The problem with trend spotting

 I am a huge fan of trend spotting and scenario planning.  Most companies simply do not understand the insight and the power that developing and interpreting trends and scenarios can provide.  Instead of being caught off-guard or surprised by emerging markets or emerging segments or new technologies, wouldn't it be much better to be aware of, or even prepared for, what is going to happen?

Watching trends and developing scenarios can only make you more aware, and give you a better sense of what is likely to happen and where to place important bets.  Yet far too many companies don't do enough trend spotting and scenario development.  Or, if they do conduct trend spotting and scenario planning they do it infrequently or haphazardly, which does not lead to great results.  In my opinion, trend spotting and scenario planning are two innovation activities that have a great return on investment.

Now, having said how important and valuable trend spotting and scenario planning is, let me let you in on a secret.  Trends are everywhere.  One of the key difficulties in trend spotting is deciding which sources of trends are valid, and which trends within those trusted sources should be prioritized.  Let me give you an example.

Here's an example of a recent tweet dealing with emerging technology trends

 

It's great that Brian Feroldi (I don't know Brian but I do follow his tweets) has put together a list of emerging needs, markets and technologies that are interesting to him as an investor.  More over, he has listed them according to his level of conviction, I guess on the potential size or success of each trend.

This is a great list, and identifies many emerging markets and trends. Brian may be an expert whose opinion you value, so this list of emerging technologies may be important.  However, this is a list of technologies for the most part, not solutions (which is what consumers buy).  We need to develop our scenarios based on emerging trends but always put these emerging technologies into a market or consumer context.  If it were as simple as being a cool technology, we'd all be riding Segways today.

Distinguishing between things

I am using this list as an example, not to criticize Brian but to show you what you need to think about when considering trends.  A few issues:

• Cloud computing is not an emerging trend, it is a reality now, and we are likely to see more and more of our IT move to the cloud.  It's a bit late to make a big bet on cloud, because so much has already been moved to the cloud.  Same with e-commerce in general, although there are interesting sub-markets and opportunities within e-commerce. 
• The "War on Cash" - this is interesting, because physical cash is becoming obsolete in many cases except for illegal activities.  Electronic transactions, credit cards, debit cards, Venmo and other platforms are replacing physical cash.  The question is:  where are the opportunities to replace cash with an electronic transaction, and how many opportunity spaces remain? 
• Autonomous/Electric vehicles.  This combines two related but disparate ideas.  Electric vehicles are a no-brainer.  Within a decade most if not all of the vehicles produced will be electric vehicles.  Think about what this means from the tier one and tier two supplier point of view - entire engine and drive train changes.  New vendors emerge, old ones adapt or disappear.  Who will "win"?  The upstarts like Tesla or the old guard - Toyota, GM, Ford?  We can make bets on the future of electric vehicles, and move beyond cars to small planes and other engines that are gas powered today.
  
  On the other hand, Autonomous vehicles are another issue altogether.  While the concept shows promise, there are dozens of safety issues, legal issues, regulatory issues, and issues with insurance and licensing that have to be resolved before autonomous vehicles will be produced and used in large quantities.  It's one thing to replace the engine of a car, but keep the vast majority of the remaining vehicle the same.  An electric car drives the same, stops the same, is controlled the same as a gas powered car.  But to replace the driver creates a whole host of legal, regulatory and safety concerns.  This is ultimately not an issue of technology but of acceptance in the marketplace.  Don't conflate the the two - electric vehicles are emerging and will be the dominant engine and drive train shortly.  Autonomous vehicles will take more time.
• One more - plant based meat.  I think Brian is framing this one too narrowly.  What I think we will see are alternatives to meat that is "grown" on a cow.  It could be that we see meat replacements (which we have now) and/or meat grown in a lab from original cow or pork tissue.  Both are viable, but right now the plant based products are leading because the technology is easier.  Don't miss the fact that we can and will grow meat in a lab - can we scale it to a large production at a reasonable price?  If the biologists and food scientists figure that out, we will continue to consume red meat but produced in an entirely different way - again disrupting an entire supply chain.

Here's a different trend report, this time from McKinsey on emerging technologies:

 

 

 

The point I want to make is that trends are everywhere - on Twitter, in annual reports, in what analysts say or report, in what consumers do or say.  Gathering them and making sense of them - evaluating and critiquing as I have done here - is an important component of synthesizing the information and beginning to decide for yourself what is most likely to unfold in the future.

Data is everywhere.  Information and insight is lacking

There's real work to gather and filter this information.  It needs to be done regularly, consistently and with the same perspectives and frames of reference.  Once gathered, the information needs to be evaluated and synthesized so that it creates insight or meaning.

So, what sources do you trust?  How do you evaluate the trends and predictions they are making?  Should you rely on third parties to do this work for you, or should you develop your own insights and facts about what you think is going to happen and why?

Once you've decided which sources to use and which to trust, and how much gathering and synthesis your teams should perform, you will have a viable trend program and analysis.  With that insight, you can make much more confident predictions about technologies, products and markets and move much more quickly than your competitors. 

Trend insight is not free but it is valuable

As Robert Heinlein used to say "TANSTAFL" - there ain't no such thing as a free lunch.  To get the value of all of the trend signals in the market, you need to invest in gathering, assessing, prioritizing and synthesizing all of the data and turning that data into useful information you can act on.  The information for the most part is free, and freely available, but there is a required human investment to turn the data and trends into actionable information.