- August 8, 2012
- Posted by: Stephen Johnson
- Category: Vistage
In his recent presentation to the Upstate SC Vistage Chief Executive Officer and Key Executive Officer Groups, Herb Meyer made several observations on world demographics that will affect business over the next three decades:
1) World population growth is decelerating, and world population will peak sometime in the next 50 years, probably around 2040.
This peak is the result of declines in birth rates in the world’s developed and developing countries. Some of these birth rate declines are the result of cultural changes (e.g. Europe, where birth rates are significantly less than the 2.1 children per family necessary for a stable population) and others through government policies (e.g.China, with a 1.0 child per family mandate.) Interestingly, the birthrate in Muslim countries, traditionally high, is plunging as the Muslim world integrates itself into the world community. The birth rate in Tehran, for example, is currently lower than the birth rate in Manhattan.
2) The world population is aging. Japan is an extreme example, where by 2040, there will be more people older than 55 than under 15. Now there’s an upside down pyramid!
3) The emergence of the world from poverty. Sometime in the next 40 years, fewer than half of the world will be “poor.” While governments will disagree, for political reasons, on the definition of the poverty line, Herb’s definition makes the most sense: a family is not poor if 1) They have a roof over their head and are not concerned about whether they will have a roof over their head tomorrow. 2) They have sufficient food to eat, and clean water to drink, and are not worried about having sufficient food or water tomorrow 3) Their children are inoculated against common childhood diseases 4) Their children are going to school and 5) One or both parents go to work each day.
4) The reconciliation of Islam with the modern world and the rights of the individual has begun. It is, and will continue to be messy, just as the reconciliation of Judaism and Christianity with the rights of the individual, which resulted in the Renaissance and the western world, was messy. It will also take longer than any of us would like.
5) The emergence of a global middle class. U.N. and World Health Organization statistics show that 150-200 million people are emerging from poverty every year. Herb points out that this is where your future customers are.
Herb’s observations on the impact of these realities upon your business decisions:
1) The competition for energy will increase. “Energy is to a growing economy as food is to the body.” “To tell a growing economy to use less energy is like telling a teenager to stay out of the refrigerator.”
2) Wars will decrease. “Middle class life is busy, interesting, but sort of boring. We would rather shop than fight.” Consider Europe, which, for the first time in history, is a mess and no troops are moving. Instead, they are headed to the Olympics.
3) The emerging global middle class will have disposable income, but not for huge purchases. Plan your offerings for a disposable income of $4-$24/day.
4) The middle class buys health care, education, entertainment, energy, and food. The elderly buy health care, cheap entertainment, food, and “comfort.”
So, to take advantage of this market, that is growing at 150-200 million buyers per year emerging from poverty, and the millions more who are aging, your offerings should be
Overall, not a bad picture, right? Well, that’s the good news. The bad news? KOOKS WITH NUCS! All of this can change in a heartbeat if the crazies in Iran, who have talked openly about trading their citizens in Tehran for the destruction of Israel, use the nuclear weapons they are developing. Or if the nuclear weapons in a disintegrating Pakistan fall into terrorist hands. Or any of a dozen other scenarios that involve the terrorist use of a nuclear weapon.
So what to do? To quote the wag: “Life is dangerous, then you die.” There is nothing we can to about the uncertainties of the Kooks with Nucs. Plan instead for the certainties: 1) World population will peak 2) The global middle class will continue to grow at 150-200 million/year 3) Energy, food, and water consumption will increase.
What are you and your business doing about this growing global market?