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Nov 19 2010

Global MegaTrends to Rock Your World – Part 1

As we enter the 2010 Holiday Season,  what is clear to us at MCI’s global Association Management & Consulting Practice is that US-based associations need to redouble their efforts to strengthen their positions in emerging markets.  Inaction, denial, or under resourcing one’s international efforts is the most risky of strategies at a time when our world is going through fundamental change.

In 2010,  our clients have asked us to better define some possible options to help grow their brands,  membership, and product demand outside home markets.   We began this effort in part by conducting a global environmental scan to identify the leading global business and economic trends, their underlying context, implications arising from their ascension, and the questions that need answers in order to chart the proper course.

Using the latest research findings from leading global institutions, we assembled the following twelve megatrends that  associations need to factor in their 2011 strategy and planning.  Here then is a short excerpt from this analysis.

Megatrend #1 – New World Order – US, EU and Japan in a Catch Up Race

Since 2001, the economies of the US, EU, Japan have not only underperformed but they are now no longer driving global growth.  Leadership is now squarely on the shoulders of emerging market leaders – China, India, Brazil and others.  Among Emerging Market Economies, the recent recessionary downturn was brief or didn’t even exist.  And today many have returned with strong growth.  Confidence in these markets is high and attracting greater business and investment while local consumer demand is building in volume and sophistication.

Meanwhile, the US & EU recovery arrived without any bounce in jobs and credit remains tight.   Companies hoard cash as hungover consumers focus on paying off debts and contributing to savings.  The risk of insolvency among member states in EU from Greece, Ireland, Portugal, and Spain undermine confidence in the future.

Today’s reality is likely to remain the same without substantial reductions in public debt, improved job growth, and investments to improve competitiveness.

Megatrend #2Innovators and Knowledge Creators Increasingly Reside in Emerging Markets

So you’ve been seeing more and more foreign contributors to your journals, conferences, and other products?  Emerging Market governments are investing in innovation hubs that have attracted funding from sovereign wealth funds & venture capital while Developed Market innovation centers are weakening with less support from private equity markets.

Sources that track contribution to science and technology using such measures as peer-review papers, patent applications or awards across various country markets find that the depth and spread of non-Western contributors is accelerating.   For instance in 1990, less than a tenth of international patent applications had a foreign co-inventor while that number has risen to 25% in 2010.  Today, 40% of US patent applications include foreigners as part of the research team.

Megatrend #3Commercialization of Innovation in the Age of Austerity

While we in the West equate innovation as breakthroughs creating new paradigms embodied in revolutionary (read expensive) products like the iPad or iPhone, many of the most important innovations coming from emerging markets consist of incremental improvements to products and processes aimed at the middle or the bottom of the income pyramid.

New innovative product design strategy using “frugal innovation” (or reverse innovation) is creating more locally relevant products aligned to the special needs of developing world consumers, and potentially, the more cash-strapped Western consumers who prefer “cost effective function” over “cutting edge, nice to have features.”

Emerging market countries are becoming hotbeds of business innovation in much the same way as Japan from the 1950s onwards. They are coming up with new products and services that are dramatically cheaper than their Western equivalents: $2,200 car, $500 portable ECG machine, or the $70 refrigerator.  Emerging market innovators are reinventing systems of production and distribution, and they are experimenting with entirely new business models.

Next up in Part 2 – Tech Explosion Meets Population Explosion, Health Care – More Than A US Problem, Global Business Craves Standards, Codes & Practices

1 comment

    • Bob Patterson on 12/13/2010 at 10:42 pm

    Well said, Peter. Along with these mega trends, I trust that you will be covering trends in both Corporate and Fiduciary Governance. With the move toward non-Anglo Saxon markets, traditional governance practices will need to be revised. US governance approaches will need to be affirmed while also being flexible. Furthermore, monitoring systems need to be utilized that reflect global ISO-like best practices.

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