New Normal eBook

The Western BabyBoomers are the largest, and wealthiest, generation that the world has ever seen. Born between 1946-70, they created a 25-year economic supercycle between 1982-2007 as they joined the Wealth Creator 25 – 54 age group. Demand for housing, cars and other consumer items soared, as they settled down and had children.

But now, the Boomers are ageing. Already, 272m Westerners – 29% of the population – are in the New Old 55+ generation. This is the age when people generally start to spend less, and save more. And the Boomers have to do this, as they are becoming uncomfortably aware that their pensions were only designed to fund them for a few years of retirement. Yet healthier lifestyles, and better medical care mean they can expect to live for an extra decade compared to previous generations.

Equally, we cannot expect the emerging economies to simply replace this lost demand. China, for example, has its own ageing problem due to the ‘one child policy’ introduced in 1978. Its population, like those of the other developing countries, is also very poor by comparison with Western standards. 96% are in the New Poor generation, earning less than $7500/year. Only a very few earn average Western salaries of $25000/year or more.

Demographics drive demand. The book thus explains why the ageing of the Boomers means we cannot go back to the Old Normal of the supercycle. Instead, it argues that we need to focus our attention on the New Normal challenges and opportunities ahead.

It demonstrates how companies and policymakers can kick-start growth again, by focusing on the unmet needs of the Perennials 55+ generation with a more service-led portfolio. Packed with case studies, and full of practical advice, the book is a road map for success as we transition to the New Normal.

The New Normal World in 2021

All of us would love to be able to see into the future. Chapter 4 of our new eBook, ‘Boom, Gloom and the New Normal’, does just this. It offers 10 predictions about how the world will look in 2021:

• A major shake-out will have occurred in Western consumer markets.
• Consumers will look for value-for-money and sustainable solutions.
• Young and old will focus on ‘needs’ rather than ‘wants’.
• Housing will no longer be seen as an investment.
• Investors will focus on ‘return of capital’ rather than ‘return on capital’.
• The term ‘middle-class’ when used in emerging economies will be recognised as having no relevance to Western income levels.
• Trade patterns and markets will have become more regional.
• Western countries will have increased the retirement age beyond 65 to reduce unsustainable pension liabilities.
• Taxation will have been increased to tackle the public debt issue.
• Social unrest will have become a more regular part of the landscape.

The transition to the New Normal will be a difficult time. The world will be less comfortable and less assured for many millions of Westerners. The wider population will find itself following the model of the ageing boomers, consuming less and saving more. Rather than expecting their assets to grow magically in value every year, they may find themselves struggling to pay-down debt left over from the credit binge.

Companies will need to refocus their creativity and resources on real needs. This will require a renewed focus on basic research. Industry and public service, rather than finance, will need to become the destination of choice for talented people, if the challenges posed by the megatrends are to be solved. Politicians with real vision will need to explain to voters that they can no longer expect all their wants to be met via endless ‘fixes’ of increased debt.

We could instead decide to ignore all of this potential unpleasantness.

But doing nothing is not a solution. It will mean we miss the opportunity to create a new wave of global growth from the megatrends. And we will instead end up with even more uncomfortable outcomes.

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Chapter Summaries

CHAPTER 1: Where we have been
This explains how markets and lifestyles are changing as a result of the ageing of the Western baby-boomers. Their wealth has been the ‘unseen hand’ driving the global economy for the past 20 years.
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CHAPTER 2: The financial crisis as the key event dividing the Old Normal from the New
We examine the long-term implications of the financial crisis, and show how we are moving to a New Normal in terms of the global economy.
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CHAPTER 3: The ebbs and flows of commodity markets
We look at the rising volatility in commodity markets for energy, food and other key products, and highlight how this relates to the increasingly short-term nature of politics/financial markets.
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CHAPTER 4: Where we are headed
We open up some key debates about the nature of the New Normal and explain how this will lead to lower levels of consumption and debt in many countries, together with an increased focus on value and sustainability.
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CHAPTER 5: The ageing baby-boomers in the West
This highlights the key changes underway, and their impact on individuals. It looks at financial and social issues, and describes the challenges that lie ahead.
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CHAPTER 6: The impact of the baby-boomers in emerging economies
These export-driven economies will now need to refocus on boosting domestic consumption, as demand for imports in the West reduces. We discuss what this will mean for future growth prospects.
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CHAPTER 7: Lessons from consumer markets
The focus is on how the changes taking place in retail markets can help us to better understand the world of the New Normal. We look at the challenges, and the uncertainties.
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CHAPTER 8: Product issues and the impact on R&D
We discuss the Megatrends concept, and argue that a transition from supplying products to supplying solutions is now underway. Long-term research and development will be essential for corporate success in the New Normal, and we identify potential winning strategies for the future, as well as highlighting those that are likely to prove dead ends.
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CHAPTER 9: Challenges for the manufacturers
Sustainability is central to the New Normal, and we look at the opportunities for manufacturers to develop new strategies for reducing raw materials/utility usage, and develop new feedstock sources, whilst also benefiting commercially from lower capital requirements and operating costs.
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CHAPTER 10: Policy issues
We argue that financial markets need to move back towards their true function of supplying capital, and away from frenzied high-speed trading; equally, how finance itself needs to be seen as a utility, not as a wealth-creating activity in its own right.
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CHAPTER 11: A Road Map for success
We set out a road map to success for companies in the New Normal, and identify 5 key areas where major change is already underway.
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CHAPTER 12: The impact on society
This answers the question ‘what does the New Normal mean for me, for my family, my company, industry and my country’. It suggests ways to become a winner, and avoid being a loser.
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