Troy Media – by Rohit Talwar
We had an excellent response to our first set of predictions of inevitable surprises which can be found here. Today we are exploring topics that we think could or should become a major focus of public discussion and debate between now and the end of 2012. As always, we welcome your feedback.
1. Education becomes a new battleground Across the developed world in particular concerns will continue rising over the standards of state education systems and the risk of falling behind emerging economies where the value of education is held in high regard. Challenges will become ever-louder on the content, appropriateness and teaching methods in use. Pressure will mount to rethink both the underlying philosophy and physical delivery of education in many countries. Demands will increase for a greater emphasis on applying new insights from research on learning, integrating technology and blending live and virtual classroom components. The focus will also shift to finding new models for running the system. For example, the Khan Academy is a not-for-profit educational organization created and operated by Salman Khan. With the stated mission “of providing a high quality education to anyone, anywhere”, the Academy supplies a free online collection of more than 1,600 videos on mathematics, science, history, and economics.
2. Social, mobile and augmented Social activity will continue to be transformed by the mobile web which is currently experiencing an unprecedented growth in use. By 2012, it is predicted that global smartphone shipments will be greater than notebook and PC sales combined and surpass the billion level by 2015. Rising smartphone penetration coupled with the rise of social apps and services will continue to transform social activity. For example, we expect to see a rise in mobile aggregator sites offering deep instant discounts for same day food and leisure experiences if enough people sign up in a fixed window of time. We also expect to see the rise of reverse auction sites where communities offer themselves up to see which provider will bid the most attractive experience offer for that evening.
3. Rising tolerance of small business law breaking Recent months have seen a growing number of cases from the UK and elsewhere where unscrupulous employers have exploited and mistreated both legal and illegal foreign workers. Examples have emerged of foreigners being held as slaves or forced to work in illegal factories with poor safety standards – leading to explosions and loss of life. An increasingly self-absorbed public will express concern, but do little to demand change. Overstretched and under-resourced police forces and judicial systems will in practice continue to turn a blind eye to detecting these abuses.
4. Aliens land in Hollywood The focus for film makers will increasingly reflect the rising mood of anxiety across their viewing public. The filmgoer needs someone or something upon which to focus our anger. Having exhausted Arab terrorists and World War II reruns for the moment, Hollywood may focus instead on other worldly threats. We anticipate a rise in films about alien invasion (e.g. Battle Los Angeles) and impending doom (e.g. Melancholia).
5. China 2.0 We expect China to accelerate its preparations for the possibility of a Republican President in the U.S. and a potentially more fractious relationship in the years that follow. China will increasingly seek to fire warning shots and make clear that it is in no mood to be bullied. The issue of the global reserve currency could be a key battleground.
Some say the process has already started. On August 6th, following Standard & Poor’s downgrading of the U.S. credit rating from AAA to AA+, Xinhua, the official Chinese news agency, launched a scathing attack on U.S. economic governance. Xinhua argued that “The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered. . . Many outside the United States believe the credit rating cut is an overdue bill that America has to pay for its own debt addition and the short-sighted political wrangling in Washington”.
Xinhua went on to say”. . . China, the largest creditor of the world’s sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets. To cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means . . . It should also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits . . . International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country”.
6. U.S. job creation – a fine word burger topped with inaction sauce? In June 2011 McKinsey estimated that to replace the seven million jobs lost in the U.S. during the 2008-09 recession would take until 2016. A key problem is that while joblessness remains high and new Americans continue entering the labour force, there are millions of open positions for which there are too few qualified workers. A radical rethink is required to deliver a major programme of rapid re-skilling of those currently out of work and encourage the adoption of accelerated learning techniques to improve the prospects of those coming out of the education system. While we expect the introduction of new training schemes and the idea of school reform to be broached, the political debate may hinder any serious progress in the short term.
7. CIVETS on the prowl First we had the BRIC grouping of Brazil, Russia, India and China, to which South Africa has recently been added. Then came the E7 and N11 – so which is the next country grouping that global businesses will focus on in their search for growth? We expect increasing attention to be paid to the CIVETS countries – Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. The EIU is predicting year on year growth for the CIVETS of 4.5 per cent per annum from 2010 through 2030. This compares to 4.8 per cent for the much more populous BRIC economies and only 1.8 per cent for the G7. Issues around civil rights, stability and environmental degradation should figure prominently in country due diligence – but may be set aside by many in the quest for growth opportunities.
8. Lost in transition In the midst of the current financial turmoil and in the face of government debt reduction programmes, the ranks of unemployed and disaffected youth will rise across Europe. A lost generation of increasingly male unemployed youths is developing with stale skill sets and limited opportunities – exacerbating already simmering social tensions. Currently, one in five people aged between 16 and 24 are unemployed in the UK. The figures in parts of Europe are much worse; with 44.3 per cent of young people unemployed in Spain, 36 per cent in Greece, 27.8 per cent in Portugal, and 31.5 per cent in Ireland. An ageing population means the influence of this group is diminishing at the ballot box and, despite much public hand-wringing by politicians, few large scale improvement measures are being implemented. As with the U.S., a radical and innovative overhaul of education, training and apprenticeship schemes is required to alter their prospects and give young people a stake in the future.
9. Internet address revolution The opening up of domain naming will create opportunities and confusion. In June 2011, the Internet Corporation for Assigned Names and Numbers (ICANN) approved a new array of top-level internet domain names. From January 2012, websites can apply to move beyond the traditional .org and .com addresses to use more specific domains such as .human rights, .app, and the designated pornography domain of .xxx. This creates new branding opportunities for those who want invest in a new dot domain name. There will inevitably be costly battles over the most sought after names. However, whilst opening up branding opportunities, the move could create confusion amongst users faced with a myriad of new domain addresses – ultimately they will simply turn to search engines to find the desired site.
10. Augmented worlds – choose your reality 2012 will be the year of the augmented reality (AR) app. As businesses seek to differentiate themselves in turbulent times, these relatively low cost developments will be seen as a quick and distinctive way of capturing customer attention. AR solutions enable us to overlay data on the world around us. For example, the Copenhagen Airport app allows you to navigate around the airport, highlights where to find retail, leisure and dining options, provides user reviews and offers prompts related to your flight. Marketers will embrace AR in their quest to deepen and strengthen the relationship between product and service brands and consumers.
11. Discount Discount Discount Demand aggregator sites will drive opportunity and innovation in the most unexpected places. Recently, National Louis University in Chicago sold all the places on an entire course via Groupon – offering students a 57 per cent discount on the normal course fee of $2,232. We expect to see a growing range of services from airline seats to medical treatments and even counselling to be sold in this manner over the next year.
12. We fly Wi-Fi We anticipate a significant expansion of in-flight Wi-Fi offerings by the end of 2012. One of the biggest debates in the airline industry is how to deliver and charge for in-flight Wi-Fi services. Several airlines such as Lufthansa, Virgin America, AirTran and Delta are already offering in-flight Wi-Fi on a number of their routes. A combination of technological advancement, falling market prices and the pull of consumer expectations are driving the change. The process of industry wide adoption of comprehensive in-flight Wi-Fi will gather pace in all but the thriftiest budget carriers.
13. The customer as service agent An increasing number of firms will shift portions of their customer service to the social media. Many will also seek to engage their most active customers as unpaid service agents – providing advice and resolutions to other customers’ queries. The opportunities are immense – for example, mobile phone operators could dramatically reduce inbound calls from new phone customers by allowing customers to upload their own 30-second videos on how you use key features on a phone. The most forward-thinking brands will recognise the value of acknowledging and rewarding these unpaid agents – be it through account credits or offering access to new model in advance of the market.
14. Cloud cover The pressure to control operating costs, reduce asset inventories, increase flexibility and access new functionality faster will all accelerate the take up of cloud computing by businesses around the globe in the coming 12 to18 months. For those on a rapid globalization path, the cloud based or Software as a Service (SaaS) model also offers the promise of global access to common systems. The pace of adoption will accelerate despite concerns over security and data theft (see our recent article on the Future of Secure Data in the Cloud).
15. Waste not want not The debate will grow over the issue of where the world sends its waste and who pays for the long term clean up costs. The fast-developing countries will increasingly seek to adopt environmental regulations more typically associated with medium-high wealth economies. Their resulting reluctance to accept foreign waste could lead to two parallel developments. Firstly, poorer economies may step in to accept the waste that no one else wants – at a price. Secondly, the need for more sustainable solutions could lead to renewed interest and investment in waste to energy conversion technologies.
16. Iran and the Middle East – the nuclear option Iran will expand and accelerate its nuclear energy programme. Other Middle Eastern countries are also pursuing the nuclear option. Gulf States, led by Saudi Arabia, are looking to invest heavily in the technology to 2030, ostensibly to diversify their energy intense economies away from hydrocarbons and to prepare for a coming era of high oil and gas prices.
17. New global leadership, old challenges, limited options Over the next 12 to18 months there could be a sea change in global political leadership. Elections are on the horizon in the U.S., Russia, France, and Spain and China (see below) will see a leadership change. However, the scale of challenges faced by the first three and the weight of expectation on the latter will mean the new leaders have little room for manoeuvre to introduce new policy measures.
The economy will clearly play a central role in determining the next U.S. President (see below). In France, a beleaguered President Sarkozy will probably hold onto his position. In Russia, Putin seems likely to reclaim the presidency, whilst in the UK, there’s an outside chance that a double dip recession and further social unrest could force the current conservative-liberal coalition to disband.
18. China’s first president of the world? For at least the last century, the world has grown accustomed to the U.S. President accepting the de facto mantle of leader of the (free) world. A Republican in the White House could see the U.S. turn inward and focus its attention on a range of domestic challenges. China could increasingly be nudged, pulled and pushed into playing more of a global leadership role – representing in particular the views and needs of the developing world majority on the planet. As China faces transition to a new leadership next year, the responsibility would lie with current Vice President Xi Jinping, who is due to take over from Hu Jintao as President of China and General Secretary of the Chinese Communist Party in 2013. Xi’s stance is as yet unclear on many issues. While he has made conciliatory moves towards the West, he has also been uncompromising on the issue of a separatist Tibet and is unlikely to countenance a populist Tibetan uprising or support for it abroad.
19. Korea – love don’t live here any more South Korea will adopt an increasingly assertive posture in the face of continued hostility from its volatile northern neighbour. March’s sinking of a South Korean Navy Vessel and subsequent artillery exchanges have stoked the fire on the peninsula whilst rising world food prices threaten to worsen an already dire situation among the North’s poor. We have also been witness to the grooming of Kim Jong-Il’s Son, Kim Jong-Un as premier, introducing another factor into a volatile mix. The South is keen to protect the rapid advances in economic and living standards it has achieved and will increasingly match any aggression from the North but is unlikely to take pre-emptive steps.
20. The U.S. Presidential Election – Two Scenarios Given the two most probably outcomes (barring the emergence of a credible independent candidate), we have focused on outlining possible scenarios for what might happen next.
Democrat Victory – A successive victory for the Democrats should reinvigorate the Obama presidency. His supporters would encourage the regime to have the confidence to pursue the more radical agenda on which he was originally elected and continue with the tentative social reforms of the previous four years. However the continuing economic crisis at home and abroad will remain Obama’s principal priority. Without reform of the U.S. political process, this suggests four more years of tortured economic wrangling with the Republicans and resulting compromises that push any proposed economic policy to the right.
Republican Victory - Whichever Republican candidate succeeds, an early and populist course of action will be to dismantle or neuter key social legislation from the Obama regime, most notably healthcare reform. In the face of continued economic turmoil, the Republicans, at the behest of the Tea Party, will most likely seek drastic cuts in the regulatory powers of the federal government, reduce taxes across the board, and ease environmental restrictions.
Next up: The Winds of Change
Rohit Talwar is the CEO of Fast Future Research – a global research and consulting company that specialises in identifying future growth industries and helps governments and global companies to explore and respond to the sectors, ideas, trends and forces shaping the next five to 20 years. firstname.lastname@example.org
Category: Business Stategy