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The Great Moderation ended with a bang in 2008. The coming period will be The Great Transformation, the most significant transformational period seen in generations, and the most significant period of transformation seen by anyone in business or public leadership today.
Transformational periods are tumultuous, but are also times of significant growth and opportunity when the deck of winners and losers is shuffled again and again, when growth rates can surge unexpectedly, and when the anchors of state and society are freed to reset to new points that will define the global business environment for decades to come.
Our perspective on The Great Transformation reflects 10 interrelated themes that, taken together, sketch out a framework for this period of transformation.
These 10 themes are generated by forces of macroeconomics, technology, geopolitics, demographics and macrosocial trends, and will collectively reshape businesses. The themes themselves encompass many subsidiary trends whose cumulative force creates the overall theme. The themes interact with each other—pushing, accelerating or redirecting—in ways that can make their outcomes seem counterintuitive if viewed in isolation.
As much as possible, we have tried to play these themes forward together to see how their collective forces will shape our future.
Total world assets are growing to $900 trillion by 2020, or 10 times the size of the underlying global economy. The state of capital superabundance will persist for decades, suppressing interest rates and rates of return.
RELATED INSIGHT
A world awash in money | Bain Report | November 14, 2012
The steady upward creep in life expectancies will likely accelerate as a new set of life-extending technologies moves from labs to clinics. This will shift the ages of the stages of life, including family formation and retirement, which in turn will change consumer behaviors and moderate the pressures from aging global populations.
RELATED INSIGHT
Labor 2030 | Bain Report | February 07, 2018
The current cycle of globalization has peaked and is starting to ebb. Geopolitical tensions have passed their nadir and will continue to rise, accelerating the impact of the political environment on the macroeconomic environment.
For nearly 70 years, oil's dominance tied the price and flow of oil to the rise and fall of the global economy. Over the coming decades, the sun will begin to set on the dominance of oil's economics on the global macro landscape, reshuffling the economics of the most important commodity in the world and altering patterns of global trade, capital flows and economic development.
After decades of growth principally driven by the catch-up of emerging markets, these markets have largely stalled along with advanced economies. The next phase of growth will occur on two frontiers—a resurgence among some advanced economies through technology-led innovation, and a new cohort of emerging markets led principally by India.
The cost of distance will decline sharply over the next two decades, altering the way we live and work. The catalyst for this historic shift: an array of new platform technologies that have pushed down the cost of distance to the tipping point.
RELATED INSIGHTS
Spatial Economics | Bain Brief | February 10, 2016
The Declining Cost of Distance | Bain Infographic | June 28, 2016
Computational power, networking, storage, sensor technologies and the software that runs on them are approaching a critical threshold, and their next milestone is translating everything in the real world ("widgets") into the symbolic world of digital.
Platforms—business models that facilitate the creation of value by others rather than internally—are growing rapidly. They will form protected harbors more dynamic than the walled fortress of firms, but more protected than the tumultuous ocean of the open market.
Midsized businesses will face increasing pressures as technology creates massive economies of scale in certain industries, simultaneously enabling even the smallest businesses to access the benefits of that scale, while maintaining the speed and agility to define and win in ever tighter niche markets.
The rise of a mass middle class society was the defining social feature of the 20th century, and its decline has created one of the most agitating challenges at the start of the 21st century. The middle class will be rebuilt as a resurgence in government's societal role combines with technology-facilitated opportunities.