Wednesday, February 03, 2010

Trend Spotting - Purpose, Frequency and Responsibility

I've written before (and recently) about the reactive nature of many businesses.  It often seems there are more incentives to ignore signals in the marketplace and then conduct heroic efforts at recovery than to simply plan effectively and study trends and act accordingly.  The purpose of today's topic is to examine whether or not trend spotting and scenario planning is important and valuable (hopefully already answered) and if trend spotting and scenario planning are important, what individual or team within your firm should be focused on this work, and how frequently it should be done.

First, let's put to bed the debate (admittedly a thin one) about whether or not your organization should track trends and try to understand likely future scenarios.  The answer for most firms is a resounding "yes", especially given the increasing pace of change.  In the past you might have been able to argue that change was slow and steady, and an occasional peak in the periscope was all that was necessary.  As globalization increases and the pace of change increases, you need to be identifying trends and making sense of those trends consistently, or the disrupters will eat your market share for lunch.  Your planning efforts can't assume the future looks a lot like the present, and also must look further out in time.  You need to look further out in time because even though the demand cycle has sped up, many firms haven't improve their product or service development cycle, so if you only look a year or two into the future, but it takes 18 months to two years to get an idea through the pipeline, you are shooting behind the curve.

OK, let's assume for the sake of argument that you agree that trend spotting and scenario planning are valuable.  Then the question becomes - who should spot and capture trends, who should develop scenarios and who should interpret the results?  These questions need to be answered on two levels:  at the corporate or business unit level, and at the product or service level.

Trend spotting should be underway, all the time, as a consistent activity by a wide range of people within your organization.  Those trends should be reported to a central analyst (individual or team) who is capturing, recording and tracking trends.  This model works at both the product/business unit level and at the corporate level.  We at OVO emphasize this work at the corporate level, because work at a product or business unit level can too easily be focused too narrowly on a specific product or market or geography, and miss trends or disruptions from other sources.  We'd rather see a number of people recognizing and reporting trends throughout the organization, centralized in some team at the corporate level, who capture, report and synthesize the trends, typically in four or five categories (demographic, technological, economic, governmental).  One central repository of these trends reduces the "my trends are more accurate than yours" debates and should ensure a more all encompassing view of trends.  Of course everything I've described can be replicated in a business unit or product line, with the awareness that these are often more narrowly tailored.

If we centralize this skill, what kinds of people are necessary to capture, analyze, report and synthesize trends?  Anyone in the organization who reads, or interacts with customers or business partners, or who has an interest in what's happening or unfolding can capture and register trends.  We've set up several systems like this where anyone can report trends.  Additionally, the central team can also track and register trends.  As trends are recorded and categorized, we can also begin to identify which are important and relevant for the business, and request more insight or investigation into some trends over others.  As this is an ongoing activity, over time it becomes evident that some "trends" fade away while some are enforced.  Periodically (we recommend twice a year) a team comes together to select trends and build scenarios about a 5 to 7 year distant future.

We tend to pick 5 to 7 year futures because in many firms the selection and implementation of a new idea and the rollout of a new product can take several years, so we want to get the product to market slight early rather than slightly late.  With the pace of change as is currently experienced, trying to understand more than seven years into the future is really a crap shoot.  Using a horizon less than three years is really not effective, as most concepts will be incremental.

Who should develop the scenarios?  We believe these should be guided or facilitated by people who don't necessarily have a vested interest in the outcome.  A scenario guided by a product manager is likely to reinforce his or her biases, since they have a stake in the outcome.  Again a central innovation team acting as facilitators with a representatives from a product unit or business unit can mix the best of both worlds and ensure a relatively unbiased examination of several potential future outcomes.

Note that through all of this discussion we assume that this function exists as a continuous offering over time, not a discrete, start-stop program but a team that builds insights and skills and offers them to executives within the business.  If you want the inexpensive, low hanging fruit of innovation, here it is.  No where else can you get a great understanding of the near future and your opportunities and challenges for less cost.  The only requirement after the scenario plan will be your ability to take action.

Contact us at OVO Innovation if you'd like to understand how to do this more effectively, or how to receive training to do it internally.
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posted by Jeffrey Phillips at 2:02 PM


OpenID arkaden said...

I guess you are right about the consensus on trend spotting. We all agree it is important. But then, isn't it easier to get a promotion with an heroic effort on trends if the company is in a crisis instead of an ongoing effort? My point is, what is the incentive for the individual worker or manager to be involved in such ongoing trend monitoring? My approach on such a topic would probably be to install a culture of 'postheroic management' in the company to make it possible in the first place.

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