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Megatrends, millennials and communication

Digital revolution is transforming society, from the concept of work itself to relationships. Future scenarios, risks and opportunities.

by Luigia Ierace
07 February 2020
9 min read
byLuigia Ierace
07 February 2020
9 min read

Technological innovation is bringing enormous changes, but other megatrends are transforming the world, redesigning the economic, financial and geopolitical landscape. These changes are powerful enough to revolutionize the very foundations of society and, in particular, the concept of work and relationships between people. We are witnessing an unprecedented flow of “economic migrants” from West to East in search of opportunities for growth and a better quality of life. The effect of this is that the United States and Europe, no longer exclusive poles of attraction, will compete with other continents to attract investment and young talent.

Economic and political transformations accompanied by profound demographic changes with a growth in the world population, a greater rate of urbanization and an increase in Millennials and Generation Z. The rate of urbanization will accelerate especially in countries with a more sustained population growth, such as in Africa and Asia. By 2015, according to United Nations estimates, the urban population will reach 72% of the total population globally, compared to 50% today. This increase in the migration to cities will require urban life to be redesigned using innovative technologies and solutions to make cities smart and sustainable. “Smart cities” of the future that will use cloud technology, mobile devices, Big Data analysis and social networks to optimize the offer of new generation services and promote low environmental impact solutions.

 

A world of scarce resources

The environment will in fact be decisive in designing future scenarios as we deal with ongoing climate change and a scarcity of natural resources. The National Intelligence Council has estimated that by 2030, 50% more energy, 40% more water and 35% more food will be needed to satisfy the needs of all the inhabitants of the planet. And the scarcity of natural resources could become one of the major causes of conflict between countries finding it difficult to guaranteeing the well-being of their citizens. As for the environmental impact, with the economic and demographic growth, the concentration of CO2 in the earth's atmosphere will continue to increase in the future. This snapshot of the future is contained in the European Commission’s Green Paper on urban transport, which shows that traffic in cities today generates 40% of CO2 emissions and 70% of other polluting emissions produced by vehicles and causes about one third of all fatal accidents, with an annual loss to the European economy estimated at 100 billion euros.

The challenge lies in the transition from a linear economy to a circular one, with systems in which all economic activities are organized so that the waste produced becomes a resource for other processes. New industries and business models on a global scale aimed at improving the quality of life of individuals, but also the environmental and geopolitical impact by reducing the dependence of economic activities on fossil fuels (oil, coal and gas) and increasing the use of energy from renewable sources (e.g. solar, wind, geothermal).

China’s record performance in new technologies

The profound changes taking place are prompting a review of the economic, geopolitical, scientific and technological strategies implemented by different countries  and are already affecting Italy.  “We are definitely not at the forefront in the application of new technologies - points out Paolo Borzatta, Senior Partner The European House – Ambrosetti - but there are areas of excellence. Smart green companies in the electricity sector but also small and medium-sized manufacturing companies that are exploiting new technologies very well. Then there is advanced research at the Italian Institute of Technology in Genoa and the Scuola Superiore Sant’Anna in Pisa, two global poles of excellence. In terms of design and application, manufacturing in certain specific sectors, such as robotics and artificial intelligence, is certainly very good”.

“At European and international level, however, Germany, France and Israel are far ahead. China is frighteningly ahead, having a different political system, I don't know if it is better or worse - Borzatta continues -, certainly they are able to produce innovations very quickly that we are struggling to carry out. Just think of smart cities, China is at the forefront because it does not have the problem of all the stakeholders who can block the operation. For us, however, it’s still science fiction. We know we'll get there but it will take us at least 5-10 years”.

In addition to all this, we have never been faced with such an enormous quantity of data about the market and consumers, which, if used in a targeted way, will be able to change habits and prospects. “Data are both a great blessing and a great catastrophe – explains Borzatta -. There is undoubtedly a big difference between having data and knowing how to use them. Highly intelligent people will be needed to understand what to do with them. But it is also a political problem, because the issue is not only the quantity of data but also how they are exchanged. Just think about the many things that could be done at state level if all national databases could be networked. A colossal enterprise in political terms, but it requires the data to be protected. If success is achieved in networking all the data, protecting the sensitive ones, wonderful things could be done, but also terrible ones with dramatic effects for our privacy”. And this opens up another scenario that concerns the ethical aspect of these changes.

A decisive role for energy

In the study by The European House – Ambrosetti, the data are compared to oil: they need to be refined and processed to produce useful results. A parallel that is certainly not random and which highlights the fundamental role of companies in the energy sector. “It is a metaphor: data are “vital” and “essential” to all companies, so they can be compared to oil (in an internal combustion engine) as they are the essential raw material need to create new products and services aimed at consumers and to optimize the corporate strategy”.

A terrain on which energy will play an important role for two reasons: the first is that all these technologies require a huge amount of energy; the second is an energy modulation effect, in the sense that the way energy is used, rather than the quantity, could change very significantly. And it is precisely new technologies that will provide the greater capacity to modulate the use of energy based on our needs and tariffs, to save in terms of consumption but also respect for the environment.

Economy, demographics, environment, technology, communication are the new dynamics designing the future and creating further opportunities. But it is difficult to get definite answers about how megatrends will impact businesses and consumers. “With these very big changes taking place, my concern - reiterates Borzatta - is that we will find ourselves with a slice of the population who will be able to adapt to it and a slice of the population who will find it very difficult to do so, which will take a long time because there may also be reactions to these changes”. 

Polarization of wealth

Technology may have given every user the possibility of communicating with the world, but it has also created a mechanism whereby economic wealth and technological knowledge are mutually reinforcing. And so today, almost 50% of the world's wealth is in the hands of 1% of the population and 86% of global wealth (240 trillion dollars) is owned by 8.6% of the adult population (425 million people).

“In essence - explains Borzatta - the polarization of wealth and knowledge also polarizes power, which opens up deep rifts within societies. I suspect that megatrends on the one hand promise a bright, interesting future, but what is not said so openly is that the social model must be rethought, from the way countries are governed to the way in which income and wealth are distributed. From a strategic observation of how the world has changed - he continues - I believe that in the next 10-15 years we will need to think about making substantial changes to the paradigms of our society, but it is difficult to predict the results. There may be catastrophic events, forms of revolution, anarchies. Let’s hope not. But we will need leaders who are capable of governing the transition, as happened in the agricultural revolution ten thousand years ago: an epochal change from hunter gatherers, to settled, sedentary monocultural agricultural societies with the domestication of animals. A change of this magnitude is what awaits us, and it will involve a lot more than just adding some extra jobs, review electoral governance systems and constitutions. All these things will have to be done, but I think we need to rethink the way we see society and its organization”.

The fourth industrial revolution, in the short term, will lead to much more effective and efficient industries that will probably change its strategic model. In the medium and long term, however, the change will be much deeper. “Many - concludes Borzatta - compare it to the arrival of the Internet in the 2000s, when great changes were predicted. In reality, how many jobs have they created that generate true value, in the last 10-20 years? We have created 'wealth shifters' (such as banks and insurers) rather than generators of wealth and jobs. I believe we will move forward in that direction, but there will be a point where we will have to look at the quality of work. And the risk is that rich people will have 200 robots working for them. Once they were called slaves, now they are known as robots. And everyone else? It is one of the possible scenarios to think about”.