How to Ride the Hottest New Trends
What will the world be like in 2008? Get ready to embrace the changes that will shape the future of your business.
By Peter Schwartz

- The future is slippery prey, but it's easier to track when you remember Amara's Law. Roy Amara, founding member of the Institute for the Future, was one of the first people to think seriously about how to study the future. "We tend to overestimate change in the short run," he observed, "and underestimate it in the long run." In other words, although we expect tomorrow to arrive in a burst of science-fiction flashiness, it often takes longer to arrive. And when it finally does, the real impact of the change is likely to exceed our initial expectations.

Consider where we stand in 2005: Much of what we see happening online today is the long-run, large-scale result of changes that many people dismissed only a few years ago. Amid the great tidal wave of innovation in the 1990s, the most interesting story was the birth of new business models like Amazon, eBay, and Google. But that's clear only in hindsight. The innovative fantasies of the dotcom era did bear fruit, but it took a lot longer--a decade, not five years. (See "Everything Old Is New Again," page 92.)

So where will the business world be in, say, 2008? I look for small but telling hints. In my 15-year-old son Benjamin's room, for example, he's uploading a lightsaber duel video he made for a Star Wars fan competition. A digital videocamera and a Mac, and suddenly he becomes Schwartz Productions. Meanwhile, Al Gore's new cable-television venture, Current TV, aims to be almost entirely viewer-produced. Marc Benioff, CEO of Salesforce.com, plans to allow his company's users to develop and share new software applications using simple programming tools. The distinction between consumer and producer, server and served, is beginning to fade, and forward-looking companies understand that making money with your customers is even better than making money from them. (See "Companies Tap Into Consumer Passion," page 84.)

This next wave of innovation is still being driven by technology. It's the result of two major forces: ubiquitous broadband and mobile communications. We're only beginning to grasp what the new economics of information is really all about. The long tail, the subject of a forthcoming book by Wired editor Chris Anderson, is just such an idea. Ubiquitous Web access makes it possible to serve very small niche markets--the long tail of overall retail sales. The better the Web access, the longer and fatter that tail becomes. Suddenly, esoteric books that were headed for the mulch pile acquire economic value. Over the long term, some can even outsell flash-in-the-pan best-sellers.

The power of computing and the ability to refine data in novel ways are leading to a new era of connection between customers, employees, and shareholders. Behind the scenes, a massive information architecture underpins more and more of life's activities, from consumer purchasing, to working at home, to learning new skills. Technology is pushing us ever deeper, faster, and to higher levels of integration in the emerging knowledge economy. (See "Business Gets a Nervous System," page 86.)

Because much of the world has figured out that the secret to sustained growth is a well-educated population, the movement toward a knowledge/service economy will become increasingly global. China will move from its current industrial-agricultural economy toward one with a sophisticated services sector much faster than we might have expected. And here at home, the competition for the most creative knowledge workers, from digital animators to molecular biologists, will almost certainly leave them in short supply. (See "Cube Dwellers Flex Their Muscle," at right.)

Such trends set the stage for continuing growth during the next three to five years, but the future can also be derailed by nasty surprises. We can see at least two major candidates in the next five years. The first could come from oil markets. Continued high growth in demand, especially in China, will keep markets tight, as developing new capacity fast enough will be very difficult. Any further disruption in supply--compounding the results of the hurricane that pounded the Gulf Coast--will trigger a lasting jump in oil prices. It's not hard to imagine that oil could go from around $60 or $70 a barrel to $80 or even $100. The impact on growth and inflation might finally begin to bite, leading perhaps to a return to the stagflation of the '70s with both high inflation and high unemployment. Poor profits as margins erode, higher costs, a weak stock market, and slow growth could create a fragile economy that would reward caution more than innovation.

The second disruptive shock is the possibility of a disease outbreak to rival the 1918 influenza pandemic. It could happen, and if it does, the scale is likely to be amplified by the fact that millions of people are flying around the world every day. SARS showed us how quickly disease can spread, often to surprising places. A major outbreak of, say, avian flu could kill huge numbers of people and disrupt the world economy. The wheels of commerce would grind to a halt as borders closed and the globalized, integrated economy unraveled.

Assuming the future is a bit brighter than that, however, enormous opportunities for new businesses (and threats to old ones) lie on the horizon. Fundamental long-term shifts like the democratization of media access may not revolutionize the world overnight, but they produce subtle and sometimes surprising changes. Remember Amara's Law, and read on with a pinch of worldly skepticism. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.