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Five crucibles of change will restructure the world economy for the foreseeable future | McKinsey

This is a terrific piece from McKinsey that summarises many of the things we read about in the context of changes at play in the world.  I firmly believe we are in the midst of a latter day industrial revolution but it needs a better definition than that, and this kind of piece breaks it down into understandable chunks that capture various aspects of things we are reading about.

We all speak of globalisation and these five forces nicely capture the implications and results.  For example something I have been reading a lot about is the concept of ‘market state’ and that is one of the five.  A result of market state thinking is the UK budget last week which recognises States cannot afford the level of government the old order requested.

Banks need to learn to adapt to this new order.  The changes are real and have consequential implications for people and affordability of purchases and asset values.

Global forces: An introduction | McKinsey

For much of the past year, a team at McKinsey has revisited and retested our assumptions about the key global trends that will define the coming era. We have identified five forces, or crucibles, where the stresses and tensions will be greatest and thus offer the richest opportunities for companies to innovate and change:

  • The great rebalancing. The coming decade will be the first in 200 years when emerging-market countries contribute more growth than the developed ones. This growth will not only create a wave of new middle-class consumers but also drive profound innovations in product design, market infrastructure, and value chains.
  • The productivity imperative. Developed-world economies will need to generate pronounced gains in productivity to power continued economic growth. The most dramatic innovations in the Western world are likely to be those that accelerate economic productivity.
  • The global grid. The global economy is growing ever more connected. Complex flows of capital, goods, information, and people are creating an interlinked network that spans geographies, social groups, and economies in ways that permit large-scale interactions at any moment. This expanding grid is seeding new business models and accelerating the pace of innovation. It also makes destabilizing cycles of volatility more likely.
  • Pricing the planet. A collision is shaping up among the rising demand for resources, constrained supplies, and changing social attitudes toward environmental protection. The next decade will see an increased focus on resource productivity, the emergence of substantial clean-tech industries, and regulatory initiatives.
  • The market state. The often contradictory demands of driving economic growth and providing the necessary safety nets to maintain social stability have put governments under extraordinary pressure. Globalization applies additional heat: how will distinctly national entities govern in an increasingly globalized world?

Global Forces website

Written by Colin Henderson

June 30, 2010 at 23:46

Posted in Uncategorized

One Response

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  1. One simple question: What’s productivity? Seems to me that KPI is measured through a variety of ways, of which none seems to be accurate. Productivity is, sadly, a way too over-used buzzword that produces nothing but confusion. In addition, it takes away focus from the big things. I profoundly believe that none of the five crucibles will have anywhere close as big an impact, than for instance the change from classic carrot-stick management to the release of man’s true strengths, using terms like Autonomy, Mastery and Purpose. (stolen with love from Daniel Pink). Behavioral science will need to play a much bigger part in the future, than the five extrinsic terms above. And companies like McKinsey will need to follow suit, or they will be out.


    August 17, 2010 at 07:55

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