Ten years ago, the iPhone had yet to be introduced. Fast forward to today and this device’s dramatic ripple effects in the US and abroad have ranged from upending the taxi industry by enabling Uber to dramatically altering the future of the US logistics industry via growth of online shopping. With the United States’ endless ability to reinvent itself and seize opportunities of the future, despite the challenges it faces, the next 10 years can be expected to usher in even more dramatic changes.
While many companies have a deep understanding of their own industry and adjacent industries, many industries (such as the taxi industry) have failed to foresee how divergent trends will converge to disrupt them. As company leadership looks forward to the next 10 years, how many understand the mega trends that are fundamentally transforming the way that Americans will live, work, and do business? Frost & Sullivan’s comprehensive new project, led by a new study “The Future of the United States”, looks at the dramatic changes the country will undergo through 2025, and the effects this will have on American businesses.
American Life in 2025 – Citizens, Communities and Cities of Tomorrow
Citizens of Tomorrow
The largest tidal wave to hit American citizens will be the rise of Millennials, which by 2025 will comprise 26.2% of the population and 43.8% of the workforce. In spite of their numbers, challenges are likely to impede their economic purchasing power and contribute to a 5% projected decrease in household income over the next 10 years. These challenges include:
- Late job start. In 2013 Millennials were twice as likely as older groups to be unemployed, with 1 in 5 living with their parents. This late start in self-sufficiency may have severe implications for lifetime earnings and is even more detrimental when combined with mounting student loan debt burdens.
- Increasing demands to support a growing elderly population. The number of citizens aged 65 and older will increase by 37% between 2015 and 2025, while those under 65 will only grow by 3%, compounding the support burden and decreasing the disposable income of the working population. Because of this shift, US childcare-focused businesses are already developing overlapping elderly products and services, such as home service providers offering dual home-care aids, and diaper companies growing their incontinence product portfolio.
- Job automation. Millennials are facing increasing automation of the workplace, which will threaten up to 47% of American jobs over the next 20 years.
Ultimately, reduced spending power from the largest earning demographic will delay Millennials’ purchase of homes, cars, and other luxury and essential items, slowing the economy and reducing overall spending. In response, some retailers are already trying to adapt to Millennials’ smaller budgets: Whole Foods, for example, is launching a lower-priced grocery chain targeted to those with the characteristics of Whole Foods shoppers, but with less disposable income. The US will also see continued growth in the peer-to-peer economy, allowing citizens to (1) make greater use of the assets they own, and (2) seek lower cost methods of obtaining those they do not. These actions have the potential to cut traditional businesses out of the transaction process.
Communities of Tomorrow
Connectivity has made the world generally – and the U.S. specifically – a smaller place. While family members separated by distance formerly struggled to communicate due to the slow pace of letters and the high price of phone calls, families today can stay in touch using a variety of applications enabled by their smart phones and computers. Over the next 10 years, new connectivity forms such as virtual reality will continue to improve the connectivity of families and communities. This trend is especially relevant for:
- Geographically dispersed families. By 2025, the number of foreign-born individuals living in the United States will have reached 15% of the total population – the highest in history. Connectivity will enable these families, as well as all geographically dispersed families throughout the US, to stay in touch to a degree not previously possible.
- Communities as family. Millennials who move to urban centers are more often forming close relationships with their peers, which serve as a new form of family support system. A similar trend is emerging in the growth of elderly communities. Technology makes it possible for these individuals to find one another, and to stay in touch easily. The growth of like-minded communities in the digital world will continue with increased use of virtual reality in an effort to build continuous, engaging interaction with others.
Cities of Tomorrow
Cities will play a pivotal role in enabling and adapting to evolving American behaviors. By 2025, the top 100 cities with the highest GDPs will produce 75% of total US GDP, wielding considerable economic power that will influence business and politics alike. Over the next 10 years the US will see the composition of these cities change, with the size and influence of mid-tier cities rising and ultimately shifting influence to new regions.
US cities will also become more innovative, with 11 American Smart Cities predicted by 2025. These cities will lead in smart energy, infrastructure, technology, and other factors that will encourage businesses and citizens to relocate. The Smart Cities of today are already opening up their data and application programming interfaces (APIs) to developers, as well as incorporating sensor technology to gain real-time insights on the optimization of city services, crime reduction, and infrastructure needs. In September 2015, the White House underscored its support of Smart Cities with a $160 million investment in Internet of Things test beds, collaborations between civic and tech movements, and other programs. Savvy logistics, network, insurance, and healthcare companies will proactively pursue contracts and seek influence in emerging city-as-a-customer relationships.
American Business in 2025 – Changing Skills, Culture, and Operations of Tomorrow
A number of factors will converge to fundamentally alter the future of the American workplace:
Skills of Tomorrow
- Technological savvy. While millennials will be the most educated demographic the US has ever seen, automation will reduce the need for some of the skills that are vital (and even in short supply) today. Even skills that are not automated are still threatened by rapidly evolving technology, leading to faster rates of obsolescence.
- Immediate learning. In response, employers will be faced with a greater burden to invest more heavily in reskilling and training employees. This will be particularly true for aging employees who are more likely to continue their careers past traditional retirement age in the future. One study found that 92% of employers are already taking steps to retain older workers, including raining and reskilling.
Corporate Culture of Tomorrow
- Humanistic, healthy workplaces. In an effort to reduce attrition and improve recruiting, companies are increasingly taking on greater responsibility for happy, healthy workers with programs that include female egg freezing and longer parental leave. Apple allows employees 30 minutes of meditation time at work each day, as well as providing classes for yoga and meditation on-site. Shifting corporate cultures will demand increasing integration of preventative care and wellness programs into the workplace by 2025, creating new opportunities for health providers and insurers.
- Zero-commute workplaces. Increased connectivity and suburban growth will expand remote working practices. In response, US companies will be faced with adopting remote working strategies, forming remote HR divisions, and creating remote corporate culture initiatives. As a greater proportion of the workforce carries out responsibilities from home or nearby collaborative workspaces, automobile manufacturers and insurance companies may see a change in purchase rates or requirements.
Corporate Operations of Tomorrow
- Intensifying agility and efficiency. Both asset-heavy and asset-light companies will grow in prominence. These specialized companies will work together through rental and contract models that build off of the scalability and adaptability that we are seeing in companies like Uber today. As another example, modular manufacturing plants that are notably smaller in size and localized near consumers will improve speed to market, customization capabilities, and environmental concerns.
- Inceasing focus on security and data collection. All American businesses will soon be quantified businesses (if they aren’t already), with ever more value extracted from data through innovative forms of collection. Analytics will drive the bulk of decision-making in the future, and data will increasingly be considered a key company asset. As a result of this shift, effective cyber security will become essential, particularly since 100% of networks currently show malicious cyber traffic. Recent cyber-attacks from China and North Korea may seem like child’s play by 2025, with experts and government officials warning of a coming “Cyber Pearl Harbor” in the next 10 years. Businesses will be less able to rely on insurance as a safety net and will soon need to handle cybersecurity concerns proactively through the office of the Chief Cyber Security Officer.
- American businesses become more data savvy as consumers become more protective of their personal data. Despite 10 connected devices per household, the proliferation of IoT, and a tenfold increase in 5G data speeds by 2025, consumers will assert more control over the data they generate and will increasingly demand compensation for companies to access it. Consumers will also seek opportunities for privacy that may lead to greater adoption of technologies such as bitcoin, which allows for anonymous purchase of cigarettes, fast food, or other items that could negatively affect personal health records. As a result, companies will have to shift their strategies for accessing consumers’ data.
As US companies embark on the next 10 years, the companies they represent should consider how the trends that are fundamentally transforming the US will converge, disrupt, and collapse industries. Companies looking for growth in the US will need to be prepared for a consumer base with reduced disposable income that increasingly adopts the sharing economy model, reducing companies’ role in the value chain. Those companies will also need to be prepared for a future in which, paradoxically, data is more valuable than ever, harder to get from consumers, and reaches new heights of cyber-attack vulnerability. Lastly, companies will need to be innovative in the relationships they create with evolving cities, communities, and employees.
As an executive, do you have a strategy in place for the future of the US?
Read Frost & Sullivan’s full report on the Future of the United States, and please register for a free webinar , to be hosted on November 11, that will explore these and other topics in more detail.
This article was written with contribution from Lauren Taylor, senior consultant with Frost & Sullivan’s global Visionary Innovation practice.
Sources: US Census; UN-ESA; ILO; Pew Research Center; “The Future of Employment”, Oxford Martin School; SupremeCourt.gov; Obama Administration; Frost & Sullivan, Whitehouse.gov FACT SHEET: Administration announces new “Smart Cities” initiative to help communities tackle local challenges and improve city services; LIMRA, “Nine in 10 employers taking steps to keep older workers on the job.”
This article was written by Sarwant Singh from Forbes and was legally licensed through the NewsCred publisher network.