1.2 The Pentagon Model

1.2 The Pentagon Model

We propose a relatively simple framework to identify and prioritize megatrends. We call it the Pentagon Model. It focuses on five criteria relating to the relevance of trends.

The five key criteria, the pentagon factors, that make up a megatrend are the following:

1. Research and, particularly, research coverage of the trend by researchers and analysts from different disciplinary background in different countries and regions. 2. Level of political attention for the trend in a significant number of countries and regions. 3. Significant interest from global investors. This acknowledges that investments have great potential to promote trends. 4. Media coverage of the trend. This refers to traditional media and social media. 5. Strength of social movements and advocacy actions related to the trend.

These factors represent different spheres of societies: scientific and research, state, and government institutions; financial and business sectors; media; and civil society. When we introduce certain megatrends, we shall quickly see that the aforementioned factors are all met.

We emphasize these five different factors because we see many business consulting firms using the term megatrend. In our understanding, megatrends affect not only the business world but also societies as a whole.

Figure 1.1: Pentagon Model of Megatrends

Source: Berthold M. Kuhn

In constructing and subsequently putting to use this model, we have thus come up with the following twelve global trends, which will shape the future in the next 10–15 years.

Global Megatrends:

 Climate Action and Sustainability;  Digitalization;  Inequality;  Demography;  Urbanization and Smart Cities;  Health and Nutrition;  Green Economy;  Sustainable Finance;  Multipolar World Order and the Future of Multilateralism;  Democracy and Governance Innovations;  Civilizational Developments: Diversity, Individualization and Loneliness, Gender Shift, and Identity Politics;

 Migration.

The trends of climate action and sustainability, digitalization, and inequality will be presented first. We regard these as the most universal trends, though we do not propose a detailed ranking of trends because many of them are closely interconnected.

Climate change is already affecting our lives and our very existence on Earth and will continue to do so in such a way that sustainability transformations are needed across countries and sectors, including in energy production, mobility, and housing. New business models and the financial sector will play critical roles in supporting sustainability transformations.

Climate change receives major attention from researchers from different disciplines. We are also witnessing a proliferation of government policies tackling climate change, while climate protection has become a decisive factor for investment decisions, which also drives new business models. Climate change is extensively covered by the media and is addressed by a large number of civil society organizations. It is at the very origin of the emergence of new social movements, such as the teenage movement Fridays for Future, and Extinction Rebellion.

While digitalization seems to primarily affect the business sector and the investment community, it is also promoted by government policies, including education policies, and extensively discussed by civil society and social movements—for example by trade unions in the context of “the future of work.” It affects almost every aspect of our daily life, from online shopping and dating to education and digital health.

Inequality is the subject of many research projects and remains a chief concern for almost all governments in all countries. Globalization has exacerbated inequality in many ways and affects policymaking and investment decisions—for example, in the field of housing. The media cover inequality extensively and the issue is addressed by many different social and political movements.