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Ivey

Changing demographics will force businesses to get creative

  • Seijts, Bansal, Morse, and Vandenbosch
  • |
  • Jul 13, 2018
Changing demographics will force businesses to get creative

On January 26, 2018, we conducted a freewheeling discussion with a dozen leaders from the Calgary business community. The topic: disruptions. Our participants included city and elected officials, members of Calgary Economic Development a not-for-profit funded by both public- and private-sector players and representatives from the real estate, health care, transportation, agricultural, high-tech, and consulting sectors. We had three questions for them: In terms of disruptions, what are you seeing? What are you doing about it? What should Ivey do to prepare future leaders for disruption?

Challenging energy and transportation

The conversation began with a look at the energy sector, which, as our participants pointed out, quickly branches out into key adjacent sectors. Renewable energy has driven down overall energy costs, posing a growing challenge to the fossil fuel industry. And as energy storage becomes more competitive, new disruptions to traditional ways of providing electricity will arise. Today, pricing is based on peak power use, but improved storage will allow people to move their consumption to off-peak hours.

“That will be a massive disruptor to the conventional energy tariff system,” said one participant.

These same trends are also challenging the transportation sector, which is scrambling to respond.

“There are 40 new energy-efficient vehicles that will be introduced by 2020 all featuring substantially different technologies, and all in a price range that I can afford,” pointed out one participant.

Clearly, the monolithic internal-combustion vehicle industry is fast becoming a thing of the past.

Changing environments

One participant interjected that government can be a huge disruptor. When people vote for dramatic change, that injects volatility into the economic system, which erodes consumer confidence and in turn affects their willingness to purchase everything from household goods to real estate, he explained.

Those trends also intersect with larger social and cultural trends, as yet another voice at the table pointed out. Millennials are less inclined to live the suburban lifestyles of their parents – two cars and a house in the suburbs – and many prefer to be car-free in the city. An influx of people from different ethnic backgrounds, too, brings new expectations to the marketplace.

“Frankly, for decades, we’ve been set up to sell to young, white families,” said one real estate developer. “But now we’re learning to build seven-bedroom, six-bath houses to meet the housing needs of multi-generation families. So demographics are a big deal. We need to be more nimble and flexible, and focus on a broader menu of options.”

Technology is the great divide

Technology, in its many aspects, was the focus of a multifaceted discussion. Entry-level and low-skill positions are already under great pressure. For example, Amazon employs almost no shelf-stockers or cashiers. The trend toward self-service will increase that pressure.

“(Technology is) a huge disruption to economies, and even civilizations,” concluded one participant.

Another participant suggested technology has changed the way corporations and other organizations are led, and will be led in the future.

“Look at Harvey Weinstein and similar cases,” he said. “Social media have emerged as both the judge and the jury. What does that mean for tomorrow’s leaders?” In other words, how does leadership change as transparency increases and privacy recedes?  

One participant cautioned that technology is accentuating the divide between the “haves” and “have-nots.” What happens, she asked rhetorically, to the young people who are growing up in houses with no Internet access, and no computers?

“We are creating quite a divide,” she said.

Living longer and feeding the world

Genomics and genetic testing – yet another manifestation of technology-derived disruption – will play an ever-larger role in tomorrow’s economy, with both positive and negative consequences.

“Disruption in diagnosis and health care will be very impactful,” observed one participant who also suggested that living to be 100 years old will not be all that uncommon in the near future.

But will longer life spans prove a mixed blessing? Will increased health-care costs and decreasing quality of life offset the benefits of longevity?

Another participant extended that observation to genetically modified crops (GMOs) and other organisms. GMOs are controversial and may continue to be so, but they can have a positive impact.

“Through precision agriculture and great stewardship of the land, we have it in our power to feed the world. It can be done,” he said.

Bringing mentoring into the classroom

There was near-unanimity across our panellists that knowledge itself is being disrupted, and that our educational system is failing to keep up with the pace of change. One participant told of her son, a ninth-grader, taking a standardized test. The “right answer” for one of the questions regarding renewable energy was that it was unreliable and expensive.

“This is what we’re still teaching our kids!” she complained.

At the university and business-school level, most agreed the emphasis has to be on fundamentals, pragmatism, resiliency, and critical thinking skills. We will need to develop and teach new attitudes toward risk because, if the business leader of the future will need to do things faster and more decisively, that will mean taking more risks, not fewer. Several participants advocated inserting successful business leaders into quasi-faculty positions at universities.

“The mentoring I deliver to emerging leaders in our company could easily be delivered in a classroom setting, if the university were inclined to make that happen,” said one participant.”

Developing a triple bottom line

Another participant talked of a “triple bottom line” that she would like to see in her incoming MBAs: fluency in economics, awareness of the business environment, and facility in dealing with people, with special emphasis on people skills. Addressing disruption means drawing on a broad base of inputs, which in turn requires learning from a wide range of people around you.

But she said recently minted graduates exhibit what she calls “MBA-itis”: arrogance, narrowness, and lack of empathy. Her prescription is to broaden their horizons.

“Make them embrace non-linear thinking. Make them take some art classes. Broaden them so they’re not so boring,” she said. “That would be great!”

Learn about the power of synthetic thinking