The Future and How to Survive It

Since 1980 global corporate profits have grown at an unprecedented pace, increasing their share of global GDP by 30%. North American and Western European multinationals have been the biggest beneficiaries, capturing more than half of corporate profits by leveraging their scale and exploiting unprecedented opportunities for reducing costs. This remarkable era is now coming to an end. Growth is slowing, costs are rising, and new rivals from emerging economies and from the technology sector are changing the rules. In the decade ahead, the authors forecast, profits will continue to increase in absolute terms, but they will fall to 7.9% of global GDP--around what they were when the boom began. To maintain their lead, executives in Western multinationals must consider the following responses. (1) Be paranoid. Instead of focusing internally, executives in Western firms need to understand their new rivals. (2) Seek out patient capital. Emerging-market firms and technology companies often take a long view, building their market share over years at the expense of short-term profits. (3) Radically self-disrupt. Companies must overcome strategic inertia by reallocating capital as conditions change. (4) Build new intellectual assets. The most profitable businesses are in idea-intensive industries, so intellectual capital, such as data and algorithms, is a prime asset. (5) Go to war for talent. As populations age and talent becomes scarce, now is the time for human capital management to become a strategic priority.

• Multinational corporations
• Globalization
• Finance and investing
• Competitive strategy
• International business