How to recognize megatrends and integrate them into the corporate strategy
In today’s corporate world, companies must strategically recognize and utilize trends if they want to survive. But how can they manage to keep abreast of what is going on in our digitalized and globalized world where information just keeps piling up? Trend researcher René Massatti and management strategist Bernhard Scherzinger have made trend-spotting an integral part of the WU Executive Academy’s new 4-day program Strategic Management. The two experts explain how to discern real trends from hypes and how companies can develop professional trend management within their organization.
Hindsight is always 20/20: in the late 1970s, the CEO of Digital Equipment, one of the most influential IT companies of the time, said that nobody needed a computer at home. Ken Olsen did not recognize the trend, or at least not in time. His enterprise sank into obscurity, a fate which will likely befall others that fail to embrace corporate trend-spotting, the art of professionally recognizing and utilizing trends for companies. Technological progress is going faster than ever, and together with the ongoing economic downturn due to the coronavirus crisis, corporate trend forecasting has become a matter of life and death for companies.
Making out new developments early on is a skill that can give enterprises a significant competitive edge, which makes it all the more important to turn trend-spotting into a priority of every corporate strategy. “When you are developing a strategy, there are two questions that you need to answer: Which trends are relevant for me? And which are not?” says Bernhard Scherzinger, managing director of the Vienna-based consulting firm Management Results Consulting. Scouting trends, a long-underestimated and marginalized topic, is getting a lot of attention today. And there is a reason for that: if companies fail to deal with strategic core issues such as trend-spotting, they risk failure.
About 60% of enterprises that go bankrupt only realize that they are in trouble a year before they finally fail. This is why companies are well-advised to observe closely what is going on around them and ask themselves how they can react to these changes better than others. At the moment, this is more important than ever, as enterprises operate under even more uncertain and volatile circumstances than usual.
René Massatti, brand ambassador for the Hamburg-based trend research company Trendone, shares the view that no enterprise can allow itself to go without trend-spotting anymore. “But to recognize and spot relevant trends, companies need the right infrastructure.” With such in place, continuous trend management instead of just scouting the occasional trend becomes possible– and this is the only way to go in the long run.
During the set-up phase, professional trend management can be developed through workshops in which goals are defined and a customized trend radar for the company is designed. “Such a trend radar makes sure that the majority of relevant things is picked up, so you are already halfway to the place you want to be,” René Massatti confirms. Distinguishing low-impact hypes from real, long-term trends is key. “Often, trends are small and off to a slow start. The important thing is to keep them under close observation over a certain period of time,” Scherzinger recommends.
The next thing a company will need is an efficient trend management system that serves to dispatch relevant information to decision-makers. This comprises, among other things, defining a communication plan and appropriate formats of interaction, such as regular meetings, events, or workshops. “It is an administrative task that is also deeply political,” says Massatti.
To implement trend-spotting within their organizations, Massatti recommends that companies follow a three-step plan:
Observe: The first step is to observe important topics. Before that, it needs to be decided who is in charge of this task within the company (for instance the IT or business development department). In the long run, it pays off to build a pool of sources and experts to keep an overview.
Understand: The second step is a basic analysis to assess the maturity of the trend, possible ramifications, and past adaptations through other companies, including market leaders and competitors (also of other sectors). There have been developments with cross-sector significance time and again, especially as borders are becoming blurred (just think of energy companies that also act as internet providers).
Transfer: The final step is the implementation in product development, making use of methods such as design thinking.
A corporate culture that nips ideas in the bud and gives rise to an innovation-averse environment is a potential obstacle for effective trend management.
Hierarchies can also be a real issue, especially when innovation is sacrificed to power play.
Exaggerated optimism bordering on hubris can also be a problem when a sense of invincibility takes hold within a company. “Companies should never stop asking themselves what the worst thing is that could happen to them,” Scherzinger advises.
It is not just the technology sector that should focus its attention on corporate trend-spotting. “Using this technique pays off across all fields, even if it is true that some sectors experience change faster than others,” Massatti emphasizes. The steel industry, for instance, is subject to longer cycles than IT. However, trends should be observed and put to use by companies across all sectors, as not all trends can be traced back to technological advances: “In finance, to name just one example, changes in customer behavior have an impact. It is much more a cultural than a purely technological issue. And that, at the same time, is the fascinating thing about trend-spotting: it has so many facets.”
For more information about the short program Strategic Management, please click here.