November 2015 | Senior Leadership
Most of the talk today about new business opportunities centers around geography: companies are eyeing or moving into the countries and regions that represent the greatest potential for growth. But with everyone headed in the same directions, gaining a competitive advantage isn’t easy. Wharton professor of international management Mauro Guillén says that singular focus can prevent senior executives from taking advantage of many other opportunities, ones that represent enormous potential.
“There are demographic trends that point to tremendous possibilities, many of which don’t require companies to enter a market on the other side of the globe,” notes Guillén, who teaches a session on these key developments in Global CEO Program: A Transformational Journey. He says that the challenges for businesses in the 21st century look very little like those they encountered in the last one, so using the same strategies won’t work. “The levels of uncertainty and complexity, coupled with game-changing events and trends, are transforming the world beyond recognition,” he explains. “This environment calls for new mindsets, new decision models, new business models, and new products and services.”
Some of those changes include the rise of emerging-market multinationals, the aging population, and the reconfiguration of global power relationships, which have created a new set of constraints and opportunities. In addition, the number of obese people has, for the first time in human history, surpassed that of those suffering from hunger; and sustainability has become a key priority, with shortages of food and water already occurring in some regions.
During Guillén’s highly interactive session, he shares with participating CEOs other startling demographic trends that every business should consider. “Cities aren’t usually thought of as a new market segment, but consider that, for the first time in human history, more people live in cities than in rural areas, and those numbers are expected to continue to increase. Across the globe, the percentage of city-dwellers is expected to reach nearly 70 percent by 2050. This rapid increase in urbanization will place stress on food, water, and sanitation systems around the world. What could that mean for your business?”
Another demographic trend that gets little attention from business leaders is the increasing numbers of 60+, wealthy women. With a longer life expectancy than men, coupled with greater earning power than ever before and inherited wealth, this population represents serious implications for consumer and financial markets as well as savings behavior. Guillén explains, “If you are in the luxury goods sector, this is great news. Excluding automobiles, about 60 percent of global luxury goods sales are made by women, and if you are doing business in insurance, education, or healthcare, then you can count on well-off women as big spenders.”
He says women are also more risk averse than men, and that makes them more likely to, for example, invest in exchange-traded funds and investment products with downside protection. “Financial services companies that seek to take advantage of this demographic need to consider the different mindset of the female investor when they are developing new products.”
“These are just two of the many important trends taking place today that are fundamentally reshaping life on the planet,” says Guillén. “The sooner we understand their implications, the better prepared we will be to cope with them and potentially turn them to our advantage.”
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