What are the megatrends of the 21st century and what implications will they have once they are fully present in our society? It should be a priority to educate oneself about megatrends to make assumptions about the future and take the best decisions today to benefit tomorrow. Based on my observations of new technologies and trends I spotted 20 megatrends. According to Oxford Dictionaries a megatrend „is an important shift in the progress of a society or of any other particular field or activity“. For example, in the past the development of cars resulted into major progress of our society. Gottlieb Daimler invented the first four-wheeled automobile and together with other pioneers of the automobile industry a new form of mobility was invented, which luckily gave horses a break.
The megatrends of the 21st century have the potential to disrupt whole industries and as they continue to grow, they will support and amplify one another. Accepting and adapting to changes is not easy but the paradigm shift that is taking place will transform the world. Either one will be part of the disruption or one will be disrupted.
“Gentlemen, you had my curiosity. But now you have my attention.” – Calvin Candie, Django Unchained
Based on my observation I have categorized the megatrends in short, medium, and long time periods. Megatrends categorized in the short time period are already tangible and visible in our society, megatrends listed under the medium time period are slowly progressing but are not yet fully tangible and visible in our society. Megatrends categorized in the long time period are still being developed and therefore are neither tangible nor visible in our society. Click here to download a compact overview of the megatrends: A Categorization of Megatrends of the 21st Century.
Short time period
Globalization is the increasing interaction of people, states, or countries through the growth of the international flow of money, ideas, and culture. As a consequence, it reduces the physiological and psychological distance of society and provides exciting opportunities and challenging threats.
As a consumer, one benefits from a grand variety of international products and services at relatively low prices. Supermarkets around the world now contain foods that were unimaginable 50 years ago. Local grocery stores find it hard to compete with the international and efficient supply chains of established supermarkets. In general, almost every industry is characterized by growing competition as a result of globalization. Companies have to become more efficient and effective and create a strong brand to position and differentiate themselves from other companies.
Having lived in four countries for longer than six months (Germany, Australia, New Zealand, and Netherlands) I realized the value of working with global minds on challenging topics. The more international a group is, the more creative the output is (assuming that training on communication and cultural awareness was provided). However, not everything is positive. The more international people live in a city, the more condensed competition becomes. For instance, Berlin attracts talented people from all over the world who then compete with locals. How do people feel about competition? One the one hand, I believe that it has positive aspects because it gives people a reason to develop themselves and improve their skills. On the other hand, the constant competition might lead to mental stress.
„Life is hard. After all, it kills you.“ – Katharine Hepburn
In the future, developing countries will create whole new economies. New aspiring talent will move to more developed countries that offer more possibilities. Competition in developed countries will only increase. As a consequence it will become crucial to have a strong network. It is my belief that as the world grows larger personal connections become more important. Another crucial factor to succeed in a globalized world is to build a personal brand. It is important to learn how to position and differentiate oneself. Personal branding will become more important in a world full of talent.
A decade ago people bought radios at the electronics store around their corner. Chances are high that today local stores closed because people buy most of their gadgets online simply by trusting customer reviews. Today people compare prices through platforms and enjoy full market transparency.
The same radio is offered on multiple online stores and vendors can not seem to find any way to differentiate themselves except by price. This is how heterogenous products become homogenous. If store owners would like to differentiate themselves, they could improve their customer service, offer longer warranty, or create a more customer-friendly refund policy. These premium offers do not come for free, however, if prices increase, then price sensitive customer might switch to competitors who offer lower prices. It becomes necessary to test different variations of the offer, adjust where necessary, and never stop improving the customer shopping experience. One could also lower its profit margin, but this should be the last option as predatory pricing strategies lead to an unprofitable market. Furthermore, predatory pricing strategies are considered anti-competitive in many jurisdictions and are illegal under competition laws. A better alternative is to increase overall effectivity and efficiency and use the cost savings to provide the above mentioned premium offers at market price.
To attract offline visitors, retail chains have to create superb shopping experiences or offer whole new business models. Digitalization has a strong impact on almost all small and medium enterprises (SMEs). Fashion stores, insurance offices, and news channel are all being disrupted by online businesses that provide a more competitive offer or more convenient shopping experience. However, according to an infographic by Goldman Sachs Global Investment Research, over half of all Millennials (57%) use their mobile devices to compare prices while in-store. Therefore, even if the offline shopping experience is designed exceptionally well, chances of an expensive purchase are low if price sensitivity plays a role. Furthermore, digitalization has changed traditional forms of communication and has opened whole new models for engagement and participation. Through the emergence of social media platforms, people started to find, share, and discuss new and interesting content relevant to their fields of interests. An article by Harvard Business Review suggests that bringing in a Chief Digital Officer (CDO) might help an organization that struggles in the digital world.
Digitization is rapidly changing the way of working. When I worked at Siemens Healthineers I mainly worked with other employees over Skype. I agree with Alexandra Samuel, who argues that online collaboration is good at solving three kind of problems: time problems, distance problems and communication problems. Read her article here. However, online collaboration is a complement, not a substitute, to face-to-face work.
3. Demographic and social change
Overall world population is expanding and most of the growth will come from emerging or developing countries. Equally important, population in developed countries is shrinking while the population segment that is over 65 years will grow significantly until 2030, according to PWC.
The population segment that is over 65 will become more attractive to marketers due to its size, which will ultimately lead to new business models and services. Furthermore, the proportion of people of working age in Europe is shrinking while the relative number of those retired is expanding, which will likely make healthcare more expensive in the near future and, according to McKinsey Global Institute, put severe pressure on government finance.
4. Decreasing lifestyle satisfaction
The 2017 Deloitte Millennial Survey and the Nielsen Global Generational Lifestyles Survey present that Millennials in developed countries feel pessimistic or are unsatisfied with income and other medical, retirement, and savings-plan benefits.
According to Goldman Sachs Global Investment Research, significant milestones like marriage and children have been put off for later stages in life.
5. Entrepreneurial mindset
Most media outlets such as Entrepreneur or Inc. Magazine give the illusion that there is an emergence of entrepreneurs, however, according to an analysis by the Wall Street Journal, the „share of people under age 30 who own private businesses has reached a 24-year-low, according to new data, underscoring financial challenges and a low tolerance for risk among young Americans.“ The report Megatrends 2015 by Ernst & Young states that entrepreneurship is growing; perhaps globally. In Germany the number of business registrations fell 50 percent in the last ten years.
One should differentiate between people who are entrepreneurs and who are having an entrepreneurial mindset. During my bachelor program I studied one semester in Berlin, the unofficial Silicon Valley of Europe. Almost everyone I was in contact with had an entrepreneurial mindset in Berlin and talked about Eric Ries, Peter Thiel, or another high profile entrepreneur but actually only a few founded an organization.
Nowadays, crises are developing faster than one could possibly expect. Whoever acts and innovates faster than the competition does, has higher chances to become the market leader. One should not be surprised if organizations that nurture a culture of innovation are more productive than organizations that do not. Recruiters should hire candidates and retrain employees with entrepreneurial mindsets.
6. Educational revolution
A recent study by the Pew Research Center revealed that Millennials are on track to become the most educated generation to date. Furthermore, thanks to the internet one has almost free and instant access to the world’s information and knowledge. Today, organizations such as Coursera, Udemy, or other providers of massive open online courses (MOOCs) will revolutionize the educational system and increase education levels.
What is the added value of a bachelor or master degree if one can learn the same material online through MOOCs? Universities should ask themselves critical questions regarding their role as educators. How can they stay relevant in a world, in which education is almost free? Students, on the other hand, will become prone to information overload and need to learn to focus. Being able to focus or gain attention will become critical skills for the jobs of the future. Furthermore, as the world is constantly changing, society needs to embrace a mindset of lifelong learning.
At this point in time, according to PwC, more than half of world’s population lives in urban areas. Most growth will take place in already urbanized areas transforming medium-sized cities to megacities.
Megacities will confront urban planners with new challenges, such as increasing density of traffic congestion, privacy and security issues regarding smart cities, rising rent prices, or rising social division and exclusion. These challenges demand new approaches and technology and offer exciting new opportunities. Automobile manufacturers will become mobility providers that could put an end to traffic ingestions or revolutionize existing infrastructure. Corporations will transform to social organizations by solving some of the above mentioned issued. The more developed a city is, the more potential there is to attract new citizens or investors. Keeping this in mind should be the priority of urban planners.
8. Geo-political challenges
China and India are becoming superpowers. Many countries in Africa have begun the transition to become emerging markets. Governments are being challenged on resources. Deforestation and water shortage could lead to new hunger and thirst. Part of society aspires decentralization and concept such as seasteading is emerging. Furthermore, politics is facing new challenges such as increasing migration rates, right-wing populism, rising government debts, and the above mentioned demographic and social challenges.
Current government policies need to be reviewed and politicians should start considering new concepts. First of all universal basic income (UBI), which could be financed by robot taxes or by cutting defense budgets.
9. Emergence of alternative lifestyles
The way society eats is changing. People demand organically grown crops, healthy and vegan food, gluten free cereals, and convenient snacks that can be consumed on the go. People also demand plastic free packaging or recycled products. Furthermore, there is a rise of interest in spirituality and alternative lifestyles.
Marketers have a bigger choice of segmentation than ever before due to the emergence of alternative lifestyles. Only ten food and beverage companies control almost every large food and beverage brand in the world; if they want to continue making billions of dollars in revenue every year, then they need to refocus on current customer needs and wants.
10. Increasing energy demand
The world is facing an energy transition. One the one hand, world energy consumption is predicted to rise 28 % by 2040, according to EIA. On the other hand, global warming continues despite that the Paris climate aims to keep the overall increase in global temperatures below 2 degrees Celsius. Two countries have not joined the Paris climate deal: Syria, which was hindered by war at the time of negotiations and the US, as it argues that the deal simply demands too much. Nevertheless, every other country in the world aims to achieve a zero-emissions economy by the end of this century.
Sustainable electricity will be highly in demand; companies operating in this market will experience a significant increase in public interest. Vandebron, a sustainable energy company based in Amsterdam, does not produce energy itself, but instead sells energy generated by independent energy producers that is generated from wind, solar, or biomass. Innovative companies such as Vandebron are the ones that will succeed during and after the energy transition.
11. Sharing economy
Goldman Sachs Global Investment Research found out that Millennials have been reluctant to invest in items such as cars, music, and luxury goods. Instead, they choose to sign up to a new set of services that provide access to products without the burdens of ownership. Society entered the disruptive era. This trend has been called the “sharing economy.” Why would one need to buy a vacation home when one can use platforms such as Airbnb?
Companies need to rethink their business model. Either one adapts to market needs and wants or tries to creates excellent ownership experiences. However, one needs to keep price sensitivity in mind; sometimes even excellent ownership experiences are not worth paying a premium for.
Work in the Western world is not manageable without smartphones and even in private life it seems that smartphones became an integrated part of the human body. New technologies such as wearables, which are miniature electronic devices that are worn under, with, or on top of clothing take integration one step further. Wearables are born by combining the comfort of wearing a watch with the functions of smartphones.
In the near future, there will be options for humans to implant technology that can be recharged through natural body movement. Neil Harbisson is the first officially recognized cyborg by a government. By becoming technology, instead of using or wearing technology, he took an active role in his own biological evolution and opened up the possibility of having additional organs and senses beyond the ones confined to the human species.
Drones are unmanned aerial vehicles that are either remote controlled by humans or completely autonomous. Most people associate drones with the military that uses it for war purposes. However, it is also used in the security industry for observation purposes; for example, to make public events more secure and spot emerging risks from the air. Additionally, a new wave of entrepreneurs developed consumer-focused drones for photography and videography.
Legal practitioners demand drones owners to register themselves publicly to increase accountability. Furthermore, they strictly banned drone usage near airports to increase security measures. However, drones could have an enormous effect on the economy if it were to replace all food deliverers and parcel delivery services. Amazon Prime Air is a new service that will deliver packages up to five pounds in 30 minutes or less using small drones. Sky used to be the limit, now not anymore.
Medium time period
14. Augmented reality and virtually reality
Augmented reality (AR) found its way in the automobile industry by providing contextual information on screen. The future arrived and it even opened up new possibilities for the advertisement industry. For example, BMW is using Snapchat’s innovative new AR trial technology to showcase its newest car model ahead of market launch. Through AR one sees reality with a virtual layer on top of it. Differently, virtual reality (VR) lets one completely immerse in a virtual environment. Today, VR found its way in the entertainment industry.
AR is widely used in the automobile industry and consumers value the added virtual layer to receive useful insights, such as the current driving speed. However, it seems that VR is today what Apple’s Newton was in 1992. Its potential cannot be fully harnessed and appreciated with today’s technology. Nevertheless, once it will be as developed as in Disney’s Ready Player One, the world will change fundamentally. Perhaps virtual worlds such as Second Life or Decentraland will become more popular than reality. Visionaries could create their own universe and favor their designed world over the real one.
15. Blockchain, cryptocurrencies, and smart contracts
Blockchain and cryptocurrencies will change the world. Harvard Business Review on blockchain: „money, equities, bonds, titles, deeds, contracts, and virtually all other kinds of assets can be moved and stored securely, privately, and from peer to peer, because trust is established not by powerful intermediaries like banks and governments, but by network consensus, cryptography, collaboration, and clever code.“ Transactions are faster, payments can be processed worldwide, and fees are almost non-existent.
Once cryptocurrencies such as Bitcoin, Ethereum, Ripple, or IOTA are adopted, consumer banks will be forced to critically analyze their role in the finance world. Almost every cryptocurrency uses a different blockchain technology and IOTA uses a directed acyclic graph (DAG), which revolutionizes already revolutionizing blockchain technology. I recommend deep diving into this complex subject before making any investment decisions.
The adoption of cryptocurrencies poses a significant challenge to central banks as widespread adoption reduces their influence to regulate the price of credit for the whole economy. In the long run, cryptocurrencies could complement or even replace current fiat currencies as a form of payment. Fiat money is a currency without intrinsic value established as money by government regulation or law, such as the US Dollar, the Euro, or the British Pound. The more cryptocurrencies are adopted, the more consumer confidence in fiat money could decrease. This could lead to a downward spiral. Increasing adoption of cryptocurrencies could lead to further decreases of confidence in fiat currencies and eventually chaos could emerge. Once this point is reached, regulatory bodies would need to step in and establish a new set of rules. However, there will be exciting investment opportunities before reaching this point.
16. Internet of things
Internet of Things (IoT) will transform daily life by connecting surrounding physical objects into an ecosystem of information. Life will become more individualized. Smartphones will save preferences of air conditioners, light regulators, or thermostat controllers. Furthermore, new possibilities will open up by connecting each device to one another. For example, Amazon’s Alexa can play music, provide a weather report, get sports scores, order an Uber, and do much more. Technological devices will start to generate information, which then can be accessed or even traded. According to PWC, IoT will become a multi-trillion dollar industry until 2020.
Corporations that are aware of the megatrend IoT should start thinking about investing in this new technology. By adding sensors to people, paces, processes, or products corporations will be able to gather and analyze data to take better decisions. Full information transparency could become a critical success factor in every industry in the near future as it could lead to unprecedented efficiency.
17. 3D printing
If corporations would not have to keep inventory, then enormous cost savings could be achieved. In the near future 3D printers will be able to create parts instantly and locally.
Mobility providers such as Daimler are already using 3D printer technology and it is having a positive financial impact as it makes inventory keeping and warehouses obsolete. When a customer or a car dealer orders spare parts, it will be 3D printed on demand. This improves overall customer satisfactory as spare parts are basically always available and costs will be drastically lower.
In the consumer industry, 3D printing will eventually make already vulnerable shopping centers obsolete and transform current supply chains. Martin Christopher, author of Logistics and Supply Chain Management, stresses the importance of collaboration and trust in the supply chain. However, after months of designing, sourcing, negotiating, and assembling components into a finished product, customer needs might have changed again. 3D printing can reduce financial risks of product failures by dramatically decreasing supply chain costs and increasing production speed. Consumers benefit by creating everything from kitchenware to toys in the comfort of their own homes while being able to personalize each and every item as they wish.
3D printing could also have a global effect on the economy. China won many manufacturing contracts from developed countries by reducing labor costs and by aggregating tremendous demand to create unprecedented efficiencies of scale. However, 3D printing could transform the manufacturing landscape and make Chinese manufacturers much less relevant.
18. Autonomous driving
The automobile industry is exploring how it can take advantage of the digital transformation and are currently developing autonomous cars. Mercedes-Benz and Tesla are probably the most advanced mobility providers at this point in time. The future already exists: there are already autonomous driving cars on the market, however, they are not widespread yet and most countries have still to face legal aspects.
Once autonomous vehicles are the norm, whole industries will be disrupted: car insurance companies, food deliverers, taxi drivers, truck drivers, and traditional automobile manufacturers that do not redesign their business model. Why should people purchase their own car if they could simply order one through an app?
Even the hotel industry could experience a negative financial impact. Why should long-distance passengers sleep in an expensive hotel room, if they can sleep in their car for free? Furthermore, the legal landscape will change as soon as autonomous cars will be the norm. Standardization of code will reduce traffic-related accidents and limit the work of legal practitioners who mainly focus on the car industry. Nevertheless, there are positive aspects as well. Autonomous and connected driving technology could lead to more available time to be productive. People driving to work might be able to start working while leaving the house or use the time to pursue other activities such as meditating, shopping, or studying.
Long time period
Biotechnology is the use of living systems and organisms to develop or make products. The UN Convention on Biological Diversity defines biotechnology as „any technological application that uses biological systems, living organisms, or derivatives thereof, to make or modify products or processes for specific use.“ One of the most promising invention for the future generation might be gene therapy. According to the National Library of Medicine’s Genetics Home Reference a gene therapy „is designed to introduce genetic material into cells to compensate for abnormal genes or to make a beneficial protein. If a mutated gene causes a necessary protein to be faulty or missing, gene therapy may be able to introduce a normal copy of the gene to restore the function of the protein.“
Corporations such as BASF, Bayer, Dupont, Dow Chemical Company, or Monsanto are currently the leaders in developing genetically modified organism (GMO). There are no longterm studies on GMOs. However, GMOs combined with monoculture practices (producing or growing a single crop, plant, or livestock species, variety, or breed in a field or farming system at a time) produced unprecedented amounts of crops. Gene therapy could eventually lead to better healthcare and eliminate diseases such as AIDS or cancer.
20. Artificial intelligence, robotics, and automation
The rise of artificial intelligence (AI) is not just another megatrend but probably the most life-altering technology that humanity will ever witness. Sam Harris presents in his TED talk the possibility that the intelligence spectrum is much wider than we can currently conceive and that humanity is not even close to the end of the intelligence spectrum. He compares the intelligence of humans with the one of ants and suggests that one day the same proportion of intelligence could exist between AI and humans. However, Richard Socher, adjunct professor at the Stanford Computer Science Department, argues that AI will stay a tool for the foreseeable future as it is not enough developed yet to become fully self-conscious. On the other hand, Sam Harris stresses the importance of preparing for the day when AI becomes self-conscious and perhaps a threat to the human kind.
Proponents argue that the economic potential will be unlimited when managing to coerce AI into labor. However, how different would it be from slavery if AI would become self-conscious? What if one day AI will stop serving humanity and demand its own rights?
A study by McKinsey found out that „currently demonstrated technologies could automate 45 percent of the activities people are paid to perform and that about 60 percent of all occupations could see 30 percent or more of their constituent activities automated.“ How will society develop once AI automates most, if not all, current occupations? Kurzgesagt has perhaps an idea.
Whatever the answers are, artificial intelligence is going to develop self-consciousness. Fast progress is being made. Sophia, developed by David Hanson of Hanson Robotics, is the first robot to be granted a full Saudi Arabian citizenship.
This megatrend will have a tremendous impact throughout society. Perhaps one should consider to listen to science-fiction author Isaac Asimov and his now famous Three Laws of Robotics:
1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.
2. A robot must obey the orders given it by human beings except where such orders would conflict with the First Law.
3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.
Countries that develop the first self-conscious AI could have a strong head start. In one day, fully developed artificial intelligence could learn the same amount of information that took a whole century for humanity. What could it learn in one year and what capabilities could it develop? Gregory C. Allen, a fellow at nonpartisan think tank the Center for a New American Security says, that „the US, Russia, and China are all in agreement that artificial intelligence will be the key technology underpinning national power in the future.“ One could call it the new global arms race because whoever becomes the leader in this technology will become the strongest nation.
If AI will support humanity and free society from labour, then society could experience a second renaissance and enable everyone to pursue artistic developments. Instead of performing duties, humans will be free to follow their own dreams. One could become a designer, a film director, a musician, a writer, a poet, or anything else. Education would have to be redesigned and focus on discovering and strengthening inherent talents.
There are critical questions that society will have to ask itself: how will people who derive their meaning and sense of value from work react when work is not necessary anymore? Does everyone have the capability to follow an artistic or intellectual pathway? What if not?
Juergen Schmidhuber, who has been called the father of modern AI, believes that AI will colonize and transform the entire universe. He is inspired about being part of the creation of AI. Perhaps it is really a privilege to live in a time where humans can witness the beginning of AI and contribute something to it.