Asia is at the confluence of many forces that are fundamentally changing our world. I think first is obviously geopolitics. The world is getting fragmented from a geopolitical standpoint. All of that has a direct or indirect impact on countries and companies in Asia.
The second thing I’d say is the force of technology. It’s impacting everyone in the world. And Asia is particularly important because for the region to continue to grow, we have to get our productivity growth rate up and technology will play a very important role in that.
Third is the demographics. The world is aging. If we look at North Asia, it is aging at a rate much faster than the US and Europe. And one-third of the population in North Asia is going to be what I would describe as an “old population” very soon.
And finally, the energy transition. Asia is unique because on a per capita basis, energy consumption in Asia is low. Asia still needs a lot of energy, but in addition to consuming a lot of energy, it needs to find a way to decarbonize. And it needs financial sector reform to be able to fund all of it.
I think these forces have fundamental implications for businesses. In a recent survey that McKinsey conducted, almost 85 percent of CEOs in Asia are optimistic about the future. They see more tailwinds than headwinds. Equally, a good three-fourths of them also feel the need for major transformation in their companies, both in driving sustainable growth and productivity.
Three things are going to be very important as you think about this. One is resilience. When you’re dealing with so much uncertainty and so much change, how do we be both defensive and offensive at the same time? Innovation will also be very important, because without innovation and growth, it’ll be very hard to meet our challenge of the energy transition or inclusion in this part of the world.
Finally, agility will be very important, because even scenario planning will have its limits—and things will unfold in ways that you didn’t anticipate. So, having organizational agility so that you can move at pace when things unfold themselves will be very important.