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10 Global Insights into a Transforming World

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10 Global Insights into a Transforming World from 2019

global trends

10 Global Insights into a Transforming World from 2019

Every day, global trends are reshaping society and the business landscape.

Today’s infographic from McKinsey Global Institute (MGI) presents a snapshot of 10 insights into how the world is changing, based on its research work from 2019.

How did we get here, and where are we going?

A Connected World in Flux

Globalization is making the world “shrink” every day, as humans and trade become increasingly connected. However, there are signs that point to a new phase of globalization that is leading to different outcomes than prior years.

1. Globalization in Transition

Global exports are fundamentally shifting. Although manufactured goods are traded at higher volumes, certain services have grown up to three times faster.

The compound annual growth rate (CAGR, 2007-2017) for different sectors are as follows:

SectorsGlobal CAGR (% of GDP)
Telecom and IT services7.8%
Business services5.3%
IP charges services5.2%
Total services3.9%
Travel services3.7%
Financial and insurance services3.2%
Total goods2.4%
Transport services1.7%

This has a profound impact on the mix of industries and countries involved in this shift away from goods and towards services. Asia is coming of age in this phase of the global economy.

2. Asia’s Ascent

Trade with and within Asia is rising, and shows no signs of slowing down. The region’s economic might is growing rapidly, and with higher disposable incomes, consumption is growing too.

In China, there is a new dynamic at play.

3. China’s Changing Relationships

Compared to other developed nations, China’s economy is relatively closed. The country is re-balancing its focus towards domestic consumption and relying less on other countries for trade, technology, and capital.

At the same time, the rest of the world is increasingly exposed and tied to China for the same things—and such unequal engagement has a ripple effect on everything from financial markets to flows of technology and innovation.

Technology and the Future of Work

New technologies like artificial intelligence are sparking new opportunities, but they also raise questions about the future of work across geographies and gender.

4. Increasingly Digital India

As the costs of devices and data plummet, India’s digital adoption is surging—it closely competes with China for the highest digital population across everything from smartphone ownership to social media users.

As mass adoption of digital technologies continues, it is poised to add significant economic value to the Indian economy.

Digital sectorCurrent economic valueMaximum potential value (2025E)
Core digital services
e.g. IT business process management
$115B$250B
Newly digitizing sectors
e.g. Financial services
<$1B$170B

Companies worldwide are also integrating new technologies—changing the nature of work itself.

5. New Geography of Work

By 2030, talent and investment in the U.S. will be concentrated in a few regions—with 60% of job growth coming from just 25 hubs.

Potential Net Job Growth
These are just some examples of places which see double-digit potential net job growth by 2030. However, all regions will face unique challenges in the next decade.

6. Automation’s Effect on Gender at Work

Globally, women and men are at similar risk of losing their jobs to automation by 2030.

  • Women: 107 million FTEs
    Share of female employment, 2017: 20%
  • Men: 163 million FTEs
    Share of male employment, 2017: 21%

*FTE: full time equivalent. Based on midpoint automation scenario.

While everyone needs to adapt in the age of automation, women face more barriers. They spend up to 1.1 trillion hours on unpaid care work, nearly three times that of men (400 billion hours).

Women are also often in lower-paid roles or male-dominated professions. Additionally, many women have less access to digital technology, and limited flexibility to pursue education. These factors make it harder for women to “catch up” and bridge the gap left behind by automation.

Inequalities and Uncertainties

It’s clear that while technology generates opportunities, it also creates new social challenges. Low- and middle-income households face stagnating incomes, higher debt, and rising basic costs.

7. Declining Labor Share of Income

The U.S. labor share of income has been dropping for years—but ¾ of this decline has occurred since 2000.

Labor Share of Income
According to McKinsey Global Institute, boom-bust commodity cycles and rising depreciation are the main factors behind this trend, more so than commonly-cited automation or globalization.

Stagnating incomes mean less purchasing power, while the cost of basics are sharply rising.

8. Changing Consumption Costs

The global inequality gap has narrowed, but within developed economies, it has actually increased.

Technology and globalization have made many discretionary goods cheaper. However, basic costs such as education, housing, and healthcare have ballooned compared to the rate of inflation over the past decade.

Category Inflation
With wages stagnating, the higher costs for basics have eaten into disposable incomes in many mature economies.

A Changing Business World

Global trends drastically influence how companies compete with one another, transforming corporate dynamics worldwide.

9. Corporate Superstars

In just two decades, the distribution of economic profits has been growing increasingly wider. The top 10% of companies (>$1 billion in revenue) brings in an ever-larger share of total profits, while the losses of the bottom 10% share deepen.

  • Average profit per company, 1995-1997
    Top 10%: $0.85B
    Bottom 10%: -$1.02B
  • Average profit per company, 2014-2016
    Top 10%: $1.36B
    Bottom 10%: -$1.56B

*In 2016 dollars. Considers corporations with ≥$1 billion average sales (inflation-adjusted). Sample sizes: 2,450 companies (1996–1997) and 5,750 companies (2014–2016).

In essence, the bottom 10% destroy as much value as the top 10% create—and it has only intensified in 20 years.

10. Latin America’s Missing Middle

Latin America best exemplifies this corporate trend of companies “thriving” versus “surviving”.

Compared to similar economies, Latin American countries lack mid-size companies with over $50M in revenue. The Latin American average for firms per $1T GDP is 65 firms, while 100 firms is the benchmark average.

While Asia’s share of the largest firms is widely distributed across countries, Latin American enterprises are lagging behind.

What does the Future Hold?

CEOs and leaders will need to adapt to the new age of disruption—and quickly. To become a 21st century company, they must ask 10 crucial questions about how they operate in an increasingly complex world:

  1. What is our mission and purpose as a company?
  2. How far do we go beyond shareholder capitalism? How are we accountable to different stakeholders?
  3. Who benefits from our economic success? How?
  4. What is the time horizon for managing our economic success and impact?
  5. What is our responsibility to our workforce, especially given future-of-work implications?
  6. How do we leverage data and technology responsibly and ethically?
  7. What are our aspirations for inclusion and diversity?
  8. What is our responsibility for societal and sustainability issues involving our business, and beyond?
  9. What are our responsibilities regarding participants in our platforms, ecosystems, supply and value chains and their impact on society?
  10. How should we address the global and local (including national) imperatives and implications of how we compete, contribute and operate?

As the 10 insights suggest, global trends are profoundly altering the course of our future. Their impact varies greatly depending on demographics and region.

Everyone—business leaders, policy makers, and individuals worldwide—will need to adapt to the realities of a world in transformation.

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The New Rules of Leadership: 5 Forces Shaping Expectations of CEOs

This infographic delves into five major forces reshaping our world and the new rules of leadership that CEOs should follow as a result.

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It’s common knowledge that CEOs assume a long list of roles and responsibilities.

But in today’s world, more and more people rely on them to go beyond their day-to-day responsibilities and advocate for broader social change. In fact, a number of external forces are changing how leaders are now expected to behave.

How can leaders juggle these evolving expectations while successfully leading their companies into the future?

The New Rules of Leadership

This infographic from bestselling author Vince Molinaro explores five drivers reshaping our world that leaders must pay attention to in order to bring about real change.

“the

How is the World Being Reshaped?

Leaders need to constantly stay one step ahead of the transformative forces that impact businesses on a broader scale.

Below we outline five key drivers that are changing what it means to be a leader in today’s world:

1. Transformative Technologies

Over the last number of decades, several technologies have emerged that could either accelerate the disruption of companies, or provide them with new opportunities for growth. According to KPMG, 72% of CEOs believe the next three years will be more critical for their industry than the previous 50 years.

For example, artificial intelligence (AI), can now provide companies with insights into what motivates their employees and how they can help them succeed. IBM’s AI predictive attrition program can even predict when employees are about to quit—saving them roughly $300 million in retention costs.

Leaders must accept that the future will be mediated by technology, and how they respond could determine whether or not their organization survives entirely.

2. Geopolitical Instability

Geopolitical risks—such as trade disputes or civil unrest—can have a catastrophic impact on a business’s bottom line, no matter its industry. Although 52% of CEOs believe the geopolitical landscape is having a significant impact on their companies, only a small portion say they have taken active steps to address these risks.

By being more sensitive to the world around them, leaders can anticipate and potentially mitigate these risks. Extensive research into geopolitical trends and leveraging the appropriate experts could support a geopolitical risk strategy, and alleviate some of the potential repercussions.

3. Revolutionizing the Working Environment

As the future of work looms, leaders are being presented with the opportunity to reimagine the inner workings of their company. But right now, they are fighting against a wide spectrum of predictions around what they should expect, with estimations surrounding the automation risk of jobs ranging from 5% to 61% as a prime example.

While physical, repetitive, or basic cognitive tasks carry a higher risk of automation, the critical work that remains will require human interaction, creativity, and judgment.

Leaders should avoid getting caught up in the hype regarding the future of work, and simply focus on helping their employees navigate the next decade.

By creating an inspiring work environment and investing in retraining and reskilling, leaders can nurture employee well-being and create a sense of connectedness and resilience in the workplace.

4. Delivering Diversity

Diversity and inclusion can serve as a path to engaging employees, and leaders are being asked to step up and deliver like never before. A staggering 77% of people feel that CEOs are responsible for leading change on important social issues like racial inequality.

But while delivering diversity, equity, and inclusion seems to be growing in importance, many companies are struggling to understand the weight of this issue.

An example of this is Noah’s Ark Paradox, which describes the belief that hiring “two of every kind” creates a diverse work environment. In reality, this creates a false sense of inclusion because the voices of these people may never actually be heard.

Modern day leaders must create a place of belonging where everyone—regardless of gender, race, sexual orientation, ability, or age—is listened to.

5. Repurposing Corporations

The drivers listed above ladder up to the fact that society is looking to businesses to help solve important issues, and leaders are the ones being held accountable.

With 84% of people expecting CEOs to inform conversations and policy debates on one or more pressing issues, from job automation to the impact of globalization, CEOs have the potential to transform their organization by galvanizing employees on the topics that matter to them.

For a long time, the purpose of corporations was purely to create value for shareholders. Now, leaders are obligated to follow a set of five commitments:

  1. Deliver value to customers
  2. Invest in employees
  3. Deal fairly and ethically with suppliers
  4. Support communities
  5. Generate long-term value for shareholders

Ultimately, these five commitments build currency for trust, which is critical for sustained growth and building a productive and satisfied workforce.

Lead the Future

If leaders understand the context they operate in, they can identify opportunities that could fuel their organization’s growth, or alternatively, help them pivot in the face of impending threats.

But organizations must invest in the development of their leaders so that they can see the bigger picture—and many are failing to do so.

By recognizing the new rules of leadership, CEOs and managers can successfully lead their organizations, and the world, into a new and uncertain future.

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3D Map: The U.S. Cities With the Highest Economic Output

The total U.S. GDP stands at a whopping $21 trillion, but which metro areas contribute to the most in terms of economic output?

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US Cities by Economic Output

3D Map: The U.S. Cities With the Highest Economic Output

At over $21 trillion, the U.S. holds the title of the world’s largest economy—accounting for almost a quarter of the global GDP total. However, the fact is that a few select cities are responsible for a large share of the country’s total economic output.

This unique 3D map from HowMuch puts into perspective the city corridors which contribute the most to the American economy at large.

Top 10 Metros by Economic Output

The visualization pulls the latest data from the U.S. Bureau of Economic Analysis (BEA, 2018), and ranks the top 10 metro area economies in the country.

One thing is immediately clear—the New York metro area dwarfs all other metro area by a large margin. This cluster, which includes Newark and Jersey City, is bigger than the metro areas surrounding Los Angeles and Chicago combined.

RankMetro AreaState codesGDP (2018)
#1New York-Newark-Jersey CityNY-NJ-PA $1.77T
#2Los Angeles-Long Beach-AnaheimCA$1.05T
#3Chicago-Naperville-ElginIL-IN-WI$0.69T
#4San Francisco-Oakland-BerkeleyCA$0.55T
#5Washington-Arlington-AlexandriaDC-VA-MD-WV$0.54T
#6Dallas-Fort Worth-ArlingtonTX$0.51T
#7Houston-The Woodlands-Sugar LandTX$0.48T
#8Boston-Cambridge-NewtonMA-NH$0.46T
#9Philadelphia-Camden-Wilmington PA-NJ-DE-MD$0.44T
#10Atlanta-Sandy Springs-AlpharettaGA$0.40T
Total GDP$6.90T

Coming in fourth place is San Francisco on the West Coast, with $549 billion in total economic output each year. Meanwhile in the South, the Dallas metroplex brings in $478 billion, placing it sixth in the ranks.

It’s worth noting that using individual metro areas is one way to view things, but geographers also think of urban life in broader terms as well. Given the proximity of cities in the Northeast, places like Boston, NYC, and Washington, D.C. are sometimes grouped into a single megaregion. When viewed this way, the corridor is actually the world’s largest in economic terms.

U.S. States: Sum of Its Parts

Zooming out beyond just these massive cities demonstrates the combined might of the U.S. in another unique way. Tallying all the urban and rural areas, every state economy can be compared to the size of entire countries.

US States and Country Comparison by GDP 2018

According to the American Enterprise Institute, the state of California brings in a GDP that rivals the United Kingdom in its entirety.

By this same measure, Texas competes with Canada in terms of pure economic output, despite a total land area that’s 15 times less that of the Great White North.

With COVID-19 continuing to impact parts of the global economy disproportionately, how will these kinds of economic comparisons hold up in the future?

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