Corporate Strategy Is About Trends
With the rise of COVID, we’ve seen huge trends take over, galvanize and basically capture the entire world within a short period of time. Corporate strategy is about how one identifies and responds to trends. It’s about knowing when your business should find a trend, knowing when to jump in, knowing when to ride that trend through the release of products, services, etc., and knowing when to jump out.
History is littered with examples of companies that saw a big trend—like social media, over-the-top streaming, virtual reality and electric cars. Some companies saw those trends and went in early, but ultimately, they were unable to ride the trend, or they went in before the trend reached mainstream status. Therefore, the investment never really panned out. Other times, they went in early and waited it out until the trend gained momentum, but someone else came along and benefited from the trend to a greater extent.
In surfing, the first surfer is not always the one who is able to ride that big wave. So the question becomes, how do you identify trends? If you extend this to pure strategy and look at the work of Clayton Christensen, he liked to say that disruptors are very hard to identify because they are usually ignored in the market. They are ignored such that incumbents stay working with established clients, and the disruptor picks up all these little clients at the bottom that nobody wants to serve and slowly starts adapting and improving. And as they adapt and improve, they start picking off all of the bigger clients. By the time the incumbent notices this newcomer, it’s too late. But the issue becomes: how do you identify this trend? How do you know something is worth pursuing?
Trends can originate in different places, but there are usually two ways they originate.
I recently read an article about a French restaurant that received a Michelin star, which is a big deal because it’s a vegan restaurant. While non-French restaurants have received Michelin stars for vegan menus, it’s the first time a French restaurant has received this. It’s even more of a big deal because one of the restaurant’s signature dishes is a vegan version of the enlarged liver of a duck, and the restaurant is located in the region of France that is known for producing this liver.
This premium establishment, the Michelin committee, confers a Michelin star on a vegan restaurant, and therefore helps make veganism cooler. This is an example of how an establishment is anointing that something is cool, worth having, luxurious and part of the mainstream. We see this very often. If a large company adopts something as a best practice, the mass market will follow. That is one way it occurs.
The other way this occurs is when the establishment never sees it coming but change bubbles through at the grassroots level. Hip hop is an example. This genre has exploded recently, but it’s been around for the last few decades. The difference is that it’s only now being noticed by established brands or what we like to call the establishment.
Ten years ago, you wouldn’t see a hip hop music video or hip hop music being used in mainstream advertising. You wouldn’t see hip hop symbols used in mainstream ad campaigns. This is an example of a trend created outside of the establishment, but because it became so popular, the establishment had to work with hip hop brands, taking the genre even further.
As you’re thinking about trends that are affecting the world, one of the biggest mistakes I see in strategy, in every country I worked in, for every type of client, is that they will go to an established, elite market research company or consulting firm and ask about trends. But here is a mistake. If the establishment—consisting of the elite consulting firms and the elite market research agency—is unaware of the trend, but the trend may be real, they’ll never put it in their report in the first place.
Many years ago, I listened to an interview with one of the world’s most famous fashion designers. They asked him how he knew what would be important in the world in a few years, and he said that twice a year, he goes to the Ginza fashion district of Tokyo, Japan and spends time drinking coffee, walking around and watching what young girls think is cool. According to this successful designer, they tend to set the fashion trend for Asia, and parts of it then get absorbed and exported into the West. He said that nobody is going to be able to commission a report telling him what a trend is going to be in a couple of years because nobody knows it’s coming.
As you try to identify trends as a business, remember that there are two types of trends you can identify: trends that are already here and trends that are coming. Trends that are coming can be split into two parts: trends that will be created by the establishment, and trends that will be forced on the establishment by a grassroots campaign. For trends that are created by the grassroots, you have to keep your ear on the ground and see what people are doing, listening to, reading and eating—and you can’t get that in a report. You have to keep your ear on the ground and see what is happening out there.
This is an excerpt from Monday Morning 8 a.m. newsletter, issue #14.