In the busy rush of our lives, it can be hard to stop and take stock of where we are and how we’re doing. All too often, we snatch snippets of information as we dash from one thing to another, we grab the news in bite-sized headlines, and we hastily check what’s happening through our Twitter or other social media feeds. This diet of half-truths, overblown opinion, and gossip leaves us with a sense of doom and gloom. If we are to believe what we hear, then a triple-whammy of disasters is going to send us hurtling to hell in a handcart: secular stagnation will rob us of the opportunity to grow, digital technology will make us redundant, and climate change will wipe us out.
This is a deeply depressing dystopian vision of the future, and it perhaps explains why we’re living in what has been called an age of anxiety. But while all strategists worth their salt will stress the importance of developing worst-case scenarios, it is also important to retain a sense of perspective. Going forward, it will be essential to separate fact from fiction and see the bigger picture.
In the dark days of the Great Depression, Franklin D. Roosevelt warned the American people that the “only thing we have to fear is fear itself.” It is true that a feeling of foreboding can have a paralyzing effect on people, causing them to lose heart and hope. It is also true that a majority of people have a distorted view of what’s really going on. In some countries, such as the Germany, France, the United Kingdom, and the United States, only 6% or less think the world is getting better.
But as Harvard’s Steven Pinker has brilliantly explained, the view that the world is in a bleak place is “not just a little wrong,” it’s “wrong wrong, flat-earth wrong, couldn’t-be-more-wrong.”
All this is not meant to sound complacent. Of course, we face many significant challenges. There are still too many poor, hungry people with little or no access to health care, proper schooling, clean water and sanitation, decent housing, and affordable sources of energy. Increasing CO2 emissions are leading to higher temperatures, the melting of Arctic and Antarctic ice and glaciers, rising seawater levels, and more droughts and natural disasters. But we should not underestimate the extraordinary power of human ingenuity to face up to these problems, to mitigate their worst effects, and ultimately to solve them.
Let us now address three challenges that affect everyone: low growth, climate change, and technological disruption.
1. Low Growth: Why It’s Not Secular Stagnation
Growth is a synonym for progress. So if we’re not growing, we’re not progressing. This is why commentators have seized on the fact that growth has slowed over the past ten years. For some, such as Larry Summers, another Harvard professor, it signals “secular stagnation”—the idea that the global economy will be prone to entrenched sluggish growth that will halt human progress in its tracks. The phrase was coined during the depths of the Great Depression. But it was wrong then, and it is wrong now. Yes, growth has slowed, but this should spark a blast of realism rather than disappointment. Compared with the growth rates prior to the Great Recession, when they soared to double digits in some rapidly developing economies, today’s rates do look weak. But the pre-Recession rates were artificially boosted by a massive—and unsustainable—increase in private debt, a real estate bubble that was always destined to burst, and a commodities boom.
So what can we realistically expect? GDP growth is determined by increases in population and increases in productivity. A global growth rate between 3% and 4% is achievable—and would still allow for developed countries to continue growing and for developing countries to catch up and become developed countries themselves. This projection assumes three things. One, developed countries will be limited to growth rates of between 1% and 3%. But because of their stagnating or only slowly growing populations, GDP per capita will still show reasonable growth of 1% to 2% per year. Two, developing countries will fulfill their rich potential and enjoy significantly higher growth rates of 3% to 7% and thus GDP per capita growth of 1% to 5% per year. And three, all countries will continue to make significant investments in their human capital (by upgrading their education and health systems), their physical capital (by improving their transport, communications, and other infrastructure), and their institutional capital (by expanding the rule of law and promoting functional governments and public bodies), and thus increase productivity.
In other words, the future is very much in our own hands. But we must make it happen.
2. Climate Change: Why the End of the World Is Not Nigh
It was our ancestors’ ability to harness the natural resources of the planet that first set us on the path of accelerated growth. For millennia, there was no discernible material progress. Then, from the mid-1700s onwards, the power generated by water, coal, and oil launched what Professor Pinker has called “a Great Escape from poverty, disease, hunger, illiteracy, and premature death, first in the West and increasingly in the rest of the world.”
There are still some people who reject the fact of anthropogenic climate change. But they are on the wrong side of history. That debate is over. Also, there are some people who say that we have left it too late to change our ways—that the end of the world is nigh. They call for a radical shift in the way we lead our lives, urging us to stop flying, driving, and eating meat.
But their reasoning is flawed. First, their diagnosis of the problem—that we are running out of time to take action—is an exaggeration, albeit an understandable one, given the cowardly way that the world’s leaders have so far gone about addressing the problem. Second, their remedies, even if they were desirable (which they are not, since they would undermine the connectivity that has driven globalization), are wholly impractical. People in developed countries are the beneficiaries of two hundred years of fossil fuel exploitation and they are frankly not going to vote for frugal living while people in developing countries pump out record amounts of CO2 in pursuit of prosperity. Equally, they can’t begrudge those in developing countries the same comfortable standard of living that they have come to expect as their birthright.
So what is to be done? How can we square the circle? To answer these questions, we must have faith in the power of human inventiveness and creativity to overcome the problems that we face and to consistently implement the solutions that have been put forward on multiple occasions. For a start, we must look at all our supply chains to reduce the shocking amounts of wastefulness in the global system. For example, around one-third of the food we produce every year—approximately 1.3 billion tons—gets lost or wasted. Likewise, energy gets lost or wasted in production, buildings, transportation, and households. The US, for instance, does not capture two-thirds of the power it generates, not least because of waste in the system.
A key lever to such process optimization is the rigorous application of data, analytics, and technology to identify the many opportunities to reduce the consumption of energy and of resources in general. This is as possible in “old” industries, such as steel mills, cement plants, and refineries, as it is in “new” industries, such as telecom networks, computer centers, and warehouses. And of course, technology can also provide lots of opportunities for optimization in private households.
Much depends on providing the right incentives. Pricing energy, water, land usage, and also emissions comprehensively and consistently is critical. Various schemes are in place or are being introduced in different parts of the world. Let us learn from each other about what works and what doesn’t work, and ensure that we abolish all the subsidies that are fostering waste.
Again, we have the means to shape our future, simply by applying our current knowledge and capabilities and continuing to expand them.
3. Digital Disruption: How It Can Be Harnessed for the Greater Good
Digitization and AI are being positioned as the big threat to employment and to society at large. Many experts are predicting that 30%, 50%, or even 70% of jobs will vanish. Everywhere humans will be replaced by machines and robots, in factories, in logistics, and in offices. At worst, only software engineers, designers, and scientists will be safe, with the rest of the population being either unemployed or reduced to providing low-level services.
But this is an overly pessimistic view. Digitization and AI have enormous potential for doing good in all aspects of life and in all sectors of the economy. However, it is the combination of people with technology that truly enables progress and higher productivity. Good education and training can be provided for many more people by supporting teachers and trainers with technology. Swifter transportation can be facilitated by bringing people together with technology. The cooperation of people within large organizations and across all organizations can be facilitated by technology, thus leading to better and faster results.
In the developed countries, we are more likely to run out of people before we run out of jobs. New technology will help to address many of the challenges we are facing as a result of slowing population growth. Meanwhile, in developing countries, it will help to integrate many more people into the economy, allowing them to become healthier, to learn faster, and to be more productive. This is why we need to embrace technology as an enabler. It has the potential to improve our lives—and AI, in particular, has the potential to help us solve some of the biggest challenges of all. In fact, it is better to think of the “a” in AI as standing for “augmented” rather than “artificial.” Properly handled, it will improve our chances of finding solutions—not impede them.
As we craft the new vision statements of tomorrow, there will be a role for each one of us—as individuals, as members of our communities, as managers and employees of private enterprises and NGOs, as politicians and civil servants in government institutions. But leaders will have a particular obligation to listen to their citizens (in the case of politicians) and to their stakeholders (in the case of chief executives), to foster wide participation in finding solutions to the greatest challenges, and to set an ambitious plan for the way forward.
If history tells us anything, it is this: we can overcome pretty much any challenge if we actively search for solutions rather than just create anxieties, if we work together constructively rather than point fingers at each other, and if we work hard to get things done rather than complain about the lack of progress.
This is why it now behooves the leaders of global businesses—who are, by definition, leaders of transnational organizations—to champion an optimistic, collaborative, and persistent approach to creating a positive future. They have a once in a generation opportunity to show that, by working together with renewed confidence and determination, they can shape tomorrow’s world for the benefit of everyone.
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