more money than ever.
Businesses like Tesla, Nike and Starbucks attract customers who behave more like fans. These brands are comfortable being outspoken on issues and taking a stance in line with their values. Sometimes this polarises people away but often it galvanises more people to their brand.
As we move into the 2020s, every entrepreneur will need to articulate what they stand for or stand against or face being bland and commoditised.
The 2020s will be the most transformational decade in human history as these big trends disrupt the status quo and create entirely new ways of doing business in their wake.