CSIRO identifies six megatrends and the business opportunities in them
Limited supply of natural resources, a shift to Asia and an ageing population all present business opportunities, according to the CSIRO's latest global megatrends report.
The CSIRO report was launched yesterday and it defines six megatrends that will substantially change the way people live.
Dr Stefan Hajkowicz of the CSIRO told SmartCompany that Australian businesses need to innovate to keep up with the fast changing world.
"The pace of change is so incredibly rapid that we are at a time in Australia when we have to really innovate," he says.
"Today more than ever we have to innovate into a new space to remain competitive to ensure our children and grandchildren still enjoy a prosperous quality of life and it is up to businesses to do that."
Here's the opportunity for businesses in the six trends:
1. More from less
The CSIRO says the earth has limited supplies of natural mineral, energy, water and food resources essential for human survival and maintaining lifestyles.
"There will be a greater focus on efficiency because there is driving demand for limited natural resources like food resources, agricultural land is disappearing at a rate of 12 million hectares a year globally," says Hajkowicz.
He says demand is ramping up and Asia is seeing unprecedented levels of economic growth, which is going to lead to a focus on renewables and increased demand for food resources.
"This means a focus on efficiency and coming up with better ways to get more from less, it may see a shift into renewables and increased efficiency in food production and potentially greater demand," he says.
"As we see iron ore prices come down, food prices are not doing the same thing, they are spiking and going higher and most projections say they will continue to remain high."
2. Going, going ... gone?
The CSIRO warns many of the world's natural habitats, plant species and animal species are in decline or at risk of extinction.
Hajkowicz says the coming decade is going to set the scene for biodiversity for the coming millennia and if we don't act to save the species on the edge of extinction they will be lost forever.
"Business has an important role to play in thinking about the role it can play in preserving critical and endangered habitats and there are business opportunities in ecotourism for example," he says.
3. The silk highway
The coming decades will see the world economy shift from west to east and north to south, according to the CSIRO report.
"This is the biggest shift in the world economy over the next 20 years, the shift in light of rapid income growth in India and Asia," says Hajkowicz.
He says foreign investment will come from China and create "big opportunities" for Australian companies to access new markets in Asia, but Hajkowicz warns of challenges as well.
Asian companies will have more and more infrastructure and equipment, making them highly competitive to Australian companies.
"We are very exposed to international markets in Australia and there is no way you can fight against that, you have to embrace it," says Hajkowicz.
"We have to think about what niches we should target, where can we win and where can't we win; that's the question Australian companies have to target."
4. Forever young
With Australia and many other countries that make up the Organisation for Economic Cooperation and Development having ageing populations, the CSIRO says this trend can be an asset.
"The big ticket item there is for the business sector to think about how it can treat the ageing population as an asset that can be used in the workforce," says Hajkowicz.
He says business needs to fully exploit the resources in the ageing population and see it as more of an opportunity than a problem.
"Businesses need to look at their human resources policy and approaches and look at tapered retirement models where people gradually scale back duties that they perform in the company," Hajkowicz says.
5. Virtually here
This megatrend explores what might happen in a world of increased connectivity where individuals, communities, governments and businesses are immersed into the virtual world to a much greater extent than ever before.
"As we look at the rise of online retail and teleworking, it is a virtual world that we are moving into and it is coming on us quite quickly," says Hajkowicz.
He predicts online retailing might grow to as much as 15% in the next few years and beyond that the sky is the limit.
"Younger people who have grown up with the internet from day zero are so used to living online that they don't have a problem with doing the bulk of their shopping online," says Hajkowicz.
6. Great expectations
The final megatrend identified by the CSIRO is a consumer, societal, demographic and cultural megatrend.
It explores the rising demand for experiences over products and the rising importance of social relationships.
"This focuses on the growing preference Australians have for experiences over products, there is a shift in discretionary expenditure to holidays, going to the theatre and movies," says Hajkowicz.
"Consumers are also concerned with intangible qualities of the product they consume, like a cup of coffee being fair trade. We have much more expectations from the product."
Hajkowicz also says there is a shift towards personalisation of products in the way Apple iTunes anticipates music which would suit consumers' preferences.
"The marketplace will increasingly head in this direction as companies will innovate to work out what the consumer wants before they know they want it," he says.
"If you can get a product exactly personalised to meet your needs, why would you buy another one?"
This story first appeared on SmartCompany.