VIDEO: Big picture is volatile, uncertain, complex and ambiguous says McKinsey chief. Oh, to be young
Volatile, uncertain, complex and ambiguous. Welcome to VUCA – the new normal and the consequence of five dramatic shifts driving change in the world over the very long term, according to management consultants McKinsey and Company.
Actually the term was originally a military idea and has been co-opted by business in the last decade.
In a presentation as part of the Center for Global Business and the Economy’s Global Speaker Series at the Stanford Graduate School of Business earlier this year Dominic Barton Global managing director, McKinsey & Company described those five trends in the context of the biggest of big pictures.
The video is well worth the investment in your time. Barton’s presentation runs for about the first 30 minutes but for those of you born after 1983 here’s the abridged and almost tweetable bullets.
The first trend is the rebalancing of the world’s economies with the rise of the BRIC nationals but also due to the African renewal. One of the trends within this is the re-emergence of the city as an economic state in its own right.
“We think its going to be cities more than countries that matter. There are 440 cities that will account for 60 per cent of the world’s GDP growth.”
The density of demographics is the second trend. In the year 2000 there were 10 workers in the world for every retiree, but by 2050 there will be only three workers for every retiree. “Those numbers will terrify governments, ” said Dominic Barton. “It’s already an issue for Japan and Korea and it will become an issue for China.”
The third force and one of the most profound, is technology according to Barton who said he makes it his duty to speak to two CEOs a day. “Technology is always one of the top two issues.”
He says technology is moving five times faster than management and there is not a single sector in the world that is immune to the technology shift.
“The biggest impacts will be in healthcare,” said Barton, “I’ve never seen anything so technology retarded as the healthcare sector – except for maybe education.”
Resources are the bedrock of the fourth big trend. The McKinsey chief points out that commodity prices – oil and gas in particular – have been in a 70 year decline largely driven by technology, however over the last 10 years they have gone up by 150 per cent.
“The long term trend is up because there are a billion new middle class consumers, and about three billion new consumers wanting to buy cell phones, refrigerators and cars.”
And finally Government rounds out the five. “There is huge pressure on government to deal with these issues. “