December 2018

Global Megatrends Impacting Businesses

Insights

Global Megatrends Impacting Businesses

Megatrends are those shifts so significant that they shape our businesses, our economies and our lives. Depending on the industry in which our business operates in, the impact of these megatrends will vary and its doesn’t have to be negative but being aware of these trends will enable us to think about how we can create opportunities for our businesses.

Having an insight into these megatrends will enable us to form a future-proofing strategy for our business. The digitisation megatrend is one obvious example of recent years, but what are the upcoming trends business leaders should be aware of, and what are their likely impacts for businesses?

What are global megatrends?

Megatrends could be understood as major, sustained global shifts that impact individuals, businesses, societies, economies, and cultures. They’re “mega” because they’re significant enough to define our way of living and doing business.

Observations on megatrends and what to prepare for

Understanding the biggest megatrends facing businesses today is critical to future-proofing our businesses and investments.

At Arowana, we see these five megatrends as ones that are already impacting economies around the world, and will continue to do so for some time.

1. Electrification of society fuelled by battery storage

One of the most significant megatrends is the rise of solar energy fuelled even more by the emergence of battery storage. Further improvements made in battery technology will continue to aid the growth and adoption of renewable energy as well as electric vehicles.

Business owners should explore and consider how trends like the electrification of transport, could help your business as well as opportunities that could emerge from the decentralisation of power generation aided by battery storage.

Perhaps your margins are being impacted by peak power prices? Installing solar and battery storage on-site may be an option to reduce these cost pressures, allowing your business to soak up the sun’s energy during the day with additional backup power supply from the installed battery which could be charged-up during off-peak periods.

Arowana through its 61% owned subsidiary VivoPower has completed projects representing more than 90 megawatts of generation capacity over the past two years and has an established track record in the utility-scale sector. In September 2018, VivoPower announced a new partnership with IT Power (Australia) Pty Ltd to develop a portfolio of utility-scale ground mounted solar projects in New South Wales.

Additionally, VivoPower’s wholly owned subsidiary Aevitas Group Limited has won the contract to design and construct the 3.6 MW Cubbie Solar Project for the largest cotton producer in Australia. Once complete, it will help power 40% of Cubbie’s energy needs during the peak cotton ginning season.

2. The middle class in Asian emerging markets

The middle class continues to expand the vibrant economies of Asia and Arowana views eCommerce and education as two ways for business leaders to leverage this megatrend.

Asian emerging economies account for approximately 44% of global GDP, which today amounts to US$28.79 trillion and this number is predicted to continue growing by over 5%p.a. over the next year. The rising middle class in Asia, in our opinion has risen and is leading a boom in eCommerce. For 2018, eCommerce revenues for the region amounted to US$832m compared to the United States which was US$505m. Majority of eCommerce buyers tend to be under 35 years of age with the 24 – 34 year olds being the largest share of buyers. This is significant given the youthful demographics of the Asian region and it’s predicted that revenue’s in the Asian eCommerce market will grow by 10.5% annually over the next 5 years.

In terms of education, Arowana is already actively engaged in the Asian emerging markets with our education platform EdventureCo. We’re currently working on bringing Australia’s largest ICT training provider DDLS to the Philippines, one of the fastest growing economies in the world with a population of over 100 million and a youthful median age of under 25. The country has committed to innovation and digital transformation to future-proof jobs and address skills gaps. Key industries and skills in demand include knowledge and business process outsourcing, big data, data analytics, cyber-security, blockchain, digital commerce, and fintech. And this partnership in the Philippines is only the beginning of DDLS’ plans to address the skills gap issue prevalent in workforces around the globe.

3. Automation and robotics essential to survival

Artificial intelligence (AI), automation, machine learning, and robotics are no longer the stuff of science fiction. Instead, they’re opportunities for business leaders to transform their business models. Businesses that ignore AI and machine learning will not survive in the coming decades.

Using automation and robotics in business has a range of benefits, as it can speed up everyday business processes by automating and streamlining them. AI can also be used to improve customer service online, and this allows businesses to allocate their resources more efficiently and effectively. Businesses should take a good look at their processes to determine at what points AI or robotics could be implemented for the greatest benefits.

Everyday businesses are employing more data analytics, automation and robotics into their businesses everyday and this is becoming the norm where pizza delivery now employs more data analysts than pizza delivery drivers and it’s not just pizzas but burgers too. The outcome, a more consistent and price competitive product plus pizzas arrive hot as they are baked on delivery.

Arowana has built up its knowledge base and capabilities in artificial intelligence, encompassing data analytics. We draw upon the expertise of Professor Hugh Durrant-Whyte, our advisory board member. A renowned expert in robotics, automation, machine and deep learning as well as data science, Professor Durrant-Whyte is an early pioneer of various localisation, mapping, and automation technologies and has helped companies like Rio Tinto develop the autonomous mining truck. Professor Durrant-Whyte was also the Chief Scientific Advisor for the United Kingdom Ministry of Defence.

We also call upon the expertise of Ed Fernandez, a director on our board. Ed is an, experienced Silicon Valley venture capitalist, and technology entrepreneur in the field of machine learning and AI. Trained in electrical and electronics engineering, Ed is an active investor and advisor in various start-ups and he runs Naiss.io, a venture capital and advisory boutique in Palo Alto.

Arowana has applied AI and machine learning techniques in acquisition due diligence as well as implementing it within our operating companies, such as EdventureCo and Thermoscan. We’re committed to growing our team with future hires of data scientists, experienced AI technicians and machine learning engineers to help future-proof our operating companies.

4. Cybersecurity and data protection focus to increase

Arowana identifies cybersecurity and data protection as a megatrend for the long term. We should expect exponential increases in cyberattacks and data theft in addition to a chronic shortage of cybersecurity and data protection professionals. Business leaders, depending on their sector, could target gaps in the marketplace for these products and services. It’s also vital to stay up to date with regulatory obligations, compliance, and measures for safeguarding your business and data.

Business data that’s at risk from cyber attacks include customer information, financial records, business plans, intellectual property, and employee records. In order to protect such data from cyber attacks, businesses should develop clear policies for security measures, implement new security procedures, and keep all computer systems updated with the most recent software protection.

Cyberattacks will continue to increase and no one is safe – not even the Prime Minister of Singapore, whose health records were targeted by malicious attackers. If you’re concerned about data security, you can check if your email account has been compromised at this website.

Arowana is well-positioned in this area, with EdventureCo’s DDLS recently recognised as the top global provider of cybersecurity training by the EC-Council. The EC-Council (International Council of E-Commerce Consultants) is the world’s largest cybersecurity technical certification body. DDLS has partnered with EC-Council to deliver training in cybersecurity courses in Australia.

5. Rise of medical cannabis, and decline in alcohol and sugar

Arowana notes a multi-decade decline in alcohol and sugar consumption has commenced. With this, the push to decriminalise and legalise medical cannabis across the world – even in unlikely countries like Thailand and Malaysia, for example – will drive exponential growth and disrupt multiple sectors. For the entrepreneurs amongst us and business leaders, you may want to consider the likely opportunities as well as challenges – such as competition from medical-cannabis companies and associated businesses – could inform their future-proofing strategies. One such company, Altria the maker of Marlboro cigarettes has recently made a US$1.8bln investment into cannabis producer, Cronos.

On alcohol, younger generations are choosing better alternatives to alcohol for socialising, and so they’re drinking far less than they used to. Alcohol consumption is dropping but consumers are focusing on quality and spending more, opting for premium beverages.

Similarly, sugar consumption is also on the decline as soaring obesity rates hit extreme heights and awareness of health risks associated with too much sugar grows. Perhaps the dedicated work of our fellow Aussies – such as Sarah Wilson’s I Quit Sugar and Damon Gameau’s That Sugar Film – is finally being heard. However, individuals with interests to protect will continue fighting against this trend; an example is the CEO of Coca-Cola Amatil arguing against a sugar tax.

Is your business prepared for the future?

We hope this article has been useful and you take the opportunity to plan for the megatrends set to disrupt our businesses and societies. Technology-driven trends like cyber-attack risks, automation and AI, and electrification have a broad impact across sectors. Other trends like the middle class in Asia and the legalisation of medicinal cannabis could present opportunities for nimble businesses seeking new market opportunities.

Are you interested in finding out more about Arowana and how SMEs can futureproof their business? Download our guide or sign up for our newsletter.