November 1, 2006

Scanning the More Distant Horizons

There are seven drivers of change that have an influence so profound, we call them “revolutions.”

How prepared are you? Are you prepared for a world of 7.9 billion people by the year 2025, and 9.1 billion by 2050? Are you prepared for a world in which the already significant gaps in strategic resources—food, water and energy—are likely to become even more profound? How positioned are you and your colleagues for a world in which knowledge is increasingly perishable and the need for more frequent re-education is growing? Are you ready for the tectonic shifts underway in global economic production? And how prepared are you for the shifting responsibilities and competencies across government, private sector, civil society and other groups?

More times than not, leaders of corporations, government bodies and non-profit organizations are hamstrung—not liberated—by today’s information-dense environment. Many are mired in a short-term view they simply can’t escape.

I believe that a key difference between mere management and strategic leadership will be our capacity to identify accurately strategic trends and then put into place organizational strategies to exploit them. This is not just an academic exercise. Simply put, organizations will live or die by their capacity to adapt to the big global changes on the horizon.

What are the big-ticket forces that together form the perimeter of the future toward which we are now moving? I would point to seven drivers of change that will have an influence so profound that we can call them “revolutions”:

  • Demographics and population shifts
  • Strategic resource management
  • The continued development and diffusion of technologies
  • The flow of information and knowledge
  • Global economic integration
  • The nature and scope of conflict
  • The challenge of governance, or our capacity to respond in organizational terms to the challenges in front of us.

At the core of all these broader trends is population. Here, two key dynamics will have even more profound implications in the years ahead.

The first is a widening of the high-growth/negative-growth spectrum of countries around the world. On the one hand, countries ranging from Afghanistan to Uganda, many of which already face serious economic development challenges, have the prospect of tripling their populations over the next 45 years. On the other end of the spectrum, countries like Ukraine, Bulgaria and Belarus face the prospect of a profound contraction in their populations—perhaps by as much as 40%. This creates the circumstances for even more significant pressure on immigration—a flow from high-growth countries that cannot accommodate their populations to static or negative-growth countries with collapsing workforces. The United Nations projects that through 2050, another 230 million people could move to another country.

The second key dynamic at work is the aging of the world population. This is not only a developed-world phenomenon; countries across the world must somehow adapt to increased levels of older citizens.

Another equally significant driver of change is in resource management. Will we be able to accommodate a population expanding to 7.9 billion by the year 2025? The short answer is we’re starting this race to the future well behind the starting line. We live in a world in which more than 800 million people are chronically undernourished, 1.1 billion do not have access to clean water and energy use is remarkably stratified across regions and countries.

As serious as the current dislocations are, the ones that we can predict out to the year 2025 and beyond are even more profound. The latest projections suggest that the number of undernourished could exceed 900 million, the number of water-stressed could reach 3 billion and the gap between global supply and demand in hydrocarbons could widen significantly.

As we scan the more distant horizon, technology is a major wildcard. The rate of change in this domain is nearly unfathomable, but there is good reason to expect continued, significant breakthroughs in the areas of computation, biotechnology, genomics and nanotechnology. These areas—and the convergence of discovery and innovation—will enable us to model complex chains of events and even predict new ones with much greater accuracy (i.e., human health, materials science, information technology). The boundaries have yet to be defined—ever longer life spans, ever more significant medicines and therapies, and manipulation of the physical world in ways that will yield stronger, lighter and more durable materials to support our changing lifestyles.

Information and knowledge flows will continue to have an enormous impact on our lives. Inexorably, as sources of information, knowledge and viewpoint continue to proliferate, we are moving toward a world in which we must choose the truth we want to receive. This has tremendous implications for leadership structures across the board—from central governments to corporations to associations—insofar as the monstrous flows of information reduce decision timeframes and enable groups and individuals to exert pressure on a real-time basis.

Global economic integration, unfolding as it is, can be expected to accelerate even further in the years to come. Complex business operations across the planet will be enabled by continued advances in information technology. Beyond that, we can anticipate a seismic shift in the structure of global economic production as a result of the hyper-growth we are witnessing in Asia—specifically, in China and India. In a world of continued stratifications in income and opportunity, these two countries, in particular, will change the fundamental balance.

With the despicable events of Sept. 11, we were plunged into a period of super-violence that opened up a new and more dangerous threat involving weapons of mass destruction. Of particular concern are scenarios involving nuclear and radiological contingencies and bioterrorism. The result is a constellation of threats, the defenses to which are substantially more complex and uncertain than only a few years ago.

Together, these drivers of change have altered the global balance of governance. Corporations and non-governmental organizations have been assuming more significant roles in a range of global issues. Increasingly, leaders will need to explore cross-organizational approaches involving government, private sector, civil society, academia and other groups in order to navigate in this environment. No small task, especially when we consider the fundamental differences between these layers of social organization.

At the outset, I asked whether you were ready for this kind of world. If you believe you are, that is only the first part of the challenge. The second and more profound task that far-sighted leaders face is to fashion proactive rather than reactive strategies—to shape the future environment in such a way that they and their organizations thrive. This is the stuff of authentic vision and leadership. It is an unrelenting, unforgiving hurdle for those of us committed to escaping the short-termism around us.

Erik R. Peterson is senior vice president of the Center for Strategic and International Studies (CSIS), a non-profit and non-partisan think tank in Washington, D.C. He also is the director of global strategy at CSIS.