Strategists analyze macro trends in search of what will drive their business growth.
A framework trend has a long life, the result of many forces in its community that it cannot manipulate. Like a river, you let yourself be carried away by the current or you exhaust yourself fighting it. Typically, when a strategic planning team formulates a strategy, it groups trends into areas of analysis in its external environment, its market, and community, to identify opportunities and threats. These are:
- Demographics: population groups, life span, family composition, disposable income
- Economy: capital, business processes, productivity, work patterns, management
- Environment: basic resources, ecosystems, transport channels, habitat
- Government: world events, politics, laws, public and economic policy, regulation
- Society: lifestyles, values, religion, leisure, culture, education, public health
- Technology: innovations, scientific discoveries, economies of scale
A trend can fall into several of these areas, but as a strategic planning facilitator, I resist the temptation to put it into two or more, as its importance can be overstated. I want business strategists to methodically think about how the market will change their business.
A “driver” is a trend in the community as it builds momentum, which will trigger an opportunity or threat to your business. For example, in 2009 the recession has spurred Walmart sales as consumers search for bargains. The subprime mortgage and derivatives mess has devastated homebuilders.
We can estimate demographic trends in the future, while politics seems to evolve throughout the electoral cycle. The economy, the business cycle we focus on, is rich in data but prone to short-term surprises. Technology trends are identified from industry associations as the best companies innovate and create the standards so that their products have an advantage in the market.
The question is: do you have a deep understanding of what “drives” your business?
