Defining the Future Economies

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In 2020, we will be living in a "Plural Economy," a digital world that is algorithmic, creative, disrupted, fast, hyper connected, purpose driven, reputation based, ruthless, and sharing.

 

If your CEO asked you for a list of books on the future economy, what books would you recommend? If you asked your senior management team to label the economy of 2020, what would they call it?

There is a lot of noise regarding which economy we have to prepare for.

Economists and IT leaders may want to label it, Plural. It can be used to describe the multiple economies we could see in 2020. Some say even before that time.

Demographers label the people born between 1997-2015 as the “Plurals.” Whereas the much talked about cohorts known as Millennials, includes those born 1981-2000.

But let’s ask which of the many economies will dominate in 2020:

 

Will it be The Sharing Economy?

A recent trend is occurring. It’s the idea that you don’t need to own something to get benefit from it. Success was once defined by what you owned. Today, access – not owning -- is the new high ground.

This has brought a powerful new force to modern life. It’s called the Sharing Economy. In 2010, Time called collaborative consumption one of the “10 Ideas That Will Change the World.”

The sharing economy is most talked about in the consumer sector. Airbnb, Uber and Zipcar are probably the most visible companies in this space.

Airbnb is an online home share founded in 2008. Today it books a new rental every two seconds. Airbnb was recently declared the official ‘alternative accommodations’ sponsor of the 2016 Olympic games.

Uber, the rideshare company, was just valued at $50 billion. Zipcar, a car-sharing service, has more members than actual car owners in major cities around the world.

Estimates of the economic impact of the sharing economy range from $3.5 billion to $26 billion. In 2020 will millennials own anything?

As of 2007, two-fifths of Americans under the age of 35 owned their homes or apartments, but that number had dropped to one-third by 2011.

In 2013, only 66% of people age 25 and under own cars. That’s a 7% drop since 2007. In 2001, 50% of those under of 35 had credit card debt, compared to 39% in 2010.

There is money to be made by corporations that enable sharing to occur and there is value to be created by sharing.

Rapidly expanding digital information and connectedness have made exchanges simpler, less expensive, and more transparent. Making the sharing economy easier to achieve.

For corporate technology we are deep in the sharing economy. This is occurring because companies are embracing open source software and the Cloud.

We are seeing the emergence of specially tuned technology stacks for specific verticals. The number of industry specific Platform-as-a-Service (PaaS) offerings will increase dramatically over the next year or so.

Tailored PaaS offerings are calibrated to meet industry specific needs. Examples of emerging industry PaaS offerings include: NYSE Capital Markets Community Platform in financial services; health information exchanges in healthcare; the Illumina PaaS solutions for genomics and Johnson Controls’ Panoptix App Marketplace in smart energy.

 

Will it be The App Economy?

Some industry watchers contend that the punch line of today should be “there’s an app for that.” In 2010 the American Dialectical Society added “app” to its ‘Words of the Year List.’

In June 2014, Apple announced it had reached 75 billion downloads in the App Store. In July of that same year, Google Play said it had crossed the 50 billion mark. Every month the number of available apps grows approximately 2%-3%.

Despite the fact that 91% of mobile app downloads are free, the iOS App Store distributed $10 billion to developers in 2014, which, is just about as much as Hollywood earned in 2014 box office revenues.

Apple claims that its App Store has created 627,000 jobs. European Commission Vice-President Andrus Ansip estimates that Europe generates one-fifth of app-related products and services.

Three important things were happening here:

1. Technology in the form of apps were increasingly being turned to by growing and multi-generational portions of the population to perform tasks and or enhance experiences core to modern existence.

2. A new model of technology provisioning has emerged. You can buy technology just by typing in your password. For the first time, this brought easy payment to the modern software world.

3. Expectations regarding performance were being raised. 68% of consumers said they demand loading times of less than six seconds. Half of those consumers demand less than three seconds [Zogby Analytics Survey 2014].

 

Will it be The Disrupted Economy?

Historically, you needed large amounts of capital, courage and scale to disrupt market leaders.

In 2020, all you’ll need to launch a disruptive game-changing innovation is a keyboard, an Internet connection, a software development kit and a credit card. With that collection of things, you’ll be distributing your goods and services and making money from your innovation.  

In Digital Disruption: Unleashing the Next Wave of Innovation [2013] Forrester analyst James McQuivey suggests that disruption has become something twelve year old children can do after school.

 

Will it be The Aging Economy?

Many economists predict that the number of super-aged countries (those with more than 20% of the population over 65) will grow from three today to 13 in 2020.

The largest implication for this economy is the lower number of people in the workforce leading to lower household savings. And this means lower economic growth.  

But many predict that the use of technology for collaboration and productivity could allow the aging population to continue to work. If so, this could help alleviate the negative outcomes.

 

Conclusion

In 2020 we will be living in a ‘Plural Economy,’ a digital world of work that is simultaneously algorithmic, creative, disrupted, fast, hyper-connected, purpose-driven, reputation-based, ruthless, and sharing.


Thornton May is a futurist, educator and author. His extensive experience researching and consulting on the role and behaviors of “C” level executives in creating value with information technology has won him an unquestioned place on the short list of serious thinkers on this topic.


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