Reinventing your future in a turbulent world
by Blair Sheppard and Nadia Kubis
If your coffee break or dinner conversations are anything like mine these days, they will often revolve around the question: What’s happening to the world? Why are we being hit by crisis after crisis?
It seems, indeed, that every country in the world is confronting a worsening stream of crises. They’re not the same crises everywhere, but they are of the same type:
- Economics: inflation levels not known in decades across many countries; falling prices in China that now raise concerns; a housing price bubble in countries including New Zealand, Sweden, Britain, Canada and Australia; and many more
- Resources: food shortages in several regions of the world, with hunger hotspots ranging from the Central American Dry Corridor and Haiti, through the Sahel, Central African Republic, South Sudan and then eastwards to the Horn of Africa, Syria, Yemen, and Afghanistan; a looming shortage of gas in Germany and other European countries; a worldwide chip shortage, that has been going on since 2020 and is only going to get worse; and many more
- Conflict: Russia’s war against Ukraine which has divided the world; the Israel-Hamas conflict; the latest military coups in Niger and Gabon; violence targeting civilians in Iran and Afghanistan, the violent protests and clashes with the police that swept across France earlier this year; among others
- Health: the opioid epidemic in the US that’s continuing to escalate; the NHS crisis in the UK where many patients don’t get treated in wards, but in the back of ambulances or in corridors, waiting rooms and cupboards — or not at all; surging number of disease outbreaks and climate-related health emergencies in the greater Horn Africa; the global COVID-19 pandemic that continues to affect people around the world; and many more
- Institutions: some high-profile bank failures earlier this year; educational systems perpetuating inequalities and not preparing students for the world that is unfolding; the undermining of democratic structures in many countries including the US; just to name a few.
The world has always faced crises, and some were arguably much worse than those we’re experiencing now: WWII, inflation in Germany in 1923, the Spanish flu. So, why is today different? What’s different now is that these crises are all happening at the same time. We are going from crisis to crisis, with no end in sight and at a rate that seems to be increasing.
In this challenging environment, most of us — governments, organizations, and individuals — are spending the bulk of our energy and resources on crisis management. That is a problem because, in fact, the crises are being caused by deeper trends that also need to be addressed. These deeper trends — the five Megatrends that we at PwC have studied extensively and that I have written about before: Climate change, Technological disruption, Demographic shifts, Fracturing world, and Social instability — need to be managed urgently, because they themselves pose existential threats and, unless they are dealt with, will create more severe and more frequent crises.
Example: How the Megatrends cause or accentuate the short-term crises we’re experiencing
Consider the health crisis in the UK and how it is caused — or at least accentuated — by a combination of Megatrends: With the population aging (Demographic shifts), demands on the healthcare system are increasing; Brexit (Fracturing world) has exacerbated long-standing staff shortages in nursing and social care as well as some specialist medical roles, e.g., anaesthesiologists; and unattractive pay and working conditions (Social instability) have caused healthcare workers to leave the profession, or the country altogether. Together with the COVID-19 pandemic and the strain it puts on the healthcare system, these trends have led to the health crisis the UK now finds itself in.
Or consider the chip shortage, which has also been accentuated by a combination of Megatrends: The tech-driven nature of most of today’s products and solutions (Technological disruption) has dramatically increased the need for chips across sectors; geopolitical and macroeconomic tensions (Fracturing world), on the other hand, have reduced the free flow of chips and disrupted supply chains. Severe weather events, including the droughts in Taiwan during the summer of 2021 (Climate change), also negatively affected the production due to the lack of available ultrapure water that is needed to clean the factories and wafers. The COVID-19 pandemic added fuel to the fire by leading to an increase in global demand for PCs and a decrease in the manufacture of semiconductors and disruption of global supply chains due to the stay-at-home economy.
Or consider high inflation that now seems more difficult to address because it is accentuated by the Megatrends: Corporations’ efforts to decarbonise their operations and protect or repair damage from extreme weather events (Climate change) drive up cost, for example through higher prices of materials and cost of insurance; the same holds true for the huge technology investments (Technological disruption) that organizations need to make but that often fail to deliver expected returns, as well as for their efforts to reconfigure supply chains (Fracturing world); in aging societies (Demographic shifts), the demand for services geared toward the elderly is increasing but the workforce delivering those services is decreasing, thus driving up cost; and the difficult work conditions and looming prospects in some professions, for example truck driving (Social instability), drive people away from these jobs, making it impossible to cover existing demand and thus further driving up prices.
Addressing the Megatrends requires institutions and businesses to fundamentally rethink and reconfigure what they do. They need to reinvent their business model or institutional form — what value they create and how they do so — in order to cope with Climate change, Technological disruption, Demographic shifts, Fracturing world, and Social instability. And do so all while dealing with the acute crises the Megatrends create. In short: They have to address the short-term and the long-term together, because, in fact, they are the same problem.
How can this be done? How can organizations win today’s race while running tomorrow’s? They need to understand the transformation they’re trying to undertake in response to the Megatrends. This will allow them to tackle the short-term crises in a way that is aligned with their long-term transformation — and use scarce time and resources in a way that benefits both the long term and the short term. Pharmaceutical companies, for example, that understood the necessity to focus on bioengineered drugs (Technological disruption, Demographic shifts) were able to apply that technology to develop the highly effective COVID-19 vaccine in record time; and governments that understood the need to get more people to use public transportation (Climate change) heavily subsidized train and bus tickets to reduce fuel consumption and cost of living in the recent energy and inflation crisis.
And there’s more: knowing what they will transform into also allows them to use the crises as the vehicle for accelerating that transformation. Crises, indeed, create an environment that can help kickstart profound and sustained change:
- They force us to question our assumptions and be willing to do things differently.
- They bring people together in new ways to find unconventional solutions.
- They compel us to act fast.
These are the same conditions we need to drive the profound transformations that the Megatrends require. So, let’s not let these crises go to waste.
What I’d like to encourage all of us to do is to think deeply about the Megatrends: How are they affecting your organization and how does your organization need to transform to survive and thrive in such an environment? And in what crisis are the Megatrends likely to manifest themselves next in your region and industry? Because then, when the next crisis hits — and it will hit — you’ll be better prepared to weather it, and you’ll be ready to use the crisis to accelerate your transformation.
As you think about how to navigate the current environment, ask yourself: Do you want to be a person who successfully addresses a given crisis, or do you want to be a person who addresses the crisis in a way that sets your organization up to write history for the next fifty years? I’d rather be the latter…
Learn more about PwC’s Megatrends here: www.pwc.com/megatrends
© 2023 PwC. All rights reserved. PwC refers to the PwC Network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
