No Ordinary Disruption: The Four Global Forces Breaking All the Trends

McKinsey seeks to pull together all of the forces that seek to pull apart business strategies. The result is a surprisingly flat description that rehashes past McKinsey research reports than offer a new way to look at the world and the relevance of strategic choices and investments. The four trends are below:

Trend 1: The locus of economic activity is shifting to emerging markets like China, India, Asia and Africa
Trend 2: Technology's impact on the economy is accelerating
Trend 3: Demographics, the aging of the population is shifting demands
Trend 4: Connectedness as trade, capital, people and information flow across national boarders

Each trend is treated in a formulaic way, following a standard structure with slavish adherence. You can extract the books outline which should give you and idea of the limitations of the book's story telling or information value.

Overall, this book is filled with factoids and other little nuggets, many previously published by McKinsey's Global Institute. So if you are looking for new insight, you will not find it here. The discussions of each trend are interesting in their own ways, but the prose is rather bland and expository rather than telling an engaging story that drives understanding or action.

The book's prescriptions are surprisingly simple -- mostly around do better -- rather thank do things differently.

Overall not recommended if you are looking for new ideas. It may be helpful for others to re-enforce their strategic decisions, particularly if those decisions are not too radical.

In No Ordinary Disruption, Richard Dobbs, James Manyika, and Jonathan Woetzel explain how to cope with "four global forces breaking all the trends": emerging growth markets (including cities) as the new gravitational centers of economic activity, increasingly faster pace of technological breakthroughs and adoptions, aging demographics, and globalization of trade driven by connectedness and interactivity.

For example, with regard to emerging growth markets (including cities) as the new gravitational centers of economic activity, they offer five specific recommendations (Pages 23-30):

1. Get to know the newcomers...and others who do business with them. Are there any significant cultural issues and sensitivities unique to the given emerging market?

2. Create new services...or new applications more appropriate to newcomers' unmet or insufficiently met needs.

3. Tap urban talent and innovation pools...and seek the counsel of those who best understand the relevant dos and don'ts, such as business school faculty and business journalists.

4. Think of cities as laboratories...collaborate with allies on many low-cost, low-risk experiments. Collaborate with anyone/everyone to learn more and do better than would otherwise be possible.

5. Manage operational complexity...especially costs and other criteria for prudent resource allocation.

Dobbs, Manyika, and Woetzel: "The portraits we take of cities [and other emerging markets] must capture the dynamism underneath the surface and highlight the brightness of opportunities, while toning down the alarming flares of risk. Most of all, they must be able to project forward motion."
These are among the dozens of passages of greatest interest and value to me, also listed to suggest the scope of Dobbs, Manyika, and Woetzel's coverage:

o Shifting Economic Centers of Gravity (Pages 16-18)
o Accelerating Innovation (33-34)
o The Disruptive Dozen (34-39)
o Accelerating Adoption (41-43)
o A Structural Change (61-64)
o A New Wave of Globalization: Trade in Goods and Services (72-83)
o The Next Three Billion Consumers: How to Adapt (98-109)
o Reversing the Cycle of Resource Opportunity: How to Adapt (120-128)
o Trend Break (132-135)
o End of an Era Farewell to Increasingly Cheaper Capital: How to Adapt (140-147)
o Overcoming Dislocation in the Market Because of a Jobs Gap: How to Adapt (156-164)
o Trend Break (166-168)
o Rise of New Competitors and a Changing Basis of Competition: How to Adapt (174-179)
o Concluding Thoughts (201-207)

I commend Dobbs, Manyika, and Woetzel on their brilliant organization and presentation of material. For example, effective adaptation is essential to coping with the four disruptive forces. Hence the importance of their insights and counsel with regard to how to adapt to resource management improvements (9-10 and 120-128), urbanization (23-30), technological disruption (45-52), the new consuming class (25-26 and 98-109), aging trend (64-70), interconnected world (83-89), capital cost changes (140-147), labor market gap (156-164), and new competition (174-179).

They also address a key question: "What can leaders do to reset the intuitions of their organizations? Here is a composite of Dobbs, Manyika, and Woetzel response: "One fundamental realization is that to drive the necessary change, leaders must develop the capabilities to reset their own intuition. McKinsey research and client experience suggest that 50 percent of all efforts to transform companies fail either because senior role models fail to drive change or because of the inherent tendency to defend the status quo...Another key to survival is to embed curiosity and learning in an organization. In an era of rapid change, full of examples of companies that have become casualties of stasis, successful leaders must adapt to be 'students in a way that maybe we haven't been before,' as Tom Peters puts it...It is also essential to surround yourself with the right people, those who are able to act ass `reset catalysts' for an entire organization. Large organizations and groups of people don't simply respond with alacrity to commands and edicts issued from on high...Agility is another vital attribute necessary to thrive in trend break era...Lastly, and most importantly, all leaders have to resist the temptation to focus on the hazards of the period ahead instead of the opportunities it presents."

Obviously, no brief commentary such as mine can possibility do full justice to the invaluable information, insights, and counsel that Richard Dobbs, James Manyika, and Jonathan Woetzel provide. However, I hope I have at least indicated why I think No Ordinary Disruption is a brilliant achievement, indeed a must read for all business leaders as well as for those who aspire to become one. Bravo!

* * *

Richard Dobbs is a director of the McKinsey Global Institute and a director in McKinsey's London office, James Manyika is a director of the McKinsey Global Institute and a director in the San Francisco office, and Jonathan Woetzel is a director of the McKinsey Global Institute and a director in the Shanghai office.

A reasonably cogent presentation, but ultimately disturbing insofar as they do not acknowledge the "global forces" of climate change, species extinction, violence, and social/economic inequality. It is perfectly fine to limit subject matter in order to make one's points. However, these other global forces need to be acknowledged as caveats to the arguments/observations the authors are putting forward. Even if the author's did not want to wade into these other factors in any detail, not mentioning them as important strands to take into account is difficult to accept as a strategist looking at both opportunities and risks. The book is more readable in the company of Thomas Picketty's, Capital in the 21st Century; James Hansen, Storms of My Grandchildren: The Truth about the Coming Climate Catastrophe and Our Last Chance to Save Humanity; and Christian Parenti, Tropic of Chaos: Climate Change and the New Geography of Violence. At least, the dimensions of the disruption we collectively face are clearer.

As a former McKinsey consultant, I have a certain bent toward "theory of everything" frameworks. This book has that, yet reads more like a series of articles than a cohesive book. How does it all fit together? That's for the reader to figure out. As usual for McKinsey stuff, there is enough data to make a convincing argument of what the authors want you to believe. Yet it all seems cobbled together in a way that lacks the ability to convince if you didn't accept the premise in the first place.

A good "skim it" read for the topics, and reference for data on the topics.

In the past American companies would first achieve market success at home and only then, sometimes many years after their founding, export their brands throughout the world, choosing first the largest, most developed, ‘American-like’ markets to enter.

Today, every startup is a potential multinational on day one, and the internet has flattened barriers to entry and leveled the competitive playing field in ways many large organizations have yet to fully acknowledge, continuing to do international business, “the way it’s always worked’.

Some of the most rapidly-growing business centers on the planet are in places many an American SVP of Sales couldn’t find on a map.

This kind of blindsiding, fundamental global change is what ‘No Ordinary Disruption’ is all about and it’s a great read, so long as you’re not overwhelmed by the numbers or averse to having your preconceptions rattled.

An especially powerful visual metaphor is the authors’ modeling of the ‘earth’s economic center of gravity’ – a geographic point derived by tracking regions by their contribution to global GDP. I won’t give it away but it’s quite stunning to see the historical movement play out over centuries and more recently, decades.

The statistical soup can be dense at times, but the book is for the most part lively and well-written, with refreshingly little C-suite/management consultant-speak. There are plenty of eye-catching factoids and graphics that pop out to drive home a point: In 1950 only two cities on earth – New York and Tokyo - had populations greater than ten million. Today there are more than twenty “geographic agglomerations” (i.e. somewhat larger than metropolitan areas) that account for an astounding (and rapidly growing) percentage of global GDP.

And these ‘emerging market’ centers are not relying on established developed countries to act as funnels and clearing houses of expertise, financing, and services. They’re dealing with one another directly, forging new supply/distribution/financial pathways on pace to largely match and overtake the U.S., Europe and developed Asian countries in economic activity within this century.

‘No Ordinary Disruption’ is not all abstract economic theory. It’s an interesting mix of big-picture trends and practical discussion about selling and managing resources – human, physical, virtual – in this brave new ‘disaggregated’ world that multinationals operate in.

I was impressed not so much by what the authors identify as the Four Disruptive Forces, per se (e.g. Urbanization, Accelerating Technological Change, The Challenges of Coping with an Aging World, and the Increasing Interconnections of Trade, People, Finance, and Data). These are all issues covered in the mainstream for years that arise repeatedly in discussions of geo-political/global economic trends.

We all know this is happening, but what really struck me in chapter after chapter was the unexpected magnitude, pace of growth, and sheer scale of these ‘trend breaks’ - the dislocating waves of change that are literally remaking the global economy according to new rules driven increasingly by new players.

A common refrain in the book is to ‘reset your intuition’ and recognize that many of today’s senior executives came up through the ranks with a set of skills and assumptions that have in many cases become outdated and rigid liabilities.

Emerging markets are not homogenous and simply waiting to be courted with already established products (or insensitive, localized imitations, ‘hand-me-downs’ and surplus cast-offs that can’t be sold at home).

Understanding the still dramatic economic diversity within countries such as Brazil, India, and China – as well as a host of African countries - is critical to maximizing competitive strategy. Building ‘from the inside out’ (i.e. establishing locations in outlying, even remote, areas as Walmart has done) can often be far more effective than the playbook approach of targeting ‘big centers’.

There is no such thing as a ‘global consumer’ and the stereotype of the free-spending, nouveau-rich, emerging market consumer is increasingly out-of-date. ‘Smart Segmentation’ is a necessity to capture market share and requires first going deep to understand local preferences for products and methods of doing business. Potential economic rewards far outweigh near-term disruptive costs to reorganize large companies internally.

Adapting brands and messaging in countries where traditional advertising – delivered through politically-controlled media that‘s distrusted more than in developed open societies – requires focusing on word-of-mouth campaigns and more creative forms of messaging.

The discussion of global demographics and the ramifications of an aging workforce is familiar territory in countries such as the U.S. and Japan, but I was surprised to learn it’s not limited to developed countries. It’s encouraging to read about flexible work arrangements, companies recognizing the value of retaining older, experienced workers, and the retooling of malls and public spaces to better accommodate the aging.

The chapter on the jobs/skills gap describes in familiar terms how ‘disaggregating’ higher skilled positions, (i.e. physician and lawyer) while substituting one or more mid-skill positions (i.e. RNs and paralegals) is a trend unlikely to subside anytime soon. The integration of technology at the production level continues to advance, while at the managerial level – as in substituting internal social networks for traditional email – it still faces resistance (no one wants to give up their email, as much as everyone complains about it), but the few companies that have committed have seen tremendous benefit.

The chapter on the end of the era of cheap capital and emerging new forms of corporate and government financing was the most challenging – the numbers got pretty dense – but the higher level discussion of alternative sources such as sovereign wealth funds (SWFs), micro-lenders and corporate mentorship of startups was an eye-opener.

‘No Ordinary Disruption’ is not an alarmist, doom-and-gloom book by any means. The writing is well-reasoned and thoughtfully presented. The message – directed largely towards decision makers and strategic planners of established multinational corporations, but of interest to anyone curious about global business - whether owner, employee, regulator, legislator – is encouragement and actionable ideas for adapting and how to ‘reset your intuition’ about how large companies conduct business on a global scale.

And above all, how beneath the upheaval are tremendous opportunities to not only retool our business approach but retool many of our policy-making institutions and create better, more sustainable, outcomes for our increasingly interconnected societies across the globe.

unfortunately, the book is a collection of fairly obvious cliches in the business world (role of technology, aging population, emerging markets...etc) with no original interpretation or new hypotheses worthy of reflection. Other than some interesting examples, most of which borrowed from other sources, the book is not the best use of time for anyone who has read even a couple of issues of Businessweek/Economist in the past few years...

Yes it is a valuable book - turns out that the authors are analysts at McKinsey - a company that advises business - the great majority of the bibliography are McKinsey reports - From the tone it is clear the readers are expected to be mostly business executives. The subjects are four well known fores that have changed the world economic basis and the authors are right that business better adapt not only to avoid demise but also to profit and take advantage of these changes - disruptions.- Should be read with books by Dent and Gilder and Bobbitt.

Like a lot of books written by McKinsey partners, this book is written from the perspective of a "paint by numbers" framework which is chock full of trends and data in a painstaking effort at fully fleshing out the authors' thesis. This means that it's turgidly written. Seriously, you can read the introduction and obtain as much insight as you'll get from buying and reading the whole book.

That said, it's a useful framework. The four forces are: the global shift away from North Atlantic trade and policy and into emerging markets, the aging world population, urbanization and technology. There's nothing earth shaking in any of this and the insights offered up are serviceable but not profound.

Most businesses start their strategy planning exercise with an understanding of mega global and industry trends in the foreseeable future. They assess headwinds, tailwinds, opportunities and landmines as they try and architect the way forward to achieve business goals. Flooded with loads of data, research and analysis, finally the leader’s experience of the past acts as an intuitive guide, to navigate and arrive at a clear picture, separating signals from abundant noise.

This book is about the need to reset the leaders’ intuitive strategic mind-set in an era of mega disruptive forces that cause unprecedented trend breaks.

The Age of Urbanization, Accelerating Technological Change, Challenges of an Ageing World and Greater Global Connections are identified as the four mega forces that shall impact the world like never before.

Under Urbanization, the focus is on new urban clusters that would develop in emerging countries. The 440 odd cities that are not in the radar of any business executive today shall spring up as new growth centres. This has several implications – The rapid development of emerging countries like China and India and the need for mega investments in infrastructure that puts pressure on commodity markets and availability of capital, pushing up interest rates. Companies then need to plan for balance sheets with lower debts and project executions with on time deliveries to avoid cost escalation and also optimal utilization of raw materials. Urbanization provides many opportunities, but companies should be prepared to customise offerings since each cluster within the same country might vastly vary in terms of customer preferences due to cultural diversities.

Discussion on other three forces, especially the chapter on Technology makes interesting read. The book identifies 12 key technologies as ‘The Disruptive Dozen’ that have massive potential for disruption in the coming decades. Prof Charles Fine in his outstanding book ‘Clock Speed’ had identified electronics as the key force that accelerates industry clock speeds in sourcing, manufacturing and marketing. The Disruptive Dozen clearly has electronics as the backbone, but we now have clarity on totally new possibilities that never existed before, that shape technologies and disrupt industries. I would recommend a separate book for business leaders on this, since technology among all other forces appears to be the biggest and most difficult to comprehend for executives in terms of intuition reset. Aptly described, it is like expecting an experienced courier boy riding on horseback to switch over to the automobile.

Jeffrey Sachs in his classic ‘Common Wealth’ identifies six earth changing trends which are a comprehensive and compelling list of issues facing Mother Earth in the twenty first century and also some excellent prescriptions for sustainable and inclusive global economic growth. This book will be a good supplementary read.

Rising socio-economic disparities and high levels of poverty could be a major derailer of economic progress if we do not achieve inclusive growth. It would be prudent to include corporate social responsibility in developing countries as a key dimension in the book.

Highly informative, a must read for business leaders and policy makers.

The authors contend that the world economy's operating system is being rewritten, thanks to four global forces. The Industrial Revolution of the 18th/19th centuries involved only one new force - change now is happening 10X as fast. The following briefly summarizes three of those global forces:

1)The first trend is the shifting of economic activity and dynamism to emerging markets like China and to large cities within those markets. As recently as 2000, 95% of the Fortune Global 500 were headquartered in developed economies. By 2025, China will be home to more large companies than either the U.S. or Europe, and nearly half of the world's large companies will be headquartered in emerging markets. Meanwhile, the global urban population has been rising an average of 65 million/year (the equivalent of 7 Chicagos/year) during the past three decades. Nearly half of global GDP growth between 2010 and 2025 will come from 440 cities in emerging markets - 95% of them small- and medium-size cities.

2)The second is the acceleration in the scope and economic impact of technology. In 2009, two years after the iPhone's launch, developers had created about 150,000 applications, 1.2 million by 2014 - with over 75 billion downloads.

3)The world population is getting older. By 2013, about 60% of the world's population lied in countries with fertility rates < replacement rates. Caring for large numbers of elderly will put severe pressure on government.

4)