Forget “disruptions” and focus on megatrends

If you keep up with today’s headlines, you know that the word “disruption” is greatly overused and usually points to something scary. Writers, who are essentially marketers, tend to frame stories about disruption to generate urgency, either for a call to action or to get more eyeballs on ads. In reality, most changes are years in the making. Real strategic vision starts with understanding global megatrends, the largest and most unstoppable forces shaping the future.

Ingersoll Rand, the $21 billion company that owns Trane® and Thermo King®, tells investors that “75 percent of the building inventory and public infrastructure that will exist in 2050 has not yet been constructed.” Let that sink in for a moment.

Consider $218 trillion as the current estimated value of the world’s infrastructure (according to Arcadis) along with multiplier effects, and there is a quadrillion dollar opportunity on the table over the next 30 years.

Ingersoll Rand understands that rapid urbanization and sustainability, two of the top global megatrends, are critically shaping its markets, and the company is vigorously preparing to capture its portion of that quadrillion dollar future cash flow with the right mix of talent, M&A, R&D and resource allocation.

Megatrends describe the largest and most unstoppable forces shaping the future. They can lead to a reasonable assessment of what economies and markets will look like in 20 or 30 years, unless, of course, something comes along and makes them irrelevant.

This means, for governance teams, that the world isn’t as disruptive as headlines suggest and that some part of the future should be predicted. The short-term, year-to-year course is not as predictable, but the long-term course is much more clear. Black swans, random events that come out of nowhere, are always in play, but megatrends are massive. Their inertia is difficult to alter or stop.

Here are a few megatrends that have implications for today’s leaders.

Megatrends chart.xlsx

It’s one thing to see the list and quite another to break down megatrends into bite-size pieces that governance teams can work with. One challenge is starting with global megatrends and working backward to regional or municipal trends. Another challenge is the year-to-year management of risk and agility, which accounts for the rise of “plug ‘n play” resources (outsourcing, M&A) and massive cash reserves. Wildcards are the most difficult to assimilate into strategy, and these include the impact of artificial intelligence on employment, rogue players damaging the economy, and the management or mismanagement of large public debt in the United States and Europe.

Practicality, please.

It’s easy for one’s head to blow up while considering the implications of megatrends and what they might mean to us individually, or to our families or firms. As a matter of practicality, using megatrends to guide strategy requires executive teams to know where they stand in the diffusion-of-innovation process, which is a proxy for how firms interact with the future. Innovators know that ongoing mastery of megatrends is paramount. This gives them the vision needed to shape markets in their favor. Laggards know not to concern themselves with megatrends because their job is to keep waning markets on life support or finish them off. In the middle are the early adopters, early majority and late majority, and here is where tough decisions must be made. Mastery of megatrends is too expensive, but so is ignorance. Executive teams in these spaces must regularly update themselves and their key people on megatrends and spend an appropriate amount of time each year cutting them up into bitesize pieces.

Megatrends are complicated, and this short post is only intended to survey the topic. If you would like more information on megatrends, please contact us. We can point you to additional resources or perform as consultants and facilitate a discussion with your leadership team.

About Carn International

Carn International is a global executive and professional search firm providing dynamic and seasoned leadership talent to clients. For over 25 years, our consultants have collaborated with companies and executives across a range of specialties and industries, fostering mutually prosperous relationships. Shawn Overcash, Senior Consultant and author of this article, can be reached at shawn.overcash@carninternational.com.