Monday, December 20, 2010

What Happens Next - McKinsey's Version

It is difficult to not appreciate McKinsey's research aptitude.  Setting aside my opinion of the firm during its recruitment drive while at my business school, I do nonetheless find its work to be shrewd.  In one of its latest publications, McKinsey discusses what it calls the "five crucibles of innovation that will shape the next decade".  The discussion is so data intensive that the numbers - thousands of them - literally pass through your head - as if a train whizzing past a station.  It is not too out of the ordinary to get carried away about the future as if the future is the greatest thing that the human kind has yet to see.  This piece from McKinsey also suffers from similar exuberance. Nonetheless, once the data is strung together, the argument does seem to make sense.

The core of their message: All of the action is happening only in emerging economies.  Developed economies are expected to lose their footholds in many standings in the next decade.  Adam Smith's "the natural progress of opulence" will be difficult to maintain in the rich nations, unless these countries produce more with fewer workers.  These rich nations can no longer expect growth in their labor forces to bump their GDPs.  They will instead need to focus on the productivity frontier.

The research (all 26 pages) can be read in its entirety in the following article: https://www.mckinseyquarterly.com/Strategy/Globalization/Global_forces_An_introduction_2625

- SP

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