It’s a while since I have written anything for this blog and so I started to write a piece exploring where to look for entrepreneurial opportunities to assist students doing business planning classes. Well it grew and grew – so the first installment is posted here and other parts will follow over the next few weeks.
An article in April’s addition of Fast Company by Charles Fishman on water security and the challenges and opportunities it presents led me to consider where future entrepreneurial opportunities might come from. Inevitably, in my role as a Professor of Entrepreneurship, I read a lot of newspaper and magazine articles about entrepreneurship and business in general and I read a lot of business plans from students and entrepreneurs. This combination of experience leads me to some considered thoughts on what the future trends might be. I doubt that my insights are novel and many of these will seem obvious to most people. Students in entrepreneurship courses, however, could benefit from considering some of these trends when proposing
ideas and before they develop business plans for their courses. Inevitably, this is a broad and sweeping list of good places to look; the real opportunities will only come from a microscopic analysis of these areas and analysis of the firms that are already doing things in these markets.
Aging populations in developed nations:
Any data you care to look at demonstrates a serious challenge for most developed nations as they enter the ‘demographic time bomb’; the beginning of a particularly critical period in this regard has just occurred as the ‘boomers’ begin to retire. Over the next 20 years (2031) a large section of the population will retire and become ‘active retirees’, about 15 years from now (2026) the boomer generation will begin to decline and become more ‘dependent retirees’. There are well document problems with this population shift, which are at the core of the debate about the deficit. Obvious pressures will be placed on Social Security and [Medicare], as well, as most of the States’ public pension systems. There is likely to be inter-generational strife as the younger generation realizes that they have little political power, due to demographics. It is also possible that future generations may become angry, having been made bankrupt by the entitlements their elders have awarded themselves, while removing these from others.
Entrepreneurial opportunities though will abound as a result. For 20 years developed societies will have a large pool of active retirees some of whom will have wealth. These retirees will want to do things: from vacationing and recreational activities; to starting businesses themselves; and, investing in others’ businesses. So for an initial period a host of businesses will grow rapidly that cater to this group’s needs and that draw on their experience and wealth. Businesses initially are likely to see the most robust growth in retirement communities, vacationing, recreational and business services that cater to this age group. As the group further age’s though their vitality will begin to decline and growth will inevitably occur in medical industries, home help and nursing homes that assist older retirees.
The anger felt by the younger generation may lead to political action and consequent innovation and change to entitlements, pensions systems and the financial instruments (e.g. medical insurance) that support people in retirement. It is difficult to predict whether this will happen or the exact ramifications if it did occur. It is clear though that substantial political change here would lead to new opportunities in financial services (e.g. medical insurance brokerages), as well as, in other areas yet unknown (e.g. inter-generational pensions and other financial services).
One of the problems of large numbers of people retiring over the same period may be critical shortages of qualified people in key professions (e.g. education; nursing), as well as, a significant disconnect between the qualifications and experience of young people and the jobs available. To some extent this is already beginning to occur and professions that expanded in the 1960s (e.g. Higher Education) are particularly susceptible to this problem. Entrepreneurial opportunities will thus exist in the ‘human resource’ industries (e.g. headhunting; HR outsourcing; HR agencies; recruitment; education and training) as those sectors most affected begin to address their human resource constraints. Immigration will also be one way in which these gaps will be addressed and so opportunities will continue to grow in international out-sourcing and managing immigration from developing countries to the developed.
The world population continues to expand and worldwide mortality rates decline; in many ways this is good news. Along with climate change the population expansion, however, puts pressure on food supplies and disruptions to food production bought about by climate change are beginning to have an impact on prices and encouraging speculation in commodities, as well as, causing food riots and other calamities. Fortunately, mankind has discovered genes and genetic engineering. Despite obvious concerns bio-engineering does offer some very useful solutions that create clear entrepreneurial opportunities and we are only at the very cusp of their potential. We are already close to having water-tolerant rice and wheat, as well as, nitrogen tolerant corn; each of which will boost global food supplies. But bio-engineering of plants and animals has many implications beyond food supplies. We may in the near future have bio-engineered algae that simultaneously remove significant CO2 from the atmosphere while producing bio-fuels. We are also close to depleting worldwide fish stocks and yet we have recently produced farmed salmon that can grow to the usual size twice as quickly. Oddly the genes of other plants and animals also become fundamentally more important and we have more incentives to protect them. The entrepreneurial opportunities here are presently science driven and the purview of large corporations (e.g. Monsanto); however, one can imagine algae farms becoming an important industry of the future that might be accessible to entrepreneurs and no doubt those genetically engineered salmon will be popular with salmon farmers. The capture and exploitation of traditionally unproductive land in preparation for new varieties of crops seems like one potential opportunity for entrepreneurs. Bio-engineering process technologies themselves are advancing rapidly (akin to moving from mainframe computers to PCs) and may reach a point soon where smaller science based businesses may be able to unlock fundamental advances in the way that large corporations and universities currently do. This seems like an area of technology that is ready to reap a Moore’s Law like advance accelerating exponentially and so may offer many new avenues for entrepreneurship in the future.
Unless you are a climate change denier you have to accept the scientific community’s consensus that climate change is happening. This is the major challenge of this century and one could argue that we are at the beginning of an industrial revolution as the world moves from an economy based on carbon-energy to one based on new forms of energy. Many of the areas discussed later are a direct consequence of this 2nd industrial revolution. Sectors from CO2 management, to energy production; energy efficiency and water efficiency are directly related to climate change. Even scientists struggle to know what the real consequences of climate change will be so it is difficult to predict where any entrepreneurial opportunities might emerge. There is no question though that climate change will have consequences that will lead to both challenges and opportunities. The most obvious are unusual variations in weather patterns, excessive heat or cold, major catastrophic events and rising sea levels. Despite their calamitous nature and the hope that we will reverse and prevent their effects it seems likely that we will have to deal with the consequences of this over the coming century. Despite the ‘darkness’ of this scenario it undeniably presents entrepreneurial opportunities. Firstly,insurers will need to have more effective climate change models when they set insurance premiums. Secondly, weather forecasting itself may need to adapt. Thirdly, consumer products to help families cope with extreme weather may have greater demand; and finally, innovations for disaster protection and response may present opportunities (e.g. tsunami, tornado or hurricane protection rooms and engineering solutions for flood prevention); technologies for recoverying destroyed or flooded land. These are just a few of the areas of challenge but entrepreneurial opportunity that climate change presents us.
There is no question that cloud computing is already taking off (aka Salesforce.com) and all of the major IT companies are moving into the space and competing head-to-head. The space seems hot in B2B applications/software, datacenters, switching, servers and chips. The driver here is mobile devices and increasing bandwidths for wireless networks and the conglomeration of IT companies into ‘one-stop’ providers of IT infrastructure, services and software for other corporations. Most of the competition is ongoing between large companies (Oracle; Cisco; Google) and the entrepreneurial opportunities maybe hard to come by. There does seem to be a few potential areas where opportunities might remain. Firstly, niche software offered within specific industry sectors for a specific purpose that utilizes the cloud concept where costs can be reduced and competition is limited. Secondly, entrepreneurial concepts that target the energy inefficiency of datacenters, and servers, and reduce energy consumption. Thirdly, B2C concepts that utilize the cloud computing approach in areas that are not yet fulfilled (e.g. Intuit’s turbotax.com). Anybody looking for entrepreneurial opportunities in this space though will need to look hard as this is currently a hot and highly competitive space.