Summer is often a good time to reflect on the long-term direction of our business. George Friedman offered some interesting insights in his recent book “The Next Decade” that I think relate directly to the public relations business. The book focuses on US foreign policy and identifies four trends that will govern politics and business over the next decade.
1. An aging population of boomers with longer life expectancy
This will increase demand on our health care system as diseases such as Alzheimer’s, Parkinson’s, heart disease, cancer and diabetes become more prevalent with age. The search for treatments will put a focus on biotech and genome technology as well as on palliative care. The gradual reduction in the workforce will drive up labour costs, which will encourage more liberal immigration policies. The next decade will see a more serious investment in the future of robotics as an answer to the labour shortage.
2. Modest technological innovation caused by shortage of capital and reduction in defense budgets
It has been about 40 years since the Internet was first conceived by the US military and more than 20 years since the microchip propelled new abilities to house and process data. Since the dot com era, most new technology developments have been about applications of these technologies, particularly with consumers. Businesses are increasingly locked in a battle for market share which will likely lead to further industry consolidation in the sector.
3. Increasing reliance on alternative fossil fuels
As I have talked about before, rising oil prices will slow down the rate of globalization and put new focus on local economies. But, this will also create pressure to develop plentiful supplies of natural gas and clean coal technology. These will be stop gap measures until more transformative, renewable energy supplies can be developed. This decade we will begin to see growing research in the areas of space base solar, fusion, and methane but fossil fuels will continue to rule.
4. A warming planet will alter food production and geo political security regulations
Producing energy requires massive amounts of water, compounding our changing climate challenges that are already creating water shortages in highly developed markets. We will begin to see the commoditization of water as well as the efficient development of desalinization (which requires a lot of energy). The impact of the change of climate in Canada will be most evident in the Arctic, as global warming will make year-round navigation of the north/west passage a possibility in the decades to come. Canada will need to act on the security and sovereignty implications otherwise others will do it for us.
For the PR business, identifying and responding to these trends can be helpful to long-term planning.
In the pharmaceutical industry, there is much talk about the overall decline in new product launches. But, the aging population will continue to keep focus and pressure on the industry. PR will have to shift its focus from traditional drug launches to more focus on bio tech medical devices and institutional care.
Our technology practice, on the other hand, might face new challenges. Without breakthrough new products, our clients will be increasingly focused on their market share. This will put more cost pressures on our business as prices decline and we see consolidation through M&A. It is important that we service our existing base of clients aggressively because new clients will be more difficult to find until we see the next generation of significant technological breakthroughs, probably in the area of robotics.
Today, twenty per cent of our revenue in Canada comes from natural resources. This is not going to change in the next decade. In fact, it may increase until renewables make a more significant contribution to energy production. This means more investment in developing fossil fuels. Our list of clients in the energy sector has grown considerably in the past decade. I expect this will continue as natural resource extraction and the construction of infrastructure become ever more important.
Global warming will increase the need to enforce sovereignty in the Arctic. One of our clients, Northrop Grumann, has a partial answer with the Global Hawk (now coined the “Polar Hawk”). But, more military resources will be shifted to defense procurements that provide for reconnaissance and surveillance, under ice capability and ice strength naval vessels. This is all equipment that needs to be purchased, making defense procurement very robust in the next decade.
These are just a few trends that will likely continue to propel growth in the next decade. Obviously, public relations won’t be immune to the very volatile business environment but, there is enough opportunity to continue our level of organic growth in the range of six to seven per cent per year.
The next ten years may not be explosive – but they should be good for stable growth.