Five trends that are reshaping the global economy

For much of the past two years, businesses around the world have focused predominantly on getting through a profound economic crisis. Thinking about what the economy might look like five years out may have seemed a luxury. It is not.

As Mitch Mac Donald, group editorial director here at DC Velocity, is fond of reminding the staff, you have to keep your eye on the road ahead, not on the hood ornament.

A group of consultants from McKinsey & Co. made much the same point in an article that appeared last June in the company's online business journal, McKinsey Quarterly. In that article, U.S.-based consultants Peter Bisson, Elizabeth Stephenson, and Patrick Viguerie argued that watching out for trends is a crucial part of long-term business success. "The fact is, trends matter," they wrote. "Systematically spotting and acting on emerging ones helps companies to capture market opportunities, test risks, and spur innovation."

The consultants warned that it's no longer enough for executives to simply monitor developments in their own markets. "Managers must also gain an understanding of deep external forces and the narrower trends they can unleash," they contended. "In our experience, if senior executives wait for the full impact of global forces to manifest themselves at an industry and company level, they will have waited too long." The argument apparently resonated with McKinsey Quarterly readers: The article ranked among the top 10 most-requested McKinsey stories last year. (My thanks, by the way, to Richard Thompson of Jones Lang LaSalle for passing this along.)

In the same article, the consultants offered their take on the major forces—or "crucibles," as they call them—that will shape the world economy in the years ahead. They should sound familiar. First is "the great rebalancing" of the global economy, as emerging-market countries overtake the developed nations in driving growth. Next is "the productivity imperative," the pressure on developed countries to step up output. Third is "the global grid," the idea that economies will continue to become more interconnected through complex flows of capital, goods, information, and more. Fourth is "pricing the planet," the growing competition for limited resources at a time of changing social attitudes toward environmental protection. And finally, "the market state," the dilemma facing national governments as they try to maintain social stability in an increasingly globalized world.

The writers admit that their ideas are tentative and that no one can know precisely how these forces will interact. But they contend nonetheless that companies must incorporate these topics into their strategic discussions. While one might quibble over the definition of the key forces, it's hard to deny that they are real.

We've written a lot about risk management and dealing with complexity over the years. It seems as if it will not get any easier.