Spotting Trends David Falor

Tracking Trends – Six Essential Steps for Spotting Your Next Opportunity

Tracking Trends - Six Essential Steps for Spotting Your Next Opportunity

I once asked Fred Smith, the founder of FedEx, what led him to start the company back in 1971. He explained that, at the time, he was running a company at the Little Rock, Arkansas, airport, refurbishing executive aircraft. It was there he began to notice that with increasing frequency, business people were showing up at his company to see if they could charter one of his planes to get some “time sensitive” shipment someplace in a hurry. “The existing freight forwarders hadn’t noticed this unmet need,” he told me. “To us it seemed like an huge opportunity.”

Smith found a need and filled it. And he acted. The Opportunity Mindset he embodies is becoming a touchstone of success in the Digital Age. When you look for it, you see it everywhere. “It was our reading of trends that led us to make this move,” Filippo Passarini, the chief information officer at Procter & Gamble told me when I interviewed him for the book Innovation is Everybody’s Business. “One of our pillars is thinking out in the future, anticipating what’s coming, and then making our move.” By thinking ahead of the curve, Passarini was able to reorganize Procter’s back office operations, and eliminate over a billion dollars in costs.

Here is a 6-step trend tracking process we use with clients to spot opportunities in change, and avoid being blindsided by disruption:

1. Observe trends in your daily life. Innovators are noticers above all. They are interested in everything. They take in more information. They read voraciously. They ask questions. They question assumptions. So step one is to start noticing more wherever you are, wherever you go. Track consumer trends, technology trends, social trends, global trends, economic trends and political trends.

2. Project out ahead. Ask yourself: where will this trend will be three, five and ten years out? For example, take the artificial intelligence industry. Today, A.I. is said to be at the same stage of development as the Internet in the mid-1990’s. Yet, more and more products and services have A.I. capability built into them all the time. The industry is expected to balloon from $8 billion in revenue today to $47 billion in 2020. Huge opportunities will accrue to those who are willing to project out ahead, then make their move.

3. Consider the larger impacts of the trend, technology or disruption. In other words, who’s going to be affected? Who will benefit from this development and who might lose out? Take driverless cars: five years ago where were they? Now early versions are available for purchase at your local dealership. Now consider the impacts yet to come. For example, if you’ve got young children; will they even need a driver license? Will the younger generation choose not to own a car? Perhaps they’ll simply order a ride with their phone when they need one. And how about auto insurance companies? With fewer and fewer car owners, and fewer accidents, what happens to them? And what will our roads and transportation systems need to do differently? By considering the societal impacts of a trend or technology, it gives you a big picture perspective.

4. Do a SWOT Analysis. Now think about the trend from the perspective of your career, your family and your organization. Big question: how fast will disruption happen to those who don’t handle this trend right? Take, for example, the 3D Printing trend. If you’re a manufacturer, you may be sensing this new capability is a potential game changer for your firm. So you’ll want to perform an initial SWOT analysis with an emphasis on the speed of change. Examine your company’s Strengths, Weaknesses, Opportunities, and Threats that 3D Printing might pose. Look at how this new way of making things might or could impact your business and your industry. How fast will all this happen? For a given business, here’s how fast it can happen: The U.S. hearing aid industry converted to 100 percent additive manufacturing in less than 500 days, according to the Harvard Business Review, and not one company that stuck to traditional manufacturing methods survived. Concludes HBR: “Managers will need to determine whether it’s wise to wait for this fast-evolving technology to mature before making certain investments or whether the risk of waiting is too great.”

5. Research early responses to the trend. As part of your SWOT analysis, do a Google search. In today’s connected world, by the time you identify a trend or development as noteworthy, somebody somewhere is probably already acting on it.– They may be around the world, or right in your community. But your response to the trend can benefit from their experience.

6. Embrace the Opportunity Mindset. Come back to the “O” in the SWOT acronym. After you review your firm’s strengths and weaknesses, and after you’ve sized up the threats inherent in the technology or the trend, lay your findings on the table, and then let your creative juices flow. Challenge yourself and your colleagues with a series of questions. How might we capitalize on this trend? How can we add value to the customer vis. a vis. this trend? If it’s a disruption bearing down on you, the question might be: how can we take these lemons and make lemonade?

In today world, it’s all too easy to miss the trends. Just ask Blockbuster, Blackberry, Nokia, Kodak, Circuit City and a host of others. By incorporating this 6-step process into your routine, you can leapfrog your competition and avoid getting blindsided by change.

Innovation Risk

How to Reduce Your Innovation Risk

The trouble with innovation is it’s risky.  Sure, the upside is nice (increased sales), but the downside (it doesn’t work) is distasteful.

Everyone is looking for the magic pill to change the risk-reward ratio of innovation, but there is no pill. Though there are some things you can do to tip the scale in your favor.

All problems are business problems.  Problem solving is the key to innovation, and all problems are business problems.  And as companies embrace the triple bottom line philosophy, where they strive to make progress in three areas – environmental, social and financial, there’s a clear framework to define business problems.

Start with a business objective.  It’s best to define a business problem in terms of a shortcoming in business results. And the holy grail of business objectives is the growth objective.  No one wants to be the obstacle, but, more importantly, everyone is happy to align their career with closing the gap in the growth objective.  In that way, if solving a problem is directly linked to achieving the growth objective, it will get solved.

Sell more.  The best way to achieve the growth objective is to sell more. Bottom line savings won’t get you there.  You need the sizzle of the top line. When solving a problem is linked to selling more, it will get solved.

Customers are the only people that buy things.  If you want to sell more, you’ve got to sell it to customers. And customers buy novel usefulness.  When solving a problem creates novel usefulness that customers like, the problem will get solved.  However, before trying to solve the problem, verify customers will buy what you’re selling.

No-To-Yes.  Small increases in efficiency and productivity don’t cause customers to radically change their buying habits.  For that your new product or service must do something new. In a No-To-Yes way, the old one couldn’t but the new one can. If solving the problem turns no to yes, it will get solved.

Would they buy it? Before solving, make sure customers will buy the useful novelty. (To know, clearly define the novelty in a hand sketch and ask them what they think.) If they say yes, see the next question.

Would it meet our growth objectives? Before solving, do the math. Does the solution result in incremental sales larger than the growth objective? If yes, see the next question.

Would we commercialize it? Before solving, map out the commercialization work. If there are no resources to commercialize, stop.  If the resources to commercialize would be freed up, solve it.

Defining is solving. Up until now, solving has been premature. And it’s still not time. Create a functional model of the existing product or service using blocks (nouns) and arrows (verbs). Then, to create the problem(s), add/modify/delete functions to enable the novel usefulness customers will buy.  There will be at least one problem – the system cannot perform the new function. Now it’s time to take a deep dive into the physics and bring the new function to life.  There will likely be other problems.  Existing functions may be blocked by the changes needed for the new function. Harmful actions may develop or some functions will be satisfied in an insufficient way.  The key is to understand the physics in the most complete way.  And solve one problem at a time.

Adaptation before creation. Most problems have been solved in another industry. Instead of reinventing the wheel, use TRIZ to find the solutions in other industries and adapt them to your product or service.  This is a powerful lever to reduce innovation risk.

There’s nothing worse than solving the wrong problem. And you know it’s the wrong problem if the solution does not (1) solve a business problem, (2) achieve the growth objective, (3) create more sales, (4) provide No-To-Yes functionality customers will buy, and (5) you won’t allocate the resources to commercialize.

And if the problem successfully runs the gauntlet and is worth solving, spend time to define it rigorously.  To understand the bedrock physics, create a functional of the system, add the new functionality and see what breaks. Then use TRIZ to create a generic solution, search for the solution across other industries and adapt it.

The key to innovation is problem solving. But to reduce the risk, before solving, spend time and energy to make sure it’s the right problem to solve. It’s far faster to solve the right problem slowly than to solve the wrong one quickly.