using megatrends to find new opportunities, prepare for ... · us anything, it is that even short...

10 www.scip.org Competitive Intelligence

If the financial crisis of the past two years has taught us anything, it is that even short term predictions and forecasts are subject to unpredicted – not necessarily unpredictable – events. Some saw the crisis coming, perhaps, but the majority of businesses were still planning for major expansions and investments just before Lehman Brothers went bankrupt, with all the consequences we know now.

These are short-term pitfalls, with sometime dramatic effects on companies that don’t react adequately with corrective measures. The real danger, however, lies elsewhere. As all of the past crises have shown, in turbulent periods new competitors arise and new ways of going to market are developed. Even customer habits and preferences are poised to change, often for the long term.

In short, crises frequently initiate long-term shifts, and often these shifts hide themselves from companies that focus too much on the short-term.

Many companies face the threat of becoming so focused on the short term resolution of their bottom-line items (profits, market shares) during a crisis that, once they return to normal functioning, they wake up to a business environment that has profoundly changed. In the worst case, they have become somewhat irrelevant.

Analyzing medium-term trends, shifts in society, and changing influences in your business environment is hence indispensable. Not only in times of crisis but also in ‘normal’ times, looking at longer term shifts in society becomes a crucial factor in ensuring that your business is prepared for future challenges and opportunities.

By Frederic De Meyer, Manager Market Intelligence, Cisco Europe andJoost Drieman, Director Market and Business Intelligence, Cisco Europe

Using Megatrends to Find New Opportunities, Prepare for New Threats

Volume 14 • Number 2 • April/June 2011 www.scip.org 11

DIFFERENT WAYS TO BENEFIT – OR SUFFER – FROM MEGATRENDS

Looking at longer term shifts and their impact on your company can generate various benefits. You could use such an exercise as an idea-generator for new opportunities, a tool to sharpen your corporate messaging, or as an early warning system to uncover future threats.

The Threat of NOT Considering MegatrendsWhat is certain, however, is that you expose yourself

to serious risks if you don’t take megatrends into consideration. For instance, General Motors invested heavily in their gas-devouring ‘Hummer’ while at the same time customer mindsets shifted to sustainability and frugality.

Another example is Coca Cola. In the midst of region that was subject to drought (as will many more areas in the future) the company continued to spoil water in one of its Indian plants. The negative publicity this generated (apart from the millions of turnover lost due to the boycott of their goods across India)is still noticeable – unfortunately the Internet has a long memory. Nevertheless, Coca Cola learned from this mistake and it now implements innovative water management processes its plants throughout the world.

These are examples from the past. Let’s look at possible examples in the near future. What would be the impact of the ever-growing ‘Global Grid’ on the Banking Sector? (By Global Grid I mean the interconnectedness between humans and things worldwide, not necessarily through internet or social media, though these two factors obviously strengthen this Global Grid). The core function of a bank, which might have been forgotten somewhat in the recent decennia, is to borrow money from people who have too much, for a certain price, and to lend it to other people who have too little, at a higher price. But do people really need to go through a bank for this?

Companies like Prosper and Zopa show that banks aren’t absolutely necessary. Hundreds of millions of dollars now move through these companies in what you could call ‘peer to peer’ lending. The system is quite sophisticated and uses many of the principles introduced by Amazon, Google, eBay’s and others. These companies can do this successfully because of the Global Grid. Banks should think about how to benefit from this trend, since they won’t be able to stop it.

Creating Opportunities Out of MegatrendsAnother way to use megatrends in corporate strategy

is to respond to them through innovation. Bratz is a very good example. As a new competitor to the never-changing Barbie doll that still aims at ‘children’ from four to sixteen, Bratz understood that children now are going through many more phases of development. Children now are much more in touch with the world, with ever-evolving technology, with new ways of finding new friends, etc. This creates many more sub-stages of childhood and adolescence.

Bratz understood this, and their dolls reflect these multiple stages. Barbie stayed the same with the ‘one size fits all’ doll. The result? Bratz become the market leader for children dolls in 2004.

Using Megatrends to Sharpen Corporate MessagesA third potential way of using megatrends is to align

your overall corporate messaging around them. If you search for ‘Siemens’ and ‘Megatrends’ on YouTube, you will find several corporate video clips from the German multinational Siemens, showing how each of their business unit responds to a specific challenge related to a megatrend. These video clips offer very compelling messages to various company stakeholders. Employees can have pride in working for a company that solves such important issues. Shareholders can take comfort in the long-term vision of the company. Customers are granted a ‘bigger picture’ of their provider. In fact, it is a compelling message to all of the stakeholders of the company.

In this case it’s a bit of a ‘chicken and egg’ story, since Siemens performed many of these activities before the trends became apparent. But by emphasizing the link between what they do and the bigger picture of why they do it – even organizing their business units around these challenges – makes the corporate message ever so strong.

Turning Anti-trends into OpportunitiesMany more ways exist to use megatrends and link

them to your company’s strategy. One last point I would like to mention is considering ‘anti-trends.’ However strange this sounds, most megatrends carry the germ of their anti-trends in them. (This doesn’t sound too awkward for quantum physicists who have to deal with anti-matter, but that’s another story.)

using megatrends


The best example is perhaps the trend of increasing complexity in our society. Never in human history have we had access to so many tools to accomplish so many different activities, to learn through so many different means, and to communicate with so many different people. Never in human history has the mind been ready to cope with this increasing complexity. However, the level of complexity is increasing at such a rate that an growing number of people will choose simplicity for some of their activity and – linked to that – their consumption behavior.

In short, people will start choosing the simplest products for several of their activities. More and more suppliers have already answered this need. The Flip camera, for instance, a high-definition handcam that matched the performance of most of the sophisticated camera’s from the 1990s, had 8 buttons in total, and didn’t require any wire at all! No doubt there’s a market generated by the anti-trend here.

BUILDING A PROCESS TO ASSESS MEGATRENDSIt’s relatively easy to have a grasp of the megatrends

ahead of us. Several books on the subject, a number of magazines subscriptions (on various subjects) and some daily web-searches should do the trick. It’s a different matter to gauge the impact these trends might have on your company. It’s an even a bigger challenge to translate this assessment into concrete business opportunities and threats for your company.

The good news is that there’s only one set of people who can really do this assessment, and that is the employees of your company. Each company has its unique blend of culture, history, structure, attitude, brand, product, target market, internal conflict, personality, etc. Because of that, each company is different in the way it relates to megatrends, may it be in the form of opportunities or threats or indifference.

The knowledge of how megatrends will affect your company only resides in your company. Even though it might take the input of external people to unleash this knowledge, or to do the groundwork thinking in selecting and spotting the trends, ultimately what will come out of the exercise is what your company already knows, but doesn’t articulate. There are many ways to articulate that knowledge, and there are even more ways to draw conclusions from it and turn it into strategy.

In this section we will take you through just one of these methods, one that I implemented in our company three years ago and that has turned into a yearly exercise. It’s really a simple process, but efficient in that it is easily replicable for any company for their long-range planning cycle or even to define short-term strategic priorities. It can be the subject of a team-building activity or it can involve a broad audience within the company. Basically there are four steps in the process:

• Select trends to include.•Discuss trends internally in ‘think tank’ meetings.•Build conclusions and recommendations.•Communicate and influence.

Figure 1: Megatrends Assessment, Process

using megatrends


GlobalizationGlobalization 3.0

Global grid

Global currency

ConsumerIndividualization

Responsible buying

GenY @ work

Technology

Pervasive technology

GRIN

Augmented reality

Social media

DIY

GeopoliticsPower shift to East

Rising middle class

Market state

Demographics

Aging population

Urbanization

Millennials

Global mobility

Gap rich-poor

Sustainability

Energy dependency

Radical transparency

Green techs

Climate change

Water shortage

1. Select Trends to IncludeThis is perhaps the hardest part of the process, since

it is very difficult to avoid being influenced by the limits of your company’s business environment. However the megatrends exercise can only realize its full potential if you look much broader than that environment. Instead of just searching for trends that have an immediate impact on your industry, look for deeper underlying societal, political or even psychological changes that will affect society as a whole. Often the opportunities and threats (and the competitors of the future) are hidden in these unsuspected areas.

For instance, for last year’s exercise in our company we selected twenty-four trends based on what a range of professionals, economists, futurists, and consultancies define as megatrends (McKinsey, Ernst & Young, The Copenhagen Institute for Future Studies, etc.). When cleaning the redundancies and overlaps, the twenty-four trends could be categorized into 6 ‘themes’ (see Table 1).

Don’t take these as a final list for you to follow, though. This is a consensus-based list, but you could easily come up with a different set of trends, depending on which way you approach the process. For instance, if you take a psychological approach, the list would have featured trends like ‘search for meaning,’ ‘feeling of solitude,’ ‘traditionalism,’ ‘tribalism,’ etc.

2. Discuss Trends Internally in ‘Think Tank’ MeetingsThis is the crucial part of the process since, as

mentioned earlier, the true knowledge of what impact a trend will have on your company resides only in your

TABLE 1: TWENTY-FOUR ExAMPLE MEGATRENDS

TIP 1: Prepare some ‘fact sheets’ about the trends you want to cover. Send these out about one week before the meeting to allow people to to start thinking about them. These fact sheets should contain some graphical ‘proof of point’ of that trend, some general introduction, and two to three key questions which need to be addressed in the think tank session.

TIP 2: Use a template with the key areas you’d like to cover in the think tanks. Take notes on this template so that everyone can see them. This will stimulate interaction and generate new ideas with the attendees.

SIDEBAR 1: TIPS FOR hOLDING SUCCESSFUL ThINk TANkS

using megatrends


company. In this phase, discuss the trends and their impact on the company with a set of internal employees.

The practical organization of these Think Tanks could take many possible forms. What we have done is set up one Think Tank per ‘theme,’ and lead discussions on the trends within each theme in a three hour session. But you might as well organize a one or two day off-site with key strategic people in your company and discuss all of the trends with the same group. If you choose to make this part of a team-building activity, you might discuss the trends in your team for half a day (in parallel sessions if you have a big team) and spend the other half of the day with different activities.

More importantly, however, is who you invite to these Think Tanks. It is quite important to have people from different backgrounds, different expertise, and different interests.

In our experience ideally a Think Tank discussion should contain four to five people with a good balance between genders, levels of seniority, and professional background. Discussions could go on in parallel, even on the same subjects in order to gather different thoughts afterwards, etc. Basically these Think Tanks can be blended dependent on the amount of people involved, the time available, and other limitations (location). Sidebar 1 contains several tips to holding successful Think Tanks.

You can use many other techniques to stimulate the ideas and maximize the level of engagement of your think tank participants such as cue cards, post-its, deep-diving, etc. The choice, however, will be dependent on the exact nature of the meetings (time, aim, etc.) and the constituency of the groups.

3. Build Conclusions and RecommendationsIt’s a tremendous challenge to make sense of all the

discussions conducted in the think tanks. You will need to select from all the ideas and thoughts the discussions have generated, and you need to condense and summarize them into impactful, short messages.

Some specific techniques and tools have helped me out hugely with this. One is the use of ‘heat maps.’ Most of you would probably know how to do this automatically using Excel. We used the heat maps to show the different trends on the horizontal axis and on the vertical axis the areas of which we wanted to study the impact of those trends (in this case: our customer segments). We then gave ‘scores’ for opportunities and/or threats in order to build a summary view as shown in Figure 2 (based on dummy data). This is obviously not rocket science, but it helps greatly to single out the most impactful messages.

Another good practice is to map the different trends and see how they interrelate with each other. The

Figure 2: Scoring Megatrend Opportunities and Threats

using megatrends


software that we use for this is called Cayra and can be downloaded for free on CNET (http://download.cnet.com/Cayra/3000-2076_4-10777905.html ).

But ultimately you want to conclude whether or not a trend will affect your business, and whether or not you should take action on it. The best way to do that is by segmenting the trends. This can be done, for instance, by mapping the threat and opportunity level of each trend on the Y axis, and a timeline on the X-axis, as shown in Figure 3.

Last but not least, we would strongly encourage you to read through several books about megatrends just to get some fresh ideas on new trends and their consequences. Our personal favorite would be Richard Watson’s Future Files, which covers more than 220 trends from virtually all different areas. (You will find a complete review of this, and other books, on our blog mentioned at the end of this article.)

As mentioned previously, the ideas on which megatrends can impact your company are best generated by internal employees. To draw the right conclusions from the idea, however, might require some external assistance,

in order to avoid the bias of looking only at your current business, go-to-market and competitive environment.

4. Communicate and InfluenceIt’s impossible to provide some standard

recommendation about this phase, as it is obviously dependent on how strategy is developed in your company. One observation nevertheless: it is worthwhile to communicate the final document broadly within the company. This way sales managers can better comprehend the challenges of their customers, or your executives can add them to the argument concerning some strategic decisions, or for any other purpose.

We would recommend you produce a pack with all the ‘fact sheets’ and a summary of the findings of each trends, distributed widely across your organization. Next, you should provide an ‘executive brief ’ to key decision-makers discussing the threats, opportunities, and new business ideas that the exercise has generated. This briefing document would be sent only to the strategic community in your company.

Figure 3: Map of Trend Threat and Opportunity Level, by Time

using megatrends


SOME CLOSING ADVICEThere is no ‘right’ or ‘wrong’ method to include

megatrends in your corporate strategy -- the only ‘wrong’ way would be not to do this exercise. There are many ways you can organize such an exercise in your company, and ultimately the best way will be dependent on how your company deals with strategy.

Nevertheless, several rules apply to anyone who wishes to take into account megatrends in corporate strategy:

•Develop ideas on how megatrends affect your business through internal discussions. Don’t rely solely on external sources, although use them in order to understand the trends and to stir the imagination while having the discussions internally.

• Involve people from different background, different expertise, and different interests in the discussions around megatrends.

• Stay open-minded. Even when the link with current business is not evident, a trend might have unsuspected consequences for your company;

•Consider anti-trends as well. Often they form specific opportunities for niche-markets on their own.

•HAVE FUN ! Through our own experience in leading such an exercise in our company for the past three years, we have learned that people who contribute are hugely thankful for being included in a ‘broader’ discussion about the company.

The aim of this article was to show that introducing a ‘Megatrend’ exercise in your company is both easy and

can potentially be hugely rewarding. By preparing for the future now, you can ensure your company’s success for the many years to come. If this article left you with unanswered questions, feel free to contact us or check this blog where we share many more ideas, trend analyses and processes: http://strategicmi.blogspot.com/.

Joost Drieman studied electronics in the Netherlands and is graduated magna cum laude in business administration at the University Of Antwerp Belgium. He has over 25 years of international experience in strategy, business development, market intelligence and management. In January 2006 Joost became European Director Market & Business Intelligence at Cisco. Before Cisco, he held senior management positions at Getronics, UB Networks, Tandem Computers and Telindus. Joost was also a consultant for the European Commission. Joost represents Cisco at the MSI and he services at the boards of Viadesk BV and Marix International NV. He is visiting lecturer at several universities and business school to teach strategic intelligence.

Frederic De Meyer currently heads the European Market Intelligence team at the technology multinational Cisco. His team provides short and long terms insights to management as a support for strategic business decisions. Frederic joined Cisco after various consultancy and business development roles at research company IDC, public relations consultant Shandwick PLC and conference organizations IIR and EFE. In his role at Cisco, Frederic (amongst other things) launched the yearly megatrend exercise described in this article. He’s been since evangelizing this process at various conferences and seminars, like SCIP. You can track progress of his research and findings about these megatrends on his blog www.fredericdemeyer.com.

using megatrends

using megatrends to find new opportunities, prepare for ... · us anything, it is that even short...

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