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Pottinger Joint CEO Nigel LakeAfter the B20 summit came to Sydney, Pottinger CEO Nigel Lake asks if big-business thinking can catalyse global growth.

Packed first-class lounges and bustling Sydney hotels don't just reflect well-heeled soccer fans returning from Brazil. In July, 300 of the world's business leaders descended on Sydney to attempt to re-ignite global growth.

Seven years after the start of the Global Financial Crisis, many economies still face a sluggish outlook.

Meanwhile, despite the best efforts of the world's political leaders, there has been little progress in reducing national debts.

Interest rates remain at record lows, benefiting investors, but punishing those saving for retirement or living off their savings.

As a result, the burden of repaying these debts will create a shocking intergenerational wealth transfer that will haunt generations X and Y for decades. Despite the fanfare of the Business 20 Summit, the purpose could not be more serious.

Although the financial emergency-room experience is now past, the patient's injuries are still grave. Debt-to-GDP levels remain chronically high in many countries, and the creeping death of unfunded pension liabilities is beginning to cast its shadow on the world's strongest economies.

Even China, for 20 years the poster child for economic growth, confronts the challenge that its people will become old before they become wealthy. So Joe Hockey and the Federal Treasury deserve all credit for persuading the G20 nations to target a two-per-cent step-change in global GDP over the next five years.

But the size of the challenge must not be underestimated. The G20 - and the B20 summit which precedes it - emerged as critical forums in the early stages of the GFC.

Recognising that action by the G8 superpowers could not save the world's financial system, a broader group was convened.

The burden of the economic crisis, and the opportunity of comprehensive restructuring of the world's financial system, was shared with 11 more countries whose economies were geared more to the future than to the past.

These smaller countries represent almost half of the world's population - four times as many people as the G8 nations.

They include China, Australia, and other key Asian, Latin American and African countries.

This is a much more diverse group, and one which has materially stronger growth prospects than the old-world economies. Say goodbye to the status quo. Einstein said: "We cannot solve our problems with the same thinking we used when we created them." Herein lies the primary challenge for the B20 leaders.

Many summit attendees represent the world's largest businesses, creating an inevitable skew towards the old economy.

Of 30 keynote speakers at B20 Australia 2014, half were from old-world industries of financial services, mining and resources, and utilities.

Not one of the world's top technology companies was present—there were no Amazons or Apples or Facebooks or Googles, nor their Asian rivals such as Samsung, HTC, and Weibo.

It's for this reason that the B20 engages with other G20 forums and processes throughout the year, including the Labour 20, Think 20, Youth 20 and Civil Society 20 initiatives, and delegates will also discuss G20 priority areas not covered by the B20 in 2014, including energy security, food security, and the digital economy. But changing your thinking about the nature of problems, and hence how to solve them, is incredibly challenging.

The biggest lesson of the past decade is that value has been created more rapidly than ever before, by the youngest cadre of entrepreneurs that the world has ever seen.

The world's top 20 technology companies have created almost two trillion dollars of value, and most of these were founded by kids in their twenties.

Make no mistake—this phrase is meant as a mark of huge respect.

They are the Red Bull revolution and they have transformed the world's technology, communications, media, and advertising industries. Our natural bias in favour of the status quo is, however, incredibly strong.

For every business that has successfully reinvented itself, there are many more that have tended their cash cows until they died, and then quietly starved to death. Consciously favouring a different approach, when the old ways still seem to be working adequately, requires exceptional courage. Brawn or brains? One of the critical questions for the B20 leaders is whether GDP growth is the best measure of economic and social prosperity and wellbeing.

In strictly business terms, it's a measure of volume, not of value.

Over the past 50 years, the balance between increases in productivity (which effectively reduce GDP) and increases in population and wealth (which effectively increase GDP) have translated into overall growth.

But as populations begin to contract, and in the current low-interest-rate environment, GDP may stagnate even as living standards continue to improve. To face this challenge head-on, leaders must consider how productivity benefits should be shared between business owners and employees.

In the US, virtually all of the benefits of productivity improvements have fed through to company profits, and hence back to shareholders. The US is well-known for its hard-working staff, low basic pay, and very short holidays.

In contrast, in Norway approximately half of all productivity improvements have fed through to employees.

As a result, its people are well paid, the country enjoys some of the longest average holidays in the world, and income inequality is relatively low.

For the past five years, it has ranked as the happiest country in the world in the Legatum Prosperity Index.

These softer issues are harder to measure, but no less important as a result.

During its year as G20 host, France advocated broader measures, leading to the OECD Better Life Index—Norway ranks second.

And, just as the spectre of a future pensions crisis is metamorphosing into a current-day issue, so too are the challenges of the physical system limits on the world's growth.

We already see this in availability of fish stocks, and the effects of carbon-dioxide emissions on global weather patterns, for example, and there is much more to come.

The power of revolutions

This change from old economies to new economies lies at the heart of the B20 project.

Dramatic new revolutions are a certainty in a number of key industries, including energy, transportation, and health care, and the effects of digital disruption will continue for at least another decade.

Renewable energy costs are rapidly approaching the point at which power sources such as distributed solar PV will simply be cheaper than conventional power (without subsidies).

Consumers in Australia already know this, and off-grid energy generation is increasing rapidly, reducing network demand.

The advent of electric vehicles will transform consumer choice globally. Meanwhile pharmaceutical, medical imaging and other healthcare technologies are developing at an extraordinary rate, and innovations such as 3D printing will transform manufacturing rapidly in the next few years.

These effects are global in nature, and, unsurprisingly, the boundaries between nations are breaking down.

Where people live, work, and shop has become much more fluid, thanks to a digitally connected world.

For governments, this makes it much harder to identify where revenue is generated and where tax should be paid. The good news for business leaders is that the nature and timing of major technological changes is predictable.

Solar energy is a case in point.

There are long-run price curves dating back to the 1960s which show costs halving every seven years - a Moore's law for solar power. Battery storage costs are declining even more rapidly, and cost curves for conventional power sources are moving in the opposite direction. Thus the key to understanding these issues lies as much in the revolution of data itself.

Big data, and much more importantly the 'big analytics' statistical toolkit which is required to understand the data, will be critical in unpicking and understanding these trends, and what they mean for businesses and governments. "The future's already here — it's just not very evenly distributed," said author William Gibson, who also coined the term 'cyberspace' in the early 1980s.

Unlocking growth in this increasingly complex world will require clear perspective on where the best long-term opportunities lie.

Fresh thinking will be critical, highlighting more than ever the importance of diverse teams, whether in business or government.

This is precisely why the B20 and G20 are so valuable, and why the actual and perceived success of the forums in 2014 is of real importance to many nations and businesses. Australia, host to these forums, provides an object lesson in the transition that is needed.

Although it is based in the Asian time zone, the country has an economy that remains significantly driven by old-world industries, and a stock exchange that is heavily skewed to mining, financial services, and property.

The country's challenge is to escape the legacy of serving offshore paymasters with the exports they need, and to build new industries which make the country much more master of its own destiny.

This means relatively less emphasis on exporting the products of the land, and much more emphasis on exporting products of the heart-mind: education, tourism, science and health care.

About Nigel Lake Nigel is Joint CEO of global advisory firm Pottinger and an entrepreneur with a passion for diversity, innovation, environment and action. He is author of The Long Term Starts Tomorrow. Follow him on Twitter at @Nigel_Lake.   

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