Even as the world’s population reaches 7 billion, the rate of growth is slowing and workforces are aging. Companies and countries can prosper by preparing for the changes to come. An excerpt from an article by Richard Shediac, Naji Moujaes and Mazen Najjar @ Strategy Business.
Most people generally recognize the role that demographic trends play in shaping societies, mature economies, emerging markets, and the environment.China and India, for example, have become immense economic engines in part because each has more than a billion people. A bulge in the youth population has been a major factor in the recent unrest in the Middle East: Young people are compelled to protest because they feel they deserve opportunities and a voice in society that reflects the strength of their numbers.Europe and Japan, conversely, are known to be suffering economically because of their aging workforces: The proportion of people who are retired, and thus dependent on others to support them, is rapidly increasing.
The conventional wisdom says that there’s nothing one can do about these kinds of demographic trends, that every country must live with its demographic destiny. But that isn’t true. Political and business leaders can do a great deal, if they are willing to take a precise approach to prediction; past and present demographic trends, as well as those expected for the near future, can help them calculate socioeconomic trajectories. In the public sector, the first step is to pinpoint a country’s development trajectory and demographic profile; next, plot the potential for social, economic, and environmental progress; then, look for challenges and opportunities; finally, develop policies and actions to improve the country’s trajectory. Companies can use a similar approach to take advantage of demographic trends in countries where they hope to find new sources of talent or potential consumers.
This proactive approach to demographics is underpinned by two analytical concepts;
– The dependency curve: the relationship between a country’s working and nonworking populations over time.
– The arc of growth: the pattern of momentum as a country’s prosperity increases while its population ages.
The strictures of demographics don’t have to be destiny. Companies must take demographics into account as they plot their corporate strategies. They will have to adjust their products and services for countries at varying points on the arc of growth. Changing demographic profiles make for new consumer priorities.
Shaping the Future
Business leaders must respond to aging populations by seizing opportunities and confining risks. They must cope with changing preferences as consumers age; they must go abroad to develop new markets, targeting countries that are moving most rapidly through the arc of growth; and they must adjust to changing workforce patterns and shifting supply chains. Most of all, they must look beyond their immediate goals and consider how demographics are affecting their industry as a whole.
These challenges are daunting and inspiring at the same time. Through the lens of proactive demographics, both governments and companies can glimpse the future and influence its outcome.
- Demographics Drive Change (1stvillager.wordpress.com)
- News: National Geographics releases 7 Billion (ilounge.com)
- China’s Other Major Demographic Problem (businessinsider.com)
- Britain’s population timebomb defused? (barneystringer.wordpress.com)