Thursday, August 2 2012

OUR world refreshes itself often and many times it’s heading into a new dimension. As business people we need to know where it is heading and what actions to take (if at all) to prepare ourselves. Is today’s newspaper headline the start of a new trend? Trends and mega trends sometime can carry both a promise of opportunity or threat to our business model or strategy.

I try to sift through a large amount of information every day looking for those issues that we will be talking about for years. Rarely it’s the “Today’s Headline” and I sometimes find small bits of information that points to a big wave coming.

The BBC cited a number of events of the last decade; 9/11, Hurricane Katrina, Cyclone Nargis devastation on Burma, Debate on Climate Change, Bam earthquake on Iran, Indian Ocean Tsunami, collapse of Lehman Brothers, death of Michael Jackson, the Large Hadron Collider (the search for the Higgs boson) and the election of President Obama to list some. What can we make out of these events?

I see some common threads in many of them and some will not have any major impact on us.



Resource Deletion



We are living on a planet with limited resources but we behave otherwise. It’s a big myth that we can mine more oil and gas if we drill deeper and in places we never have. In the short term it will work especially with new technology. But the limit is still there.

The Millennium Ecosystem Assessment (2005) was drawn up by 1,300 researchers from over 95 nations showed that we have changed ecosystems drastically in 50 years due to the high demand for fuel, timber, water and food. Further, the report says there is an irreversible loss in the diversity of life on the planet, with some ten-30 percent of the mammal, bird and amphibian species currently threatened with extinction.

Fish stocks around the world have been badly depleted and some have gone beyond redial measures. The loss of virgin forest continues for timber and conversion to agricultural lands. The pressure to feed 7 billion people is putting extreme pressure on the planet. Coupled with the developing world’s need to raise living standards (more meat and manufactured goods) means there is more carbon dioxide in the atmosphere. Water resources are threatened as we use more for agriculture and wells have to be dug deeper. Food and water might be a good future reason for some nations to go to war.

At the current rate of exploitation, we will need another planet by 2050. We can only hope NASA can find one close by.



Climate Change



Russia had a devastating flood this month which killed 171 people and so, too, was Japan with one month’s rain falling within two days. India had a very wet north this year and parched south. Its agriculture has been affected and so, too, has the grain belt in the United States. The US is having its hottest weather ever and its corn crop is suffering. The US Department of Agriculture forecasts their largest crop, corn, to come in 12 percent less than last year and prices are up 40 percent in June.

Locally, we have a double digit inflation of 12 percent driven by about 30 percent rise in food prices. While we cannot prove these events (from a scientific point of view) are climate change related, something is cooking and it is a pot with less food. Remember the food shock of 2011!

There is a prediction of more severe weather to come. We are pumping more carbon into the atmosphere and more trees (the lungs of the planet) are being cut down. The polar ice caps are melting at a faster rate than scientists forecast and sea level is rising. About 60 percent of the world’s population lives near the sea. We might have a new type of refugee coming; the climate change refugee and it could happen on a global scale.

What will we do? Currently we are doing little except adding more carbon (we are at almost 400 parts per million) and are near the tipping point, the point of no return. When we reach the slippery slope we will tip over into another climate. Will modern agriculture adapt? Most of the world’s important crops, corn, wheat, soy beans and rice are done through open field farming. When the rains do not come on time, irrigation is not an option.



Population Growth



There are just too much of us on this planet. The UN predicts over 9 billion by 2050 and can this planet support us all. The classical economist Thomas Malthus’ thesis of food production falling short of population growth seems to be showing its head once again. Right now 1 billion do not have anything to eat and add more people and you get the picture. We desperately need another green revolution.

Food is one issue but people need more goods and this means more resources. More pressure on Mother Earth. More people live in cities than in rural areas and this means more crime and the growth of slums together with drugs and other criminal activities.

Societal Ills



Recently, Nestle did an audit of its cocoa supply chain and found to its dismay that children were employed in large numbers. There is a growing business in human trafficking and exploitation of women in developing countries. The use of exotic drugs among the rich and poor is pervasive.

The murder rate in countries like Mexico and Venezuela, powered by drugs threatens to overwhelm their state agencies. With an official homicide rate of 14,000 per year and high unemployment in Venezuela, with one disaster an implosion can happen. Where will they run to? The nearest stop is……



Apocalypse Now



Like sardines in a tin, humanity face some big challenges and tough choices. Climate change and population growth will require leadership from politicians, business leaders and community groups. Do we have enough time and willingness to change before we enter into another hostile world?

I am not sure, but better not complain. Although, I am sure the ride is going to be rough.

shamid@entrepreneurTnT.com