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Facing up to a four-generation society

A practical discussion of how we might turn a massive social liability into a common good.

A version of this article appeared in the Summer 2019 issue of strategy+business.

A profound but mostly unrecognized demographic and economic trend is unfolding around the world right now. The average human life span is growing enough that for the first time in recorded history, four generations can routinely expect to be alive at the same time. To be sure, this trend is countered somewhat by the increasingly older ages at which many women give birth; in 2010, the mean age of mothers at the birth of their first child was 25 or higher in most industrialized countries. Even so, with more people living into their late 90s, the 4-Gen society that is taking shape can be expected to last at least one more generation, and probably much longer.

The experience of the last similar transition — the 20th-century shift from a 2-Gen society to a 3-Gen society — suggests that the impact will be immense. In 1900, when the average global human life span was 31, relatively few adults had grandparents who were still alive. At the end of World War II, the average global life span had risen to 48, and its growth accelerated after 1945; in 2019, it is above 70. In industrialized societies, the relationship between adults and their grandparents is now taken for granted.

This transition has been, by many standards, a massive net positive for humanity. Since the end of World War II, even as the global population has increased from 2.3 billion to 7.7 billion, inflation-adjusted per capita income has risen from US$4,000 to $11,000 per year, and GDP has spiked from $9 trillion to more than $100 trillion. Billions of lives have grown richer; new global wars have so far been avoided. And the predominant demographic theme of the past 30 years has been the rise of hundreds of millions of newly middle-class people in China, India, and other emerging societies, and the multitrillion-dollar economic transformation that followed.

Of course, we don’t know whether the 3-Gen transition caused, was caused by, or merely correlated with these benefits; nor do we know for sure whether they will continue. And we can’t overlook the negative elements of the last transition: climate change, suburban sprawl, greater income inequality, the decline of some previously dominant national economies, and the stresses that go with a more interconnected world and a more mechanized culture.

The next transition may involve even greater challenges. There has never been a modern society in which people routinely lived into their 90s. The longevity revolution is putting massive strains on all of our major social systems — employment, retirement, education, healthcare, housing, transportation, and food, as well as the environment. Humanity’s ability to manage this shift over the next 30 years, and the extent to which it increases or decreases well-being and overall quality of life, probably depend on the decisions we make collectively today. And that in turn depends on how well we understand the forces and factors arising from the new 4-Gen world.

The Range of 4-Gen Opportunities

In demographics, at least, the parameters of the 4-Gen society are becoming clear. As of late 2017, there were almost a billion people aged 60 or older in the world, according to United Nations estimates (pdf). That number had more than doubled since 1980, when it was 382 million, and it will double again before 2050, when it is expected to reach 2.1 billion. This represents 2.4 percent annual growth of this group, roughly three times the growth of the total world population. Unless there is a significant and unexpected change in the distribution of capital and assets, people over 60 will soon own three-quarters of all the world’s wealth while comprising only one-quarter of the population.

It is generally understood how this change will stress the social systems of the present. Pension and healthcare systems are particularly at risk. What is less obvious is the advantage it brings. Two billion people over 60 will be alive by mid-century. This is a massive untapped asset, as important to the 21st century as the discovery of cheap fossil fuels was to the 19th and 20th centuries. Moreover, this cognitive and social asset can be harnessed in a way that will not deplete, but instead strengthen, our planet’s environmental health.

Two billion people over 60 will be alive by mid-century. This is a massive untapped asset.

Imagine how a 4-Gen world might evolve ad hoc versus how it might be designed. Many 70-year-olds will work; but will they work 30-hour weeks in jobs that take advantage of their insight and skills, or will they be forced into low-paying, 60-hour gig jobs to survive? People will need homes; will they live in isolated apartments that fracture family relationships or designs that encourage the mutual support of four or more generations? Artificial intelligence, pervasive data gathering, autonomous mobility, and healthcare innovations will be commonplace. Will these factors come together to enhance or constrain the pursuit of happiness in this new world?

One can imagine a benevolent future in which homes are adapted to age and ability, towns and cities center around people, and technology becomes a servant rather than a master. Colleges would have multigenerational student bodies and learning would be continuous. Age segregation would be replaced by age mingling, retirement by re-creation (a term coined by Lynda Gratton and Andrew Scott in their book The 100-Year Life: Living and Working in an Age of Longevity that refers to the extended, nonlinear style of learning that will be necessary over longer life spans). Death would be dignified and taxes reasonable. Entirely new product categories could emerge: flexible mortgages, hybrid long-term care, physical regeneration, upgradable home modules, intergenerational wealth contracts, and multigenerational cruises. Resources would be used ever more efficiently, and waste — emissions, pollutants, and all discarded materials — would be curbed. These shifts could be enabled in part by technological advances, but even more by the collaborative “animal spirits” of millions of older working people with time, experience, and the energy to try new things.

To build the systems we need to realize that future, we must adopt the mind-set of leaders who have faced significant social change: for instance, after World War II, when Dwight Eisenhower (with the Interstate Highway System he championed), Robert Moses (with New York City’s infrastructure) and George Marshall (with the economic plan that bore his name) were not afraid of bold, overarching redesigns. To be sure, the specific models they and their contemporaries put in place — suburban sprawl and mass production — have run their course. Moreover, their counterparts today are limited by their institutional and professional focus on solving problems in piecemeal fashion: fixing healthcare systems, for example, rather than redesigning cities to make it easier to stay healthy.

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There are some bold new models being tested, in China and Singapore for example, but they are associated with command-and-control governance that overrides individual liberties. A viable solution for the wider world would have to combine civic participation with comprehensive urban design and large-scale institutional learning and innovation. That may seem impossible, given our political climate, but it has been accomplished before under even more adverse circumstances — and it can be abetted by the strengths and benefits inherent in a 4-Gen world.

The 4-Gen potential today is latent, much like the potential of the populations in China or India prior to the 1990s. Entrepreneurs and venture capitalists ignore it largely because they don’t see it. Older people often feel invisible, and in the epicenters of global innovation, “old” often means “over 40.” When Silicon Valley denizens tackle 4-Gen concepts, they tend to frame narrow goals such as extending their own lives through longevity drugs or designing autonomous vehicles with wheelchair lifts. Meanwhile, antiquated zoning laws drive generational inequality, unnecessary emissions, and societal misery. Healthcare regulations and subsidies reinforce the systems and practices of a society with much shorter life spans. The pressures of a 4-Gen world are unraveling the post–World War II consensus on health, wealth, housing, transport, work, and education.

Can we push the reset button? Three aspects of life illustrate the 4-Gen opportunity: home, transport, and work.

Homes for 4-Gen Families

Trillions of dollars in equity are imprisoned by 100-year-old laws. That’s the hidden tragedy of our current housing situation in the West. In the U.K. and U.S., there is a combined $26 trillion of housing wealth, of which more than two-thirds is held by people over 60. Unfortunately, most homes around the world are ill-suited to the entirety of a 90-year life. Designed for nuclear families, they are too expensive for childless couples and too compact and intrusive for multigenerational families. In the U.S., according to the Pew Research Center, 64 million people were living in multigenerational housing in 2016, often in cramped or suboptimal designs.

One remedy would be an intergenerational reshuffling of the parental home to accommodate multiple family units. If people could alter their homes more easily, without the expense of moving and uprooting their lives, they could redeploy their savings on career retraining, long-term care insurance, consumption, and support for their children. By our estimates, rightsizing 10 percent of the homes owned by people over 60 in the U.K. and U.S. would trigger $1.6 trillion in capital and expense reallocation and $290 billion a year in incremental GDP.

Experiments of this sort have already begun; in Japan, for instance, architects are using four-generation house designs to distinguish themselves. American builders such as Lennar are also starting to promote multigenerational housing models that provide a greater balance of efficiency, community, and privacy. Still more radical improvements are available by migrating to “compact city” models: environments such as Zurich or Copenhagen, where density is relatively high, few motor vehicles are privately owned, and there is greater reliance on walking, cycling, and public transport. Based on a 2016 study led by Mark Stevenson, professor of public health at the University of Melbourne, we calculate that Greater London would add approximately 500,000 incremental years to its citizens’ lives and gain 4 percent in GDP growth within a decade by shifting to a compact city model, largely through reduced pollution and increased physical fitness. Extending the compact city model to just 10 percent of the U.K. and U.S. economies could yield $90 billion in GDP, for a combined $380 billion opportunity.

However, this potential is latent: Young families can’t afford the houses owned by those over 60, and the over-60s can’t find homes to rightsize to. Zoning laws often block the adaptations required to address the decline in average U.S. household size from 3.5 people in 1950 to 2.5 today. Engineer and urban planning writer Charles Marohn calls the resulting suburban sprawl a “growth Ponzi scheme” in which poorly conceived investments in roads, water, and electric systems for low-density single-family homes trap communities in debt, requiring even more suburban sprawl for local governments to make their short-term payments. As noted in a 2018 OECD report, the result is pollution, unsustainable finances, and housing inequity.

Suppose that you were designing a small city from scratch without archaic zoning restrictions, intending to attract a mix of ages to live together in a healthy, sustainable fashion, and work in today’s high-tech industries. Would you emulate the suburban sprawl of the 1950s? Or would you build dense neighborhoods with four- to five-story buildings and adjacent green spaces? Land cost per home would be lower in the latter, and modular construction would decrease building costs. Housing designed to be affordable would enable young families to live near where they worked and older people to downsize elegantly.

Now imagine redesigning the homes themselves, incorporating recent developments in 3D printing and flexible operations. Houses intended for multiple generations would operate on a home-as-a-service model, with flexibility and maintenance built into the subscription. Sensors embedded in buildings would track activity, responding to medical problems or threats. Modular home structures would enable flexible floorplan layouts, so that downsizing and upsizing could be done with a click on an app; a child’s room might one day convert, for example, into a small rentable apartment. Empty nesters might sell a spare room to neighbors with a growing family, shifting the location of the doorway. And amenities would adapt to evolving physiological needs; a bathroom for a young family would have a bathtub, converting to a large shower for a childless couple or a bath-seat model for an elderly individual with relatively little cost.

Higher density begets commerce, and so home and retail would be near each other, with both supplied by the on-demand grocery logistics networks managed by Amazon, Walmart, Kroger, or Tesco. Light manufacturing (of those upgradable bath components, for example), might take place via 3D printing within the stores themselves or at nearby print manufacturing locations. Town and green would coexist, with personal and communal gardens, trails, and parks. Vertical farming would provide vegetables on demand, with (for volunteer gardeners) a potential oxytocin hit. A sort of Internet of towns designed this way might emerge, linking dense urban centers — not just giant cities such as New York and London, but medium-sized ones such as Pittsburgh, Newcastle, Des Moines, and Barcelona — that act as hubs for networks of other cities and towns, connected by bicycle, shared vehicles, and rail. Generations would live closer together, often within walking distance of their extended family members, and people would base life decisions on abundant, flexible space.

Current zoning laws, NIMBY (“not in my backyard”) attitudes, and inertia hold back these opportunities. However, there are signs of change. Technology has entered the stodgy world of real estate, with “proptech” (technology for real estate) venture capital investment vaulting from $200 million in 2012 to about $13 billion in 2017. Companies such as Katerra have raised substantial capital to transform construction using mass production techniques. Farsighted enterprises such as Legal & General are investing directly in housing and in modular manufacturing. Governments recognize the opportunity: the U.K. plans to build up to 23 new garden cities, with 200,000 homes.

There is also a bottom-up revolution underway of planners, builders, engineers, and ordinary citizens rebelling against the status quo. In the U.S., the Congress for New Urbanism (CNU) provides a platform for radically different visions of the built environment. CNU has introduced concepts such as “tactical urbanism” (using guerrilla methods to change streetscapes before a department of transport can intervene) and “suburban retrofit” (replacing a dead mall with a vibrant neighborhood that combines work, play, and living space).

Multimodal Mobility

Today’s communities seem to come in two flavors: dense and congested, or sparse and utterly dependent on automobiles. Some sprawling but congested cities, such as Los Angeles, embody the worst of both. With the number of vehicle miles traveled per year exceeding 3 trillion in the U.S. and 300 billion in the U.K. (pdf), novel transportation systems are critically important. Unfortunately, the most prevalent vision of the future, a world of self-driving cars and car-sharing services, seems likely to foster the same type of sprawling, congested layouts that hamper mobility today.

The true cost of single-driver passenger cars is higher than it might seem at first glance. We estimate that even a 10 percent reduction in car usage would save about $250 billion in costs related to fuel, repairs, harm to health caused by emissions, and traffic accidents. Motor vehicle accidents result in 40,000 annual deaths in the U.S. and 1,700 in the United Kingdom (pdf). Car pollution in London adds £8,000 (about US$11,000) each year in health-related costs per car, and four in 10 Americans already live with excessive pollution. For all the freedom and thrills associated with driving, reliance on automobile travel makes people fat, ill, and bad-tempered. Worst of all, perhaps, is the loss of mobility for the very young and very old, who cannot drive yet live in a car-centered society. The “roaming range” of autonomous travel for a typical 8-year-old has shrunk from a few miles 100 years ago to a few hundred feet today.

A better option can be found in the comprehensive design of multimodal mobility, which offers a more flexible model of transportation. Walking, bicycling, motor scooter use, sharing of on-call vehicles, autonomous (self-driving) vehicles, rapid renting of autos, and fixed public transit would all fit together in this model, with hubs that enable people to easily and safely switch from one mode of transport to another. Already, there is much movement in this direction. Copenhagen and Amsterdam have set an example of shared bicycle modality that has sparked more than 1,000 public and private bike-sharing programs around the world. Copenhagen is now building 28 biking superhighways covering 500 kilometers that extend into nearby towns, and aims for 75 percent of all trips in the city to be via bike, foot, or public transport by 2025. The global electric bike sector is expected to grow in revenue from $16 billion in 2016 to $24 billion in 2025, and the popularity of electric scooters has surged recently in some urban centers. London, Paris, Madrid, and Oslo are planning on rapid transitions to a car-limited model. And initiatives such as the U.K.’s Future of Mobility Grand Challenge seek to provoke a countrywide evolution into a dramatically different transport paradigm.

Although the early adopters of the multimodal mobility model are often millennials, its impact will be felt across all four generations. When cars recede, it is safer for young children to reclaim the freedom to roam. Grandparents and great-grandparents regain mobility by walking, biking, or even being driven in trishaws (a reinvention of the rickshaw). Everyone benefits from a reduction in commute time, an increase in transportation innovation, and a smoother transition to the age of self-driving vehicles.

Workplaces that Work

In 2019, a typical office worker settles in on Monday morning, signs on to the Internet, and spends the bulk of the week in a computer-mediated environment. One survey of 2,000 workers showed that they average six and a half hours per day in front of a screen. Less than eight hours per week are spent in nonscreen activity, such as talking to colleagues. In another study, more than 70 percent of employees were looking for a new job, a clear indicator of widespread disenchantment. Not coincidentally, we are seeing an epidemic of loneliness and depression, affecting everyone from CEOs to line workers and the unemployed. For those with families, the responsibilities of childcare and eldercare compete with workplace demands, making people yearn for more flexibility.

But flexibility without sustained support — the so-called gig economy of freelance work contracted through the Internet — does not serve the needs of employees. It does not provide the stable financial and social base that people need to support a family. Meanwhile, employers struggle to fill the jobs they have. A 2017 study by the human capital and recruiting technology firm CareerBuilder found that more than 70 percent of job hires are subsequently viewed as mistakes.

The same forces that disrupt work provide new opportunities for value creation. People need a work model that enables them to spend most of their time away from the expensive central cities and still have dynamic careers that offer stimulating exchanges with colleagues.

Working near home has tremendous benefits. It makes it easier to combine school pickups and drop-offs, visits to the doctor, or other unforeseen events with the demands of a high-paced career. It allows couples to manage trade-offs. It reinvigorates small towns and city cores with incremental demand for lunch and dinner. It can also be compatible with a new hyperlocal retail model, in which food for dinner is picked up close to work and biked back home.

Though employers may sometimes struggle to quantify it, the value of remote work is substantiated more fully every year. A 2017 survey by the recruiting site FlexJobs found that 4 million Americans are working from home at least half the time, up from 1.5 million in 2005. Work output and productivity are more easily measurable than they had been in the past, so it isn’t as necessary to force people to co-locate. Paradoxically, the intangible economy makes tracking tangible output easier. Results are more obvious: a block of code that improves usage metrics, an article that gathers readers, a design that attracts customers. Remote collaboration is increasingly important, because the best workmate on a given endeavor is likely to be located far away.

Innovative blended models combining work at home, near home, and in the center city could increase productivity and GDP. There are 95 million American and 9 million British citizens over age 16 who are not working, representing a potential 190 billion hours per year and more than $4.5 trillion per year in lost output. A 10 percent increment in work hours through blended models would add $450 billion in GDP. Retirees, at-home moms and dads, those caring for loved ones, and freelancers would be prime candidates for blended models.

One key requirement for this model is the fungible work space, and many entrepreneurial solutions are already emerging. WeWork is probably the best known, but there are others. Cove is a distributed coworking company based in Washington, DC, premised on providing a workplace within 10 to 15 minutes of walking or biking from where people live. Serendipity Labs offers high-end office environments at more than 125 suburban locations. IWG (owner of the Regus brand), after falling behind WeWork in the dense urban coworking market, is looking to the suburbs as an area of opportunity. New networks such as the Age of No Retirement, the U.K. Men’s Sheds Association, and Voice are mixing shared spaces and social support to help reboot careers and hobbies.

The 4-Gen Way of Life

Investments in 4-Gen infrastructure and design will pay off. Our calculations suggest that a 10 percent improvement in the performance of the built environment, transport, and work would yield more than $1 trillion in annual benefits at a 5 percent increase in GDP — to say nothing of the increase in quality of life and in the volume and caliber of social interactions. All political points of view can find something to support in this approach: It combines reduced bureaucracy, economic growth, increased efficiency, emissions reductions, and greater equality. As Japanese management did in the 1980s, a 4-Gen perspective would upend conventional assumptions by demonstrating that quality improvements lead to cost savings.

This is not a short-term shift, and it could have profound implications for younger generations of workers at the beginning of what may be careers of unprecedented length. Many people who are in their 20s and 30s today want the same things their parents wanted: a secure life and the ability to raise children. This is harder for them to achieve because they have more debt, face tougher employment conditions, and work in more expensive cities where housing is less affordable. These problems can’t be solved in isolation; they must be considered in the context of a changing human life span.

Moving into a 4-Gen world may also have great psychological and social effects, just as the 3-Gen transition did. Before that shift, village life involved family and community ties that many people yearned to escape. “Doing better than your parents” wasn’t just a matter of having more money. It meant having more choices and executing those choices in ways that parents didn’t dare. To some people, moving into a 4-Gen world might feel like moving into a more constrained environment, managing not just parental and grandparental relationships, but great-grandparental ties as well. But it can also bring a life with better options, in which the smaller horizontal spread of a typical family (with fewer siblings) is compensated for by a larger vertical spread (more cross-generational ties) and the social value of denser communities.

A few starting points seem particularly apt for 4-Gen experiments.

Higher education. Colleges and universities tend to focus on young adults, but their affinity with alumni remains strong, and college towns are favored retirement destinations. As the need for mid- and late-career education grows, colleges can leverage their infrastructure and built environment to expand their customer base to older students. They could also evolve into multigenerational environments where all four age cohorts, from children to elders, learn together.

Abandoned retail stores. Shopping mall retrofits, popularized by architecture professors Ellen Dunham-Jones and June Williamson in their book Retrofitting Suburbia (Wiley, 2011), offer potential for new uses. The U.S. has 7 trillion square feet of retail space and at least 500 vacant shopping malls. Retail has significant infrastructure and locational advantages that would suggest substantial opportunity for reinvention.

4-Gen towns. There are more than 31,000 small cities and towns in the U.S. and 7,000 in the U.K., many of which are aging rapidly as younger people leave. As work decentralizes, some of these places may be attractive for resettlement due to their low-cost housing, natural beauty, closeness to family, and quality education. These communities can be resettled by the next wave of middle-aged adults (working parents), who will in turn pull along children, grandparents, and even great-grandparents, revitalizing these towns. With high quality of life and sufficient access to communications and transportation to larger cities, the children might break the cycle of departure and stay.

As we considered these opportunities, we reached three essential insights. First, tweaking models from the past will not be enough. We need to reconceive entire systems. Second, neither individuals nor corporations nor governments can tackle this shift alone — we need new zoning, banking regulations, healthcare rules, and other enablers to help entrepreneurs and private–public partnerships to invest in solutions. Third, for those willing to embrace the complexity of the transition, there is a massive economic opportunity — as large as that created by the development of the middle classes in China and India — measured in trillions of dollars in incremental GDP in the U.S. and U.K. alone.

The history of major infrastructure shifts such as this one would suggest cautious, thoughtful experimentation prior to large-scale change. In the 19th century, the rush to urban industrialization was accompanied by squalor, child labor, pollution, and disease. In the 20th century, the remedy appeared to be a mass production–based suburban model — but that too had unintended negative side effects such as urban sprawl and severe environmental distress. Once there were rules in place buttressing this model — including restrictive zoning, public financing, and even laws against walking — it was hard to turn away from it.

So let us approach this opportunity with the philosophy of successful blitzscalers such as Uber (which has raised $24 billion), WeWork ($8 billion), and Airbnb ($4 billion) that have transformed their respective industries. Let’s be experimental, data-driven, and humble. Let dozens of experiments flower and see where the best solutions come from. Gather data, taking advantage of the plethora of tracking mechanisms, and be rigorous, logical, and empirical in making sense of what it shows. Let the good stories be told (without hiding stories of mistakes), and put people in leadership roles who know how to replicate the best ideas. As these ideas win out, tap into the vast pool of available capital to scale at logarithmic rates. Don’t wait for the 4-Gen society to fully emerge; it will be too late then to shape it. The time to act is now.

Author profiles:

  • Dominic Endicott is a venture capitalist and management consultant based in Boston and London. He led the first venture investment in GreatCall, a pioneer in four-generation services recently acquired by Best Buy for US$800 million.
  • John Sviokla is an investor, board member, consultant, and author based in the Boston area and in Chicago. A retired partner with PwC US, he leads the firm’s executive think tank, the Exchange. He is the coauthor with Mitch Cohen of The Self-Made Billionaire Effect: How Extreme Producers Create Massive Value (Portfolio, 2014).
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