Strategic Trend Analysis

From my new Harvard Business Review article, here’s how to build one of the four capabilities that every innovative organization needs: Trend Sensing. It involves…potato chips. Companies frequently hop on trends, but many do so only once the trends are well into their lifecycle. That can be costly and risky — market values may already reflect discovery of the trend, and the trend may have peaked. Nestle, for instance, bought the lean diet company Jenny Craig in 2006 for approximately $600 million, after weight loss trends were already starting to move away from Jenny Craig’s focus on fat content due to new discoveries in nutrition science. Nestle then sold the business cheaply seven years later as it divested several under-performing brands. There are other failure modes for trend-sensing, too. Firms can discuss trends in abstract ways – like how the population is aging – without tying them to specific changes in customer needs, supplier capabilities, operational challenges, or competitive pressures. Alternatively, trend sensing may become a soapbox for opinionated individuals to make the industry their inkblot test, asserting big strategic implications from ambiguous signals, such as arguing that the growth of AI means that companies should bring more IT capabilities in-house. That can lead to expensive missteps as companies overpay for assets that may be on-trend but which lack other strengths such as competitive differentiation or favorable economics. Witness perhaps the most disastrous merger of all-time: Time Warner’s with AOL during the dot-com bubble. What to do instead? For a contrast, look at PepsiCo, the multinational food and beverage powerhouse. It held a “Do Us a Flavor” competition for Lay’s potato chips from 2012 - 2018, seeking ideas from consumers for its next flavor. It didn’t actually need new ideas — the company has plenty — but this was an excellent way to track what flavor interests were trending and where. (The first year’s winner: cheesy garlic bread). Ultimately the program ended in part due to its popularity —  going through up to 3.8 million entries a year required a tremendous amount of labor and management time. The contest boasted characteristics of effective trend-hunting programs: it surfaced trends in real-time, it was inexpensive, it produced specific implications, and it was objective. Whether you sponsor a contest, go prospecting at conferences for adjacent industries, talk to your most passionate users, or embrace other methods, these parameters guide effective searches for trends. (Have you used other methods to go trend hunting? Please add them in the comments!)

The Predictive Edge: How Forward-Looking Strategy Drives Growth A CEO I worked with recently made a striking admission: "We created a strategic plan based entirely on today's market conditions, not where things are heading." This common oversight explains why so many strategic plans become irrelevant before they're even fully implemented. Effective strategic planning isn't just about understanding your current business landscape – it's about predicting where that landscape is shifting. It's about developing foresight, not just insight. The most successful companies I coach don't just react to change; they anticipate it by: • Systematically analyzing emerging trends in their market and adjacent industries • Understanding the macro forces impacting their customers' businesses • Identifying the investments their clients are making today that signal tomorrow's priorities • Looking for early indicators of disruption that others might miss One technology company I advised noticed their customers were increasingly investing in data security. Rather than simply noting this trend, they explored what was driving it, discovering regulatory changes on the horizon that would impact their entire industry. This predictive insight allowed them to develop solutions ahead of their competitors and position themselves as thought leaders rather than followers. The most valuable strategic plans incorporate robust trend analysis and future-state predictions that inform today's decisions while preparing for tomorrow's realities. What trends are you tracking that might reshape your industry in the next 3-5 years? How are these predictions influencing your current strategic decisions?

Most businesses panic when they see their average order value (AOV) drop 25%. They then… - Slash prices - Rush promotions - Question their premium products But smart retailers know better — they investigate patterns first. Here are a few to get you started: 1. Sales data Your 6-month trends reveal the first signs of change: - Did price changes affect order value? - Which products are selling more or less? - What's the pattern in shopping cart composition? - What does purchase frequency tell us? - What's hiding in abandoned carts? - Are premium products getting abandoned? 🧩 Let’s say you see premium items getting abandoned at checkout repeatedly. Looking deeper, you might find a specific price threshold — leading to an opportunity for strategic bundling. 2. Website behavior Tools like CrazyEgg, LuckyOrange, Hotjar, and FullStory show complete interaction patterns: - Most visited pages - Heat map patterns - Premium product engagement 🧩 Are customers spending time on review sections but leaving? You might need stronger social proof and not necessarily lower prices. 3. Customer voices Data tells half the story, and your customers tell the other half. Direct fact-finding reveals… - Customer sentiments on new premium products - Views on popular vs. unpopular items - Feedback on existing products Social media conversations add another layer of insight. 🧩 Suppose your focus groups reveal confusion about premium features. This could signal you need better education — not different products. 4. Competitive landscape A comprehensive look at your market reveals if competitors… - Launched promotions that coincided with the change - Introduced new products during your AOV drop - Brought innovative solutions to the market - Lowered their existing product prices 🧩 Did you notice your AOV drop right when a competitor introduced similar products at lower prices? This is a direct connection between market changes and your sales patterns. 5. Long-term trends Customer surveys help you identify shifts in popularity before they hurt your bottom line. 🧩 If they show customers gradually losing interest in a once-popular product category… You’ve spotted a trend that explains your dropping order value (and suggests you should act accordingly). 💡 Remember this: Numbers don't drop without reason. Patterns don't form by accident. Solutions don't come from guessing. Understanding your customers' behavior is the difference between reacting and leading.

Scenario Planning vs. Traditional Forecasting ☑ Traditional Forecasting: Making Short-Term Predictions ↳ Forecasting relies heavily on past data, assuming recent trends will continue.   ↳ Works well for short-term horizons (e.g., monthly, quarterly).   ↳ Less effective for long-term planning (10-30 years), as unforeseen events disrupt the stability of current trends. ☑ The Limitations of Extending Current Trends ↳ Traditional methods need help with long-term shifts.   ↳ Major events like natural disasters, political changes, or technological innovations make simple trend projections unreliable.   ↳ Using traditional forecasting for long-term plans is like "throwing darts at a board." Enter Scenario Planning: Preparing for Multiple Futures ☑ Why Scenario Planning?   ↳ Instead of predicting a single future, it explores multiple possible futures.   ↳ Scenario Planning helps organizations prepare rather than predict.   ↳ Think of it as **judo**—adaptable to multiple outcomes, not just a fixed path. ☑ Building Scenarios Around Key Uncertainties   ↳ Focus on the main factors that could drive change, like geopolitical or economic shifts.   ↳ Create plausible future scenarios to cover a wide range of potential outcomes.   ↳ This approach reduces the need for precise predictions, focusing on preparing for the impact of key effects. Benefits for organizations ↳ Scenario Planning allows organizations to shift from trying to predict events to preparing for the effects of these events.   ↳ It offers a practical framework to identify and plan for significant risks without knowing the nature of future disruptions. Remember, Planning for the future isn’t about predicting it—it's about being ready for whatever comes next. Ps. If you enjoy learning about strategic planning, please follow me 🙏

🔍 𝗧𝗵𝗲 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗘𝗱𝗴𝗲 - 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗧𝗶𝗽 #1: 𝗦𝘁𝗮𝘆 𝗔𝗵𝗲𝗮𝗱 𝗼𝗳 𝗖𝗵𝗮𝗻𝗴𝗲 (and Turn Regulation into Opportunity) 𝗚𝗿𝗲𝗮𝘁 𝗹𝗲𝗮𝗱𝗲𝗿𝘀 𝗱𝗼𝗻’𝘁 𝗷𝘂𝘀𝘁 𝗿𝗲𝗮𝗰𝘁 𝘁𝗼 𝗰𝗵𝗮𝗻𝗴𝗲; 𝘁𝗵𝗲𝘆 𝗮𝗻𝘁𝗶𝗰𝗶𝗽𝗮𝘁𝗲 𝗶𝘁. Whether it’s new laws, emerging tech, or economic shifts, the best strategists see what’s coming and turn compliance into a competitive advantage. 𝗕𝗲 𝘁𝗵𝗲 𝘁𝗿𝗲𝗻𝗱-𝘀𝗽𝗼𝘁𝘁𝗲𝗿: Great strategists scan the horizon for economic shifts, technological trends, and looming policy changes. In regulated industries, this means anticipating new laws and guidelines – and planning for them before they hit. A government call-to-action in the UK, for example, urges financial firms to co-design strategies with regulators and consumer groups to spur growth. This isn’t just bureaucracy; it’s strategy (if done well). 𝗥𝗲𝘀𝗲𝗮𝗿𝗰𝗵-𝗯𝗮𝗰𝗸𝗲𝗱 𝗶𝗻𝘀𝗶𝗴𝗵𝘁: Studies show that companies proactive about external change thrive. Nearly three-quarters (72%) of surveyed utility industry leaders said innovation at their organization is primarily driven by regulation or compliance. 𝗜𝗻 𝗼𝘁𝗵𝗲𝗿 𝘄𝗼𝗿𝗱𝘀, 𝘁𝗵𝗲 𝗿𝘂𝗹𝗲𝗯𝗼𝗼𝗸 𝗰𝗮𝗻 𝗯𝗲 𝗮 𝘀𝗽𝗿𝗶𝗻𝗴𝗯𝗼𝗮𝗿𝗱. Conversely, MIT research finds that 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝘀𝘁𝗮𝗴𝗻𝗮𝘁𝗲 𝗶𝗳 𝘁𝗵𝗲𝘆 𝘁𝗿𝗲𝗮𝘁 𝗿𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻 𝗽𝘂𝗿𝗲𝗹𝘆 𝗮𝘀 𝗮 𝗯𝘂𝗿𝗱𝗲𝗻 – so flip the script and use rules to fuel creativity. 𝗨𝘀𝗲 𝗰𝗮𝘀𝗲: When the EU rolled out open-banking regulations, savvy banks didn’t just grumble; they jumped on it. They formed new fintech partnerships and launched apps leveraging the mandated data-sharing. By the time competitors were playing catch-up, these frontrunners had won customers with innovative services (while ticking the compliance box). Similarly, healthcare providers who anticipated telehealth policy changes during the pandemic moved services online overnight – a strategic pivot that saved both patients and business. 𝗔𝗰𝘁𝗶𝗼𝗻 𝘀𝘁𝗲𝗽: 𝗜𝗻𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝘀𝗰𝗲𝗻𝗮𝗿𝗶𝗼 𝗽𝗹𝗮𝗻𝗻𝗶𝗻𝗴 𝗶𝗻 𝘆𝗼𝘂𝗿 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆 𝘁𝗼𝗼𝗹𝗸𝗶𝘁. For instance, many banks now run “what-if” simulations for upcoming regulatory scenarios (from interest-rate changes to new privacy laws) just as they do for market risks. By envisioning best and worst-case futures, you can prepare plan A, B, and C. It’s a playbook that served companies like Royal Dutch Shell well in turbulent oil markets, and it can work for your organization too – whether you’re navigating fintech regulations or healthcare reforms. #Strategy  #RegulatoryInsight #Innovation Michael Montalto Michael Cattanach Mike O. Maria Lilly • Robert Field Jessica Carroll Shera Haliczer Pete Cafarchio, PCC Rick Diana Satyendra (Tripps) T. Nikhil Ferreira Krishan Jogia David Audi An Le Hutch Hutchens Wally Musto Visar Gashi Gregory Scott Henson Mark McNamara Solomon Viera Gonen G. Stefanie Krievins Richard Williams