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Published: February 23, 2010
 / Spring 2010 / Issue 58

 
 

Facing Up to the Demographic Dilemma

S+B: Is there a greater need for coordination among the public, private, and nonprofit sectors?

LEHMANN: I do think there needs to be collaboration, and I think we need to think more about this from a macro perspective. I totally agree that businesses are looking for profits and by definition have to work on a relatively short-term basis. But a group like us should be thinking in terms of advising business on future opportunities. I deal with business intensely; I teach at a business school. I always try to appeal to enlightened self-interest and say to companies, “You should be doing X, Y, Z, not because of the good that it will do to the planet, but because of the benefits it will produce for your managers, shareholders, and other stakeholders.” So if you start with the premise that companies are about profits, you need to push them to think about where the profits are going to be generated, and whether they are going to have the resources to generate them.

When you look at the demographic data, the bottom line is that on the one hand, you have the problem of aging populations, mostly in the developed world. On the other hand, you have the problem of an enormous population explosion taking place among the poor countries of the world.

The biggest demographic increase is going to be in Africa. By 2050, roughly 20 percent of the world population is going to be in Africa, up from 9 percent in 1900. The same is true in parts of Asia and the Middle East. Just in the next decade, the youth dividend will be adding 250 million people in Central and South Asia, 9 million in Iraq, 9 million in Iran, 10 million in Afghanistan, 38 million in Pakistan — you’re going to be adding a population in that country alone half as big as Germany’s. The population of Yemen is going to increase from 17 million today to 39 million in 2025.

This is the kind of thing that we need to talk to companies about. If you ask them, “Where are your computer engineers tomorrow?” they say, “Well, in China.” Well, they won’t be in China, or in Singapore. Your future computer engineers — your future workforce — has to come from Yemen, from Nigeria, from Pakistan. We need to think about how we are going to get people who will have the necessary skills. We know the people will be there. But in many cases, they will be uneducated and possibly lacking the right motivation.

S+B: Could we envision corporations in developed countries founding schools in the Yemens and the Pakistans of the world and then building plants there or relocating or importing the workers?

LEHMANN: I think those are the kinds of things that will be needed. I believe all of us — corporations, business consultants, and business schools — have gone off on a very wrong track with corporate social responsibility. It is where issues like this were relegated, and it was a concept that was dead on delivery, because it became a kind of feel-good activity that the CEO could talk about and for which he or she could get an award for citizenship.

What must be done is to integrate issues like demographic change into the mainstream of the corporate strategy. And here’s where I think one needs to look at cases. I’ll give you just one case, but I could give you a number. I am acquainted with an Indian entrepreneur named Rajendra Pawar, who is cofounder of a very successful software company called NIIT Ltd., and a friend of the [World Economic] Forum. NIIT is a pioneer in education-oriented technology. It developed a concept, which you may be familiar with, called Hole-in-the-Wall, which places free computers in public locations for kids in slums and in poor villages. It’s called Hole-in-the-Wall because, literally, they take a wall and put computers in there. These kids, some of whom have probably never seen a blackboard, gain computer literacy by teaching themselves simply through the availability of the computers. It’s a fantastic social experiment.

 
 
 
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Resources

  1. David E. Bloom, David Canning, and Jaypee Sevilla, The Demographic Dividend: A New Perspective on the Economic Consequences of Population Change (RAND Corporation, 2003): A review of the effects of demographic change on economic growth.
  2. Chiemi Hayashi et al., “Transforming Pensions and Healthcare in a Rapidly Ageing World: Opportunities and Collaborative Strategies” (World Economic Forum, 2009): A detailed look at the question of aging societies and their implications for health care and pensions.
  3. Florian Kohlbacher and Cornelius Herstatt, eds., The Silver Market Phenomenon: Business Opportunities in an Era of Demographic Change (Springer, 2008): Leading experts examine the business opportunities and implications of aging societies in this collection of 33 essays.
  4. George Magnus, The Age of Aging: How Demographics Are Changing the Global Economy and Our World (Wiley, 2008): How low birthrates and rising life expectancy are leading to rapid aging and a stagnation or fall in the number of people of working age in Western societies.
  5. Nandan Nilekani, “India’s Demographic Moment,” s+b, Autumn 2009: The economic force of a burgeoning population.
  6. Richard Rawlinson and Natasha Kuznetsova, “50-plus: A Market That Marketers Still Miss,” s+b, Spring 2009: Why companies miss out by failing to market to aging baby boomers in the U.S. and western Europe.
  7. For more thought leadership on this topic, see the s+b website at:
    www.strategy-business.com/organizations_and_people.
 
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