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The Digital Era The digitisation of our lifestyles is becoming the norm. People are now able to work anywhere, anytime, fragmenting the traditional workplace and challenging the need for a central physical business location and traditional organisational hierarchies. Leaders in the digital era will need to get a grip on managing diverse, loose knit teams whose members are dispersed around the world.
In order to create loyalty, leaders must foster a sense of unity, engagement and collaboration among people who rarely meet, and ensure that there is effective decision making among these groups. Openness, integrity and reputation management will be key in a transparent, virtual world, which will oblige leaders to act with sincerity and authenticity, or see their reputations plummet.
The global population is expanding — especially in developing and emerging markets, and rapidly aging in the industrialised world. These demographic changes are placing great pressure on social structures and western companies. National welfare systems are being stretched to breaking point due to growing populations and faltering support ratios.
The result of ageing populations is a war for talent which will intensify into the future. An ageing global population will mean a shrinking workforce, stepping up the competition for specialised skills, high performers and effective leaders.
Corporations and even nations will find themselves in a global war for talent. Successful organisations will need to develop an increasingly diverse workforce to ensure an adequate talent pipeline, which will include employing men and women of all ages and of different cultural backgrounds. Managing this diversity will be a core leadership competency. Technological convergence Technological progress is likely to transform many aspects of our lives.
Advanced scientific disciplines such as nanotechnology, biotechnology, IT, cognitive science and robotics will drive major innovations in important areas such as healthcare, logistics and nutrition. The coming together of these scientific fields will make possible the greatest leaps forward, transforming industries, threatening others and creating many new product markets.
In addition, convergence of these technologies will necessitate new levels and forms of collaboration. Diverse scientific disciplines, businesses, academia and even competitors will need to work together to pioneer research programs. All this technological advancement will lead to societies debating over the ethical boundaries of technological advancement. Each of these individual megatrends will create tough challenges and enormous complexity for organisations and leaders, However, they do not develop in isolation.
They are developing together, and as such, will greatly intensify the difficulties for business leaders. The megatrends combined will result in a set of 5 reinforcers and four significant dilemmas. The reinforcers result from and are reinforced by 2 or more megatrends in tandem. It is these reinforcers that will have the greater impact on the future of business leadership.
At the same time, a series of tensions, contradictions and inconsistencies between the megatrends will present a series of dilemmas that leaders will have to face. The 5 reinforcers are: 1. Stakeholder Proliferation Unlike in the past when businesses only had one main stakeholder to please — shareholders — today companies need to address the demands of a complex array of stakeholders, including customers, employees, suppliers and competitors.
Stakeholders are no longer limited to groups of people, abstract entities such as society, the planet, and global regulatory bodies also have become crucial considerations. Leaders must increasingly consider the impact of their decisions within this new stakeholder landscape. Power Shift Power is the ability to direct or influence the behavior of others. Conventionally business leaders have the power to influence their employees, consumers and other stakeholders which is what enables them to execute their strategies and implement their decisions.
However, the megatrends will shift this power and authority away from leaders towards other stakeholders. The war for talent will place the power in the hands of talented individuals and out of the hands of business leaders. This power shift will present industry leaders will a paradox. Leaders will need greater power to be able to make and execute the big decisions needed to address the challenges and threats of the megatrend storm, yet the megatrends themselves will act to erode leaders power.
New Working Practices Together the megatrends will bring about dramatic social, emotional, physical and procedural changes in work and the workplace. This will result in a new social practice of work and is a fundamental overhaul of deeply embedded working processes, routines and behaviours and of long-established expectations of the workplace and work-life balance. This new model will consist of several elements which will combine to make work look very different for many people in The new model will include fully mobile workplaces; virtual work with new virtual tools and platforms to enable work to be done remotely; blurred boundaries between private, public and work life; and growing anticollectivism and antiauthoritarianism among the workforce.
The new social practice of work will result in a paradox for leaders who will need to lead employees they never see, and who might not even think of the leaders as their leaders. Cost Explosion Rising costs are a common lament among business leaders and consumers alike. However, under the megatrend storm, costs are set to explode across the board as a result of a range of factors including the environmental crisis and the scarcity of raw materials such as oil and rare earth metals.
Global warming and growing populations will threaten water supplies, increase temperatures and threaten food supplies. The talent shortage will drive up employee costs. Faced with soaring costs, we may need to find different ways of living, working and doing business. Ethicisation of Business In recent years, the business world has not displayed the highest moral standards.
Looking ahead, the megatrends, including climate change, the digital era, and technological convergence will demand impeccable ethics from organisations and their leaders. Consumers will expect that companies contribute to a fairer society and establish trusting relationships with customers. This calls for a high levels of integrity, authenticity and transparency.
Leadership Dilemmas caused by the Megatrends 1. Mobility Globalisation 2. Meanwhile, the growing middle class will result in millions of people starting to travel for pleasure and leisure. However, addressing climate change will require a drastic reduction in carbon emitting travel and transport costs. Leaders will have to make tough decisions about travel and how they can function without actually meeting the people they manage and work with.
Resources Growing consumer demand as a result of Globalisation 2. Demand for technology in particular will sour and new machines with powerful applications in healthcare, agriculture, food production and other important fields will be developed. So how will industry continue to satisfy spiraling demand for technology in the face of dwindling supply of essential raw inputs?
Hierarchies On the one hand, the megatrends will push for the need for flatter management structures where employees exert their individualism, want more responsibility, display less respect for formal authority, and insist on working remotely. On the other hand, increasingly large, diverse and global corporations will require ever increasing levels of coordination to execute operations, share ideas, deliver products to market, improve processes, drive innovation and cope with the increased complexity.
How thin can hierarchies become while still exerting the necessary control? Creating lean structures that retain adequate control could prove to be a tricky balance. Horizons The environmental crisis caused by years of human activity is probably the most intractable problem facing the world today. It will require complex solutions designed and implemented over long periods of time. Yet younger generations have short attention spans and are used to instant gratification.
The world will need long-term thinking, painstaking analysis and thoughtful consideration to deal with its complex problems, but where, when and how will organisations find time for people to think through these issues and consider solutions? Also, contrary to generally accepted view of leadership, there is not one set of leaders and one set of followers in life. In fact, many people are both. They may be a leader in one area and a follower in another.
So leadership is not only relational, it is also contextual. An important aspect of leadership is influencing others. Broadly speaking, there are 6 ways a leader can influence people: 1 by giving commands, 2 by setting the pace, 3 by sharing the vision 4 by coaching 5 by creating harmony, and 6 by including others in decision making.
Alpha-male leaders tend to resort largely to the first two styles. Globalization 2. Climate change: Sustainability becomes imperative. Individualism: Freedom of choice erodes loyalty. Digitization: Boundaries blur between private and working lives. Demographic changes: Aging populations intensify the talent war. Converging technologies: The sharpest tech shift in history is around the corner.
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In Leadership , six megatrends are uncovered for the forward-thinking leader that will dramatically impact organizations' markets, cultures, systems, and processes Globalization 2. Climate change: Sustainability becomes imperative. Individualism: Freedom of choice erodes loyalty.
Digitization: Boundaries blur between private and working lives. Demographic changes: Aging populations intensify the talent war. Demographics and social change … ageing populations, global migration and robotic automation Changes in global demographics will bring significant challenges and opportunities for societies and businesses. The forces that underpin this megatrend include ageing populations in advanced economies and China, the outlook for future jobs, immigration pressure, skills imbalance and the radically different priorities of younger generations.
Italy and Germany lead the way in Europe, with the median age of their populations at In Western Europe, 1 in 5 people are older than 65 and this is expected to rise to 1 in 4 in the next decade. Ageing and the resulting decline in the labour force will hence require dramatic social and technological changes. Consider the case of Japan; the combination of ageing about one-third of its population is over 65yr and low immigration has led to very tight labour markets; the jobs-to-applicant ratio in Japan stands at 1.
At the same time, Japan has been one of the largest buyers and makers of robotics; it employs robots for every 10, human workers compared to for the US. Smarter machines are a solution for countries with shrinking labour forces; but they are likely to trigger challenges for younger economies, by disrupting jobs and limiting wage growth. As the competition for highly skilled labour heats up, companies will need to spend more resources to attract, train and retain talent.
Rapid urbanisation … Supercities of the new world, melting points of culture, demanding new infrastructure Cities have always been hubs for talent, capital and innovation. In the last decade, hundreds of large cities have been built in emerging economies, attracting significant infrastructure investments.
Large cities such as San Francisco, London, Paris and New York have also been the ideal launch pads for entrepreneurs given their large, dense populations. Understanding the advantages and challenges of future cities can help us identify the next sources of growth. As cities grow large, they require significant infrastructure, including communication networks e. This was a key driver of commodity demand and fixed investments in the last years as China and other developing economies industrialised rapidly and millions of people migrated to cities.
Large cities that offer good infrastructure, greater convenience and attractive job opportunities typically attract global talent. This leads to higher population densities and younger consumers with higher disposable incomes: the perfect ingredients for innovation and entrepreneurship.
Climate change and resource scarcity … carbon, and the pressure on our planet for food, oil, and water An expanding population and the rising demand for food, energy and materials continue to strain the finite resources of the planet. The need for solutions that improve energy efficiency, lower food waste and provide alternatives to scarce resources has never been greater. Underlying these trends is the persistent increase in global emissions which has led to intensifying debates around climate change and how we can resolve it.
In , global emissions continued their march higher growing 1. The social and economic consequences of climate change are substantial. How can this be slowed? Investing in energy efficiency and renewable energy is an important step. The good news is that clean energy today is cheaper than it has ever been. In some countries, clean energy sources are comparable to natural gas and coal power in terms of unit costs and rely less on government subsidies each year.
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